EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. NRS 679B.120 is hereby amended to read as follows:

1-2 679B.120 The commissioner shall:

1-13 any person has violated any provision of this code or to secure information

2-1 useful in the lawful enforcement or administration of any such provision;

2-2 and

2-3 6. Have such additional powers and duties as may be provided by other

2-4 laws of this state.

2-5 Sec. 2. Chapter 680A of NRS is hereby amended by adding thereto the

2-6 provisions set forth as sections 3 to 8, inclusive, of this act.

2-7 Sec. 3. As used in sections 3 to 8, inclusive, of this act, unless the

2-8 context otherwise requires, "for-profit corporation or entity" has the

2-9 meaning ascribed to it in section 14 of this act.

2-10 Sec. 4. The provisions of sections 3 to 8, inclusive, of this act apply

2-11 only to a nonprofit hospital, medical or dental service corporation that is

2-12 described in section 15 of this act.

2-13 Sec. 5. 1. Except as otherwise provided in this section, the

2-14 commissioner shall not grant or continue authority to transact insurance

2-15 in this state to any insurer or proposed insurer that:

2-16 (a) Converted from a nonprofit hospital, medical or dental service

2-17 corporation to a for-profit corporation or entity after the effective date of

2-18 this act; and

2-19 (b) Has transacted insurance in this state as a nonprofit hospital,

2-20 medical or dental service corporation.

2-21 2. If an insurer or proposed insurer described in subsection 1 is a

2-22 domestic insurer, the commissioner may grant or continue authority to

2-23 transact insurance in this state to the insurer only if the insurer has

2-24 complied with the provisions of sections 14 to 27, inclusive, of this act.

2-25 3. If an insurer or proposed insurer described in subsection 1 is a

2-26 foreign insurer, the commissioner may grant or continue authority to

2-27 transact insurance in this state to the insurer only:

2-28 (a) If the commissioner is notified by the attorney general pursuant to

2-29 section 6 of this act that a charitable trust has been established in the

2-30 State of Nevada to serve the health care needs of persons in this state in

2-31 the manner set forth in sections 22, 23 and 24 of this act with assets equal

2-32 to the full fair market value of the nonprofit hospital, medical or dental

2-33 service corporation attributable to the business it has conducted in the

2-34 State of Nevada at the time of the conversion, as determined in the

2-35 manner set forth in section 22 of this act; or

2-36 (b) For a specified time until the attorney general makes the

2-37 determination pursuant to subsection 2 of section 6 of this act.

2-38 Sec. 6. 1. The commissioner shall notify the attorney general when:

2-39 (a) A foreign insurer that has conducted business in this state as a

2-40 nonprofit hospital, medical or dental service corporation and has

2-41 converted to a for-profit corporation or entity after the effective date of

2-42 this act applies for an original certificate of authority;

3-1 (b) A foreign insurer that has transacted insurance in this state as a

3-2 nonprofit hospital, medical or dental service corporation and has

3-3 converted to a for-profit corporation or entity after the effective date of

3-4 this act files with the commissioner an annual statement required

3-5 pursuant to NRS 680A.270; or

3-6 (c) The commissioner otherwise becomes aware that a foreign insurer

3-7 that is authorized to transact insurance in this state and has transacted

3-8 insurance in this state as a nonprofit hospital, medical or dental service

3-9 corporation has converted to a for-profit corporation or entity after the

3-10 effective date of this act.

3-11 2. Except as otherwise provided in subsection 3, not later than 90

3-12 days after receiving notification from the commissioner pursuant to

3-13 subsection 1 or otherwise becoming aware that a foreign insurer that has

3-14 conducted business in this state as a nonprofit hospital, medical or dental

3-15 service corporation has initiated the process for converting to a for-profit

3-16 corporation or entity in another state, the attorney general shall

3-17 determine:

3-18 (a) In the manner set forth in section 22 of this act, whether or not a

3-19 charitable trust has been established in the manner set forth in section 22

3-20 of this act with assets equal to the full fair market value of the nonprofit

3-21 hospital, medical or dental service corporation attributable to business it

3-22 has conducted in the State of Nevada at the time of the conversion; and

3-23 (b) Whether or not the charitable assets of the charitable trust are

3-24 being held and distributed in the manner set forth in sections 23 and 24 of

3-25 this act.

3-26 3. If the attorney general cannot make a determination pursuant to

3-27 subsection 2 within 90 days, he may extend the period for not more than

3-28 60 days by giving notice to the commissioner and the foreign insurer.

3-29 4. The attorney general shall immediately notify the commissioner of

3-30 his determinations made pursuant to subsection 3.

3-31 Sec. 7. 1. The attorney general may:

3-32 (a) Advise, receive advice from, consult and cooperate with other

3-33 agencies of this state, the Federal Government, agencies of other states,

3-34 interstate agencies and with other persons to carry out the provisions of

3-35 sections 3 to 8, inclusive, of this act;

3-36 (b) Adopt such regulations as are necessary to carry out the provisions

3-37 of sections 3 to 8, inclusive, of this act;

3-38 (c) Contract with an agency of this state to assist the attorney general

3-39 in carrying out the provisions of sections 3 to 8, inclusive, of this act; and

3-40 (d) Contract with one or more consultants or experts to assist with a

3-41 determination to be made pursuant to subsection 2 of section 6 of this act,

3-42 including, without limitation, establishing the full fair market value of the

3-43 nonprofit hospital, medical or dental service corporation attributable to

4-1 business it has conducted in the State of Nevada at the time of the

4-2 conversion.

4-3 2. The total costs incurred by the attorney general through contracts

4-4 entered into for obtaining assistance in making the determination

4-5 pursuant to subsection 2 of section 6 of this act must be reasonable and

4-6 necessary.

4-7 3. The attorney general may require the parties involved in the

4-8 conversion to enter into an agreement, on terms established by the

4-9 attorney general, to pay for any costs incurred by the attorney general

4-10 pursuant to paragraph (d) of subsection 1. Such an agreement may

4-11 include, without limitation:

4-12 (a) Requiring the parties involved in the conversion to make a cash

4-13 deposit with an escrow agent in a manner approved by the attorney

4-14 general, and authorizing the attorney general to withdraw money from

4-15 the escrow account to cover any costs incurred pursuant to paragraph (d)

4-16 of subsection 1;

4-17 (b) Requiring the parties to pay the attorney general an amount of

4-18 money in advance to cover the expected costs that will be incurred

4-19 pursuant to paragraph (d) of subsection 1;

4-20 (c) Requiring the parties to make monthly payments to the attorney

4-21 general for the costs incurred by the attorney general pursuant to

4-22 paragraph (d) of subsection 1; or

4-23 (d) Any combination thereof.

4-24 Sec. 8. In carrying out the duties set forth in sections 3 to 8,

4-25 inclusive, of this act, the attorney general may:

4-26 1. Issue subpoenas requiring the attendance and testimony of

4-27 witnesses and the production of reports, papers, documents and other

4-28 evidence which he deems necessary;

4-29 2. Administer oaths; and

4-30 3. Compel a person to subscribe to his testimony after it has been

4-31 correctly reduced to writing.

4-32 Sec. 9. NRS 680A.070 is hereby amended to read as follows:

4-33 680A.070 A certificate of authority is not required of an insurer with

4-43 state.

5-1 3. Prosecution or defense of suits at law, except that no insurer

5-2 unlawfully transacting insurance in this state without a certificate of

5-3 authority may institute or maintain, other than defend, any action at law or

5-4 in equity in any court of this state, either directly or through an assignee or

5-5 successor in interest, to enforce any right, claim or demand arising out of

5-6 such an insurance transaction until the insurer, assignee or successor has

5-7 obtained a certificate of authority. This provision does not apply to any suit

5-8 or action by the receiver, rehabilitator or liquidator of such an insurer,

5-9 assignee or successor under laws similar to those contained in chapter 696B

5-10 of NRS.

5-11 4. Transactions pursuant to surplus lines coverages lawfully written

5-12 under chapter 685A of NRS.

5-13 5. A suit, action or proceeding for the enforcement or defense of its

5-14 rights relative to its investments in this state.

5-15 6. Reinsurance, except as to a domestic reinsurer or the reinsurance of a

5-16 domestic insurer, unless the reinsurance is authorized pursuant to subsection

5-17 1 of NRS 681A.110.

5-18 7. [Transactions] Except as otherwise provided in this subsection,

5-19 transactions in this state involving group life insurance, group health or

5-20 blanket health insurance, or group annuities where the master policy or

5-21 contract of such groups was lawfully solicited, issued and delivered

5-22 pursuant to the laws of a state in which the insurer was authorized to

5-23 transact insurance, to a group organized for purposes other than the

5-24 procurement of insurance or to a group approved pursuant to NRS

5-25 688B.030 or 689B.026, and where the policyholder is domiciled or

5-26 otherwise has a bona fide situs. A foreign insurer that converted from a

5-27 nonprofit hospital, medical or dental service corporation to a for-profit

5-28 corporation or entity after the effective date of this act that previously

5-29 transacted insurance in this state as a nonprofit hospital, medical or

5-30 dental service corporation may engage in such transactions only if the

5-31 commissioner has granted or continued authority for the nonprofit

5-32 hospital, medical or dental service corporation to transact insurance

5-33 pursuant to section 5 of this act.

5-34 8. The issuance of annuities by an affiliate of an authorized insurer if

5-35 the affiliate:

5-36 (a) Is approved by the commissioner;

5-37 (b) Is organized as a nonprofit educational corporation;

5-38 (c) Issues annuities only to nonprofit institutions of education and

5-39 research; and

5-40 (d) Reports and pays any premium tax on the annuities required pursuant

5-41 to chapter 680B of NRS.

5-42 9. Transactions involving the procurement of excess liability insurance

5-43 above underlying liability coverage or self-insured retention of at least

6-1 $25,000,000, if procured from an unauthorized alien or foreign insurer who

6-2 does not solicit, negotiate or enter into such transactions in this state by any

6-3 means, and if procured by a person:

6-4 (a) Whose total annual premiums for property and casualty insurance is

6-5 $1,000,000 or more; and

6-6 (b) Who employs 250 or more full-time employees.

6-7 A person who procures insurance in accordance with this subsection shall

6-8 report and pay any premium tax on the insurance required pursuant to NRS

6-9 680B.040.

6-10 Sec. 10. NRS 680A.070 is hereby amended to read as follows:

6-11 680A.070 A certificate of authority is not required of an insurer with

6-12 respect to any of the following:

6-13 1. Investigation, settlement or litigation of claims under its policies

6-14 lawfully written in this state, or liquidation of assets and liabilities of the

6-15 insurer, other than collection of new premiums, all as resulting from its

6-16 former authorized operations in this state.

6-17 2. Except as otherwise provided in subsection 2 of NRS 680A.060,

6-18 transactions thereunder after issuance of a policy covering only subjects of

6-19 insurance that are not resident, located or expressly to be performed in this

6-20 state at the time of issuance, and lawfully solicited, written and delivered

6-21 outside this state.

6-22 3. Prosecution or defense of suits at law, except that no insurer

6-23 unlawfully transacting insurance in this state without a certificate of

6-24 authority may institute or maintain, other than defend, any action at law or

6-25 in equity in any court of this state, either directly or through an assignee or

6-26 successor in interest, to enforce any right, claim or demand arising out of

6-27 such an insurance transaction until the insurer, assignee or successor has

6-28 obtained a certificate of authority. This provision does not apply to any suit

6-29 or action by the receiver, rehabilitator or liquidator of such an insurer,

6-30 assignee or successor under laws similar to those contained in chapter 696B

6-31 of NRS.

6-32 4. Transactions pursuant to surplus lines coverages lawfully written

6-33 under chapter 685A of NRS.

6-34 5. A suit, action or proceeding for the enforcement or defense of its

6-35 rights relative to its investments in this state.

6-36 6. Reinsurance, except as to a domestic reinsurer or the reinsurance of a

6-37 domestic insurer, unless the reinsurance is authorized pursuant to subsection

6-38 1 of NRS 681A.110.

6-39 7. [Transactions] Except as otherwise provided in this subsection,

6-40 transactions in this state involving group life insurance, group health or

6-41 blanket health insurance, or group annuities where the master policy or

6-42 contract of such groups was lawfully solicited, issued and delivered

6-43 pursuant to the laws of a state in which the insurer was authorized to

7-1 transact insurance, to a group organized for purposes other than the

7-2 procurement of insurance or to a group approved pursuant to NRS

7-3 688B.030 or 689B.026, and where the policyholder is domiciled or

7-4 otherwise has a bona fide situs. A foreign insurer that converted from a

7-5 nonprofit hospital, medical or dental service corporation to a for-profit

7-6 corporation or entity after the effective date of this act that previously

7-7 transacted insurance in this state as a nonprofit hospital, medical or

7-8 dental service corporation may engage in such transactions only if the

7-9 commissioner has granted or continued authority for the nonprofit

7-10 hospital, medical or dental service corporation to transact insurance

7-11 pursuant to section 5 of this act.

7-12 8. The issuance of annuities by an affiliate of an authorized insurer if

7-13 the affiliate:

7-14 (a) Is approved by the commissioner;

7-15 (b) Is organized as a nonprofit educational corporation;

7-16 (c) Issues annuities only to nonprofit institutions of education and

7-17 research; and

7-18 (d) Reports and pays any premium tax on the annuities required pursuant

7-19 to chapter 680B of NRS.

7-20 9. Transactions, other than for workers’ compensation insurance or for

7-21 industrial insurance provided pursuant to chapters 616A to 617, inclusive,

7-22 of NRS, involving the procurement of excess liability insurance above

7-23 underlying liability coverage or self-insured retention of at least

7-24 $25,000,000, if procured from an unauthorized alien or foreign insurer who

7-25 does not solicit, negotiate or enter into such transactions in this state by any

7-26 means, and if procured by a person:

7-27 (a) Whose total annual premiums for property and casualty insurance,

7-28 not including workers’ compensation or industrial insurance, is $1,000,000

7-29 or more; and

7-30 (b) Who employs 250 or more full-time employees.

7-31 A person who procures insurance in accordance with this subsection shall

7-32 report and pay any premium tax on the insurance required pursuant to NRS

7-33 680B.040.

7-34 Sec. 11. NRS 680A.095 is hereby amended to read as follows:

7-35 680A.095 1. Except as otherwise provided in subsection 3, an insurer

7-41 inclusive, of this act.

8-1 2. To qualify for authority only to transact reinsurance, an insurer must

8-2 meet the same requirements for capital and surplus as are imposed on an

8-3 insurer which is authorized to transact insurance in this state.

8-4 3. This section does not apply to the joint reinsurance of title insurance

8-5 risks or to reciprocal insurance authorized pursuant to chapter 694B of

8-6 NRS.

8-7 Sec. 12. NRS 680A.175 is hereby amended to read as follows:

8-8 680A.175 1. If a domestic insurer transfers its domicile to another

8-15 state.

8-16 Sec. 13. Chapter 695B of NRS is hereby amended by adding thereto

8-17 the provisions set forth as sections 14 to 28, inclusive, of this act.

8-18 Sec. 14. As used in sections 14 to 28, inclusive, of this act, unless the

8-19 context otherwise requires, "for-profit corporation or entity" means a

8-20 corporation, partnership, proprietorship, business association, stock

8-21 insurer and any other similar organization that conducts an activity for

8-22 profit.

8-23 Sec. 15. The provisions of sections 14 to 28, inclusive, of this act

8-24 apply only to a nonprofit hospital, medical or dental service corporation

8-25 that is:

8-26 1. Recognized as exempt pursuant to section 501(c)(3) or 501(c)(4) of

8-27 the Internal Revenue Code of 1986, future amendments to those sections

8-28 and the corresponding provisions of future internal revenue laws;

8-29 2. Subject to the provisions of section 833 of the Internal Revenue

8-30 Code of 1986, future amendments to that section and the corresponding

8-31 provisions of future internal revenue laws;

8-32 3. Incorporated pursuant to chapter 82 of NRS;

8-33 4. Subject to the provisions of chapter 695B of NRS;

8-34 5. Exempt from state franchise, property and sales taxes; or

8-35 6. Organized and operated for the promotion of public good or to

8-36 benefit the public and which normally receives more than one-third of its

8-37 support each year from private or public gifts, grants, contributions or

8-38 membership fees.

8-39 Sec. 16. 1. A nonprofit hospital, medical or dental service

8-40 corporation shall not enter into an agreement or transaction to:

8-41 (a) Sell its assets to;

8-42 (b) Transfer its assets to;

8-43 (c) Lease its assets to;

9-1 (d) Exchange its assets with the assets of;

9-2 (e) Provide an option with respect to;

9-3 (f) Convey its assets to;

9-4 (g) Give its assets to;

9-5 (h) Restructure itself as;

9-6 (i) Convert to;

9-7 (j) Merge with;

9-8 (k) Enter into a joint venture with;

9-9 (l) Enter into any other agreement or transaction to transfer control,

9-10 responsibility or governance of its assets, operations or business to; or

9-11 (m) Otherwise dispose of its assets to,

9-12 a for-profit corporation or entity, if a material amount of the assets,

9-13 operations or business of the nonprofit hospital, medical or dental service

9-14 corporation are involved in the agreement or transaction, unless it obtains

9-15 written approval or written conditional approval from the attorney

9-16 general.

9-17 2. A nonprofit hospital, medical or dental service corporation shall

9-18 not enter into an agreement or transaction set forth in subsection 1 that,

9-19 when combined with one or more transactions that occurred or occur

9-20 within 5 years before or after the agreement or transaction is closed, will

9-21 result in a change of governance, ownership or operational control of a

9-22 material amount of the assets, operations or business of the nonprofit

9-23 hospital, medical or dental service corporation to a for-profit corporation

9-24 or entity, unless it obtains written approval or conditional approval from

9-25 the attorney general.

9-26 Sec. 17. 1. To obtain approval of a proposed agreement or

9-27 transaction set forth in section 16 of this act, a nonprofit hospital, medical

9-28 or dental service corporation shall provide the attorney general with a

9-29 written request for approval. The written request must include:

9-30 (a) Proof that a majority of the board of directors of the nonprofit

9-31 hospital, medical or dental service corporation voted in favor of the

9-32 agreement or transaction;

9-33 (b) Proof that each member of the board of directors of the nonprofit

9-34 hospital, medical or dental service corporation received a copy of the

9-35 provisions of sections 14 to 28, inclusive, of this act and the complete

9-36 written request for approval to be provided to the attorney general

9-37 pursuant to this subsection before voting on whether to approve the

9-38 agreement or transaction; and

9-39 (c) Any other information requested by the attorney general.

9-40 2. After receiving all necessary information, the attorney general

9-41 shall notify the nonprofit hospital, medical or dental service corporation

9-42 that its written request for approval of an agreement or transaction is

9-43 complete.

10-1 3. Except as otherwise provided in this subsection, not later than 90

10-2 days after notifying a nonprofit hospital, medical or dental service

10-3 corporation that its request for approval of an agreement or transaction is

10-4 complete, the attorney general shall notify the nonprofit hospital, medical

10-5 or dental service corporation in writing whether or not the request for

10-6 approval has been granted. If the attorney general cannot make a

10-7 determination concerning an agreement or transaction within 90 days, he

10-8 may extend the period for not more than 60 days by giving notice to the

10-9 nonprofit hospital, medical or dental service corporation.

10-10 4. Except as otherwise provided in subsection 5, the attorney general

10-11 shall approve an agreement or transaction if he determines that the

10-12 provisions of sections 14 to 27, inclusive, of this act have been satisfied. If

10-13 the attorney general determines that the provisions of sections 14 to 27,

10-14 inclusive, of this act have not been satisfied, he shall:

10-15 (a) Notify the nonprofit hospital, medical or dental service corporation

10-16 that the request for approval has been denied and provide the reasons for

10-17 not approving the agreement or transaction; or

10-18 (b) Notify the nonprofit hospital, medical or dental service corporation

10-19 that the request for approval has been conditionally approved, the

10-20 conditions that must be satisfied for the agreement or transaction to be

10-21 fully approved and the date by which such conditions must be satisfied.

10-22 5. The attorney general may deny a request for approval if any party

10-23 to the agreement or transaction fails to provide information in a timely

10-24 manner to the attorney general after being requested to provide such

10-25 information.

10-26 6. If the terms or conditions of a proposed agreement or transaction

10-27 for which a written request for approval has been provided to the attorney

10-28 general pursuant to subsection 1 are materially changed, the nonprofit

10-29 hospital, medical or dental service corporation must provide a new written

10-30 request for approval in the manner set forth in subsection 1.

10-31 7. Any person who is aggrieved by a final decision of the attorney

10-32 general made pursuant to this section, including, without limitation, a

10-33 consumer of health care or community group that represents the citizens

10-34 of this state, may petition for judicial review in the manner provided in

10-35 chapter 233B of NRS.

10-36 Sec. 18. 1. Any agreement or transaction entered into in violation

10-37 of section 16 of this act is void.

10-38 2. Each member of the governing board or the chief financial officer

10-39 of a party to an agreement or transaction entered into in violation of

10-40 section 16 of this act is liable for a civil penalty not to exceed $1,000,000

10-41 for each violation, which may be recovered in a civil action brought in the

10-42 name of the State of Nevada by the attorney general in a court of

10-43 competent jurisdiction.

11-1 3. Each member of the governing board or the chief financial officer

11-2 of a party to an agreement or transaction set forth in section 16 of this act

11-3 who intentionally manipulates the full fair market value of the nonprofit

11-4 hospital, medical or dental service corporation in a manner that causes

11-5 the full fair market value of the nonprofit hospital, medical or dental

11-6 service corporation to decrease is personally liable for a civil penalty not

11-7 to exceed $1,000,000 for each violation, which may be recovered in a civil

11-8 action brought in the name of the State of Nevada by the attorney general

11-9 in a court of competent jurisdiction.

11-10 4. A civil penalty imposed pursuant to this section is in addition to,

11-11 and not exclusive of, any other available remedy or penalty for a violation

11-12 of this section.

11-13 Sec. 19. 1. Not later than 5 working days after receiving

11-14 notification from the attorney general pursuant to section 17 of this act

11-15 that a written request for approval of an agreement or transaction is

11-16 complete, a nonprofit hospital, medical or dental service corporation

11-17 shall:

11-18 (a) Provide public notice of the proposed agreement or transaction in a

11-19 form approved by the attorney general by publication once each week for

11-20 3 consecutive weeks in at least one newspaper of general circulation in

11-21 each area of this state where the nonprofit hospital, medical or dental

11-22 service corporation provides services; and

11-23 (b) Provide notice of the proposed agreement or transaction by mailing

11-24 notice in a form approved by the attorney general to all interested persons

11-25 of whom the nonprofit hospital, medical or dental service corporation is

11-26 aware, including, without limitation, its subscribers and insureds.

11-27 2. Not later than 10 working days after receiving a completed written

11-28 request from a nonprofit hospital, medical or dental service corporation

11-29 pursuant to section 17 of this act, the attorney general shall mail written

11-30 notice of the proposed agreement or transaction to all persons who have

11-31 requested in writing to receive notice of all written requests for approval

11-32 filed pursuant to section 17 of this act.

11-33 3. The attorney general may charge any party to the proposed

11-34 agreement or transaction for any costs incurred in complying with the

11-35 provisions of this section concerning providing notice, holding public

11-36 hearings and providing records to the public.

11-37 Sec. 20. 1. Not later than 45 days after receiving a completed

11-38 written request for approval from a nonprofit hospital, medical or dental

11-39 service corporation pursuant to section 17 of this act, the attorney general

11-40 shall hold at least one public hearing in each area of this state where the

11-41 nonprofit hospital, medical or dental service corporation provides

11-42 services. To determine the number of public hearings to hold in each

11-43 area, the attorney general shall consider the number of persons who

12-1 reside in each area and the nature and value of the proposed agreement

12-2 or transaction to ensure that the persons who will be affected by the

12-3 agreement or transaction have an opportunity to provide information to

12-4 the attorney general concerning the agreement or transaction.

12-5 2. At each public hearing held pursuant to this section, the attorney

12-6 general shall obtain comments from persons who will be affected by the

12-7 agreement or transaction concerning the potential risks and benefits of

12-8 the agreement or transaction. Any person may file a written comment or

12-9 exhibit to be distributed at or appear and make comments at a public

12-10 hearing held pursuant to this section. Each party to the proposed

12-11 agreement or transaction must have at least one representative present at

12-12 each public hearing held pursuant to this section.

12-13 3. At least 21 days before each public hearing, the attorney general

12-14 shall provide notice of the time and place of the hearing:

12-15 (a) By publication in at least one newspaper of general circulation in

12-16 the area where the hearing will be held;

12-17 (b) By mailing written notice to the board of county commissioners of

12-18 the county where the hearing will be held; and

12-19 (c) By mailing notice to all other interested persons of whom the

12-20 attorney general is aware, including, without limitation, other nonprofit

12-21 hospital, medical or dental service corporations and the subscribers and

12-22 insureds of the nonprofit hospital, medical or dental service corporation.

12-23 4. The attorney general shall:

12-24 (a) Prepare and maintain a written summary of all written and oral

12-25 comments made in preparation for each public hearing and made at each

12-26 public hearing held pursuant to this section, including, without limitation,

12-27 all questions asked by persons at the hearing;

12-28 (b) Require a response to each question asked at such a hearing from

12-29 an appropriate party to the proposed agreement or transaction and

12-30 include such responses in the summary prepared pursuant to this

12-31 subsection;

12-32 (c) Maintain the summary prepared pursuant to this subsection in the

12-33 office of the attorney general and file the summary with the governing

12-34 authority of each public library in each area of this state where the

12-35 nonprofit hospital, medical or dental service corporation provides

12-36 services; and

12-37 (d) Make copies of the summary prepared pursuant to this subsection

12-38 available free of charge to any person who provides a written request to

12-39 the attorney general.

12-40 5. Records in the possession of the attorney general concerning a

12-41 proposed agreement or transaction are public records and must be open

12-42 to public inspection free of charge at the office of the attorney general

12-43 and the office of the nonprofit hospital, medical or dental service

13-1 corporation that is proposing the agreement or transaction during regular

13-2 business hours.

13-3 6. The attorney general may charge any party to the proposed

13-4 agreement or transaction for any costs incurred in complying with the

13-5 provisions of subsections 1, 2, 3 and 5 concerning providing notice,

13-6 holding public hearings and providing records to the public.

13-7 Sec. 21. 1. The terms and conditions of an agreement or

13-8 transaction set forth in section 16 of this act must be fair and reasonable

13-9 to residents of this state, including, without limitation, recipients of health

13-10 care services, subscribers or policyholders of the nonprofit hospital,

13-11 medical or dental service corporation that is proposing the agreement or

13-12 transaction and the nonprofit hospital, medical or dental service

13-13 corporation that is proposing the agreement or transaction.

13-14 2. An agreement or transaction set forth in section 16 of this act must

13-15 be in the public interest. An agreement or transaction will be deemed to

13-16 be in the public interest only if the nonprofit hospital, medical or dental

13-17 service corporation that is proposing the agreement or transaction has

13-18 taken the appropriate steps to safeguard the value of its assets that are

13-19 required to be placed in a charitable trust pursuant to section 22 of this

13-20 act and to ensure that any proceeds from the agreement or transaction

13-21 are irrevocably dedicated to charitable health care purposes.

13-22 3. An agreement or transaction set forth in section 16 of this act must

13-23 not:

13-24 (a) Result in any benefit to a private person, including, without

13-25 limitation, a stock option, an agreement not to compete or any other

13-26 private benefit; or

13-27 (b) Have an adverse effect on the affordability of health care services

13-28 to persons who reside in each area where the nonprofit hospital, medical

13-29 or dental service corporation that is proposing the agreement or

13-30 transaction provides services or be likely to have such an effect.

13-31 4. A nonprofit hospital, medical or dental service corporation that is

13-32 proposing an agreement or transaction set forth in section 16 of this act

13-33 shall use due diligence in selecting the other persons involved in the

13-34 proposed agreement or transaction, and in negotiating the terms and

13-35 conditions of the agreement or transaction.

13-36 Sec. 22. 1. Except as otherwise provided in subsection 6, the parties

13-37 that are proposing to enter into an agreement or transaction set forth in

13-38 section 16 of this act shall, as part of the agreement or transaction,

13-39 establish a charitable trust which must receive assets in an amount equal

13-40 to the full fair market value of the nonprofit hospital, medical or dental

13-41 service corporation as determined by the attorney general pursuant to

13-42 subsection 2.

14-1 2. Except as otherwise provided in subsection 7, the attorney general

14-2 shall use an independent expert to determine the full fair market value of

14-3 the nonprofit hospital, medical or dental service corporation at the time

14-4 when the agreement or transaction is carried out, as if the nonprofit

14-5 hospital, medical or dental service corporation had outstanding voting

14-6 stock and as if 100 percent of its stock was freely transferable and

14-7 available for purchase without restriction. In determining the full fair

14-8 market value of the nonprofit hospital, medical or dental service

14-9 corporation, the attorney general shall consider all relevant factors,

14-10 including, without limitation, its market value, investment or earnings

14-11 value, value of the net assets, value of the goodwill, value of the trade

14-12 name and a control premium, if any.

14-13 3. The nonprofit hospital, medical or dental service corporation shall

14-14 conduct an independent valuation of its full fair market value. The

14-15 attorney general may use an independent expert to review the valuation

14-16 conducted by the nonprofit hospital, medical or dental service

14-17 corporation.

14-18 4. A party to the proposed agreement or transaction shall not

14-19 manipulate the full fair market value of the nonprofit hospital, medical or

14-20 dental service corporation in a manner that causes the full fair market

14-21 value of the nonprofit hospital, medical or dental service corporation to

14-22 decrease.

14-23 5. All or a portion of the consideration conveyed to the charitable

14-24 trust may consist of stock in the for-profit corporation or entity.

14-25 6. Except as otherwise provided in subsection 7, if the nonprofit

14-26 hospital, medical or dental service corporation continues to conduct

14-27 business or has conducted business in another state, the attorney general

14-28 shall determine the full fair market value of the nonprofit hospital,

14-29 medical or dental service corporation that is attributable to the business

14-30 conducted in the State of Nevada separate from the full fair market value

14-31 of the nonprofit hospital, medical or dental service corporation

14-32 attributable to business conducted by the nonprofit hospital, medical or

14-33 dental service corporation in other states. The charitable trust required to

14-34 be established in this state pursuant to this section must have assets in an

14-35 amount equal to the full fair market value of the nonprofit hospital,

14-36 medical or dental service corporation attributable to business it has

14-37 conducted in the State of Nevada at the time the agreement or transaction

14-38 is entered into, as determined by the attorney general in the manner set

14-39 forth in this section.

14-40 7. The attorney general may rely on an independent valuation of the

14-41 full fair market value of the nonprofit hospital, medical or dental service

14-42 corporation or an independent valuation of the full fair market value of

14-43 the nonprofit hospital, medical or dental service corporation that is

15-1 attributable to the business conducted in the State of Nevada that was

15-2 performed by an agency or officer of another state if the attorney general

15-3 determines that the valuation was conducted in a reliable manner.

15-4 Sec. 23. 1. The charitable assets of a charitable trust established

15-5 pursuant to section 22 of this act must be distributed to a tax-exempt

15-6 charitable organization that:

15-7 (a) Is recognized as exempt pursuant to section 501(c)(3) or 501(c)(4)

15-8 of the Internal Revenue Code of 1986, future amendments to that section

15-9 and the corresponding provisions of future internal revenue laws; and

15-10 (b) Complies with the provisions of sections 4941 to 4945, inclusive, of

15-11 the Internal Revenue Code of 1986, future amendments to those sections

15-12 and the corresponding provisions of future internal revenue laws.

15-13 2. The charitable mission of and grants awarded by a charitable

15-14 organization that receives charitable assets pursuant to this section must

15-15 primarily serve the necessary health care needs of this state which are not

15-16 currently being met, including, without limitation, serving the medically

15-17 uninsured and underserved persons in this state and focusing on

15-18 promoting access to health care services, improving the quality of health

15-19 care services provided to persons in this state and improving the quality

15-20 and availability of preventative health care services to persons in this

15-21 state.

15-22 3. A charitable organization that receives charitable assets pursuant

15-23 to this section must provide assistance to persons in the areas of this state

15-24 where the nonprofit hospital, medical or dental service corporation

15-25 previously provided services. Its governing board must reflect the diversity

15-26 of the communities in which it is providing assistance.

15-27 Sec. 24. 1. A charitable organization that receives charitable assets

15-28 pursuant to section 23 of this act shall provide the attorney general with

15-29 an annual report concerning its administration of the charitable assets it

15-30 receives, including, without limitation, its grant-making and other

15-31 charitable activities. The annual report is a public record and must be

15-32 open to public inspection free of charge at the office of the attorney

15-33 general and the office of the charitable organization during regular

15-34 business hours.

15-35 2. A charitable organization that receives charitable assets pursuant

15-36 to section 23 of this act shall establish an advisory board that includes,

15-37 without limitation, providers of health care and citizens, to advise the

15-38 charitable organization concerning the health care needs of persons in

15-39 this state.

15-40 3. A charitable organization that receives charitable assets pursuant

15-41 to section 23 of this act, and all of its directors, officers and members of

15-42 its staff must be independent of the for-profit corporation or entity and its

16-1 affiliates with whom the nonprofit hospital, medical or dental service

16-2 corporation is proposing to enter into an agreement or transaction.

16-3 4. A director, officer or member of the staff of the nonprofit hospital,

16-4 medical or dental service corporation that is proposing the agreement or

16-5 transaction must not be a director, officer or member of the staff of a

16-6 charitable organization that receives charitable assets pursuant to section

16-7 23 of this act.

16-8 5. No director, officer or member of the staff of the nonprofit

16-9 hospital, medical or dental service corporation that is proposing the

16-10 agreement or transaction, or director, officer or member of the staff of a

16-11 charitable organization that receives charitable assets pursuant to section

16-12 23 of this act may benefit directly or indirectly from the proposed

16-13 agreement or transaction.

16-14 6. A charitable organization that receives charitable assets pursuant

16-15 to section 23 of this act shall establish a procedure for avoiding conflicts

16-16 of interest and for ensuring that the charitable assets are not distributed

16-17 in a manner which will benefit the for-profit corporation or entity with

16-18 whom the nonprofit hospital, medical or dental service corporation is

16-19 proposing to enter into the agreement or transaction, or the board of

16-20 directors or other management of the for-profit corporation or entity.

16-21 7. The attorney general may oversee and monitor the activities

16-22 carried out by a charitable organization that receives charitable assets

16-23 pursuant to section 23 of this act.

16-24 Sec. 25. 1. The attorney general may:

16-25 (a) Advise, receive advice from, consult and cooperate with other

16-26 agencies of this state, the Federal Government, agencies of other states,

16-27 interstate agencies and with other persons to carry out the provisions of

16-28 sections 14 to 27, inclusive, of this act;

16-29 (b) Adopt such regulations as are necessary to carry out the provisions

16-30 of sections 14 to 27, inclusive, of this act;

16-31 (c) Contract with an agency of this state to assist the attorney general

16-32 in carrying out the provisions of sections 14 to 27, inclusive, of this act;

16-33 and

16-34 (d) Contract with one or more consultants or experts to assist in the

16-35 review of a proposed agreement or transaction pursuant to the provisions

16-36 of sections 14 to 27, inclusive, of this act, including, without limitation,

16-37 establishing the full fair market value of the nonprofit hospital, medical

16-38 or dental service corporation that is proposing the agreement or

16-39 transaction.

16-40 2. The total costs incurred by the attorney general through contracts

16-41 entered into for obtaining assistance in reviewing the proposed agreement

16-42 or transaction must be reasonable and necessary.

17-1 3. The attorney general may require the parties involved in the

17-2 conversion to enter into an agreement, on terms established by the

17-3 attorney general, to pay for any costs incurred by the attorney general

17-4 pursuant to paragraph (d) of subsection 1. Such an agreement may

17-5 include, without limitation:

17-6 (a) Requiring the parties involved in the conversion to make a cash

17-7 deposit with an escrow agent in a manner approved by the attorney

17-8 general, and authorizing the attorney general to withdraw money from

17-9 the escrow account to cover any costs incurred pursuant to paragraph (d)

17-10 of subsection 1;

17-11 (b) Requiring the parties to pay the attorney general an amount of

17-12 money in advance to cover the expected costs that will be incurred

17-13 pursuant to paragraph (d) of subsection 1;

17-14 (c) Requiring the parties to make monthly payments to the attorney

17-15 general for the costs incurred by the attorney general pursuant to

17-16 paragraph (d) of subsection 1; or

17-17 (d) Any combination thereof.

17-18 Sec. 26. In carrying out the duties set forth in sections 14 to 27,

17-19 inclusive, of this act, the attorney general may:

17-20 1. Issue subpoenas requiring the attendance and testimony of

17-21 witnesses and the production of reports, papers, documents and other

17-22 evidence which he deems necessary;

17-23 2. Administer oaths; and

17-24 3. Compel a person to subscribe to his testimony after it has been

17-25 correctly reduced to writing.

17-26 Sec. 27. Each nonprofit hospital, medical or dental service

17-27 corporation that enters into an agreement or a transaction set forth in

17-28 section 16 of this act and that continues to conduct business as a

17-29 nonprofit hospital, medical or dental service corporation after the

17-30 agreement or transaction has been carried out shall submit an annual

17-31 report to the attorney general describing the manner in which it continues

17-32 to satisfy any obligation it has to the public. The attorney general may

17-33 oversee the nonprofit hospital, medical or dental service corporation to

17-34 ensure that it satisfies any such obligation to the public.

17-35 Sec. 28. The commissioner shall not issue or renew a certificate of

17-36 authority to any corporation proposing to establish, maintain or operate a

17-37 nonprofit hospital, medical or dental service plan if the corporation has

17-38 entered into an agreement or transaction in violation of section 16 of this

17-39 act.

17-40 Sec. 29. NRS 695B.320 is hereby amended to read as follows:

17-41 695B.320 Nonprofit hospital and medical or dental service corporations

17-43 chapters 679A and 679B of NRS, NRS 686A.010 to 686A.315, inclusive,

18-1 687B.010 to 687B.040, inclusive, 687B.070 to 687B.140, inclusive,

18-2 687B.150, 687B.160, 687B.180, 687B.200 to 687B.255, inclusive,

18-3 687B.270, 687B.310 to 687B.380, inclusive, 687B.410, 687B.420,

18-4 687B.430, and chapters 692C and 696B of NRS, and sections 3 to 8,

18-5 inclusive, of this act to the extent applicable and not in conflict with the

18-6 express provisions of this chapter.

18-7 Sec. 30. NRS 695C.055 is hereby amended to read as follows:

18-8 695C.055 1. The provisions of NRS 449.465, 679B.158, subsections

18-14 must be replaced by "maintenance organization."

18-15 Sec. 31. NRS 695F.090 is hereby amended to read as follows:

18-16 695F.090 Prepaid limited health service organizations are subject to the

18-40 12. Sections 3 to 8, inclusive, of this act.

19-1 Sec. 32. 1. This section and sections 1 to 9, inclusive, and 11 to 31,

19-2 inclusive, of this act become effective upon passage and approval.

19-3 2. Section 10 of this act becomes effective at 12:02 a.m. on July 1,

19-4 1999.