Senate Bill No. 28–Senator Amodei
Prefiled January 19, 2001
____________
Referred to Committee on Commerce and Labor
SUMMARY—Authorizes formation of associations of
self-insured private employers to provide health coverage. (BDR 57‑590)
FISCAL NOTE: Effect on Local Government: No.
~
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).
AN ACT relating to health insurance; providing in skeleton form for the formation of
associations of self-insured private employers to provide health coverage;
imposing certain requirements upon such an association and its board of
trustees; prohibiting certain acts without a solicitor’s permit issued by the
commissioner of insurance; authorizing the commissioner of insurance to impose
an administrative fine for certain violations; imposing certain requirements
upon a third-party administrator for such an association; providing a penalty;
and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section 1. Chapter 689C of NRS is hereby amended by
adding thereto
1-2 the provisions set forth as
sections 2 to 42, inclusive, of this act.
1-3 Sec. 2. As used in sections 2
to 42, inclusive, of this act, unless the
1-4 context otherwise requires, the words and terms defined in sections
3 to
1-5 6, inclusive, of this act have the meanings ascribed to them in
those
1-6 sections.
1-7 Sec. 3. “Association of
self-insured private employers” means a
1-8 nonprofit, unincorporated association composed of five or more
private
1-9 employers that has been issued a certificate by the commissioner
and is
1-10 subject to the provisions of sections 2 to 42, inclusive, of this
act.
1-11 Sec. 4. “Association’s
administrator” means a person who is
1-12 employed by or has contracted with the board of trustees of an
1-13 association of self-insured private employers to carry out the
policies of
1-14 the board of trustees and to be responsible for the daily operation
of the
1-15 association.
2-1 Sec. 5. “Tangible net worth”
means all the assets of an association
2-2 of self-insured private employers or of a member of such an
association
2-3 except:
2-4 1. Accounts receivable, if they are factored or
collateralized.
2-5 2. An inventory, except one held for resale and
not collateralized.
2-6 3. A prepaid expense.
2-7 4. An unqualified investment.
2-8 5. An allocated bond fund.
2-9 6. An investment in an affiliate.
2-10 7. A restricted fund.
2-11 8. A reserve.
2-12 9. A security cost, such as a capitalized bond
cost.
2-13 10. A cash equivalent, unless it is described in
the footnotes for the
2-14 balance sheet by item, and for investments, by duration and nature.
A
2-15 cash flow statement is not a sufficient description.
2-16 11. A contingency or commitment, including any
estimated cost.
2-17 12. Any book adjustment caused by a change in an
accounting policy
2-18 or a restatement.
2-19 13. Goodwill or excess cost over the fair market
value of assets.
2-20 14. Any other items listed in the assets that are
deemed unacceptable
2-21 by the commissioner because they cannot be justified or because
they do
2-22 not directly support the ability of the association or the member
to pay a
2-23 claim.
2-24 Sec. 6. “Third-party
administrator” means a person who is hired by
2-25 an association of self-insured private employers to provide
administrative
2-26 services for the association of self-insured private employers and
to
2-27 manage claims. The term does not include an insurance company.
2-28 Sec. 7. 1. An association of self-insured private
employers may
2-29 provide health coverage through a trust fund and, where necessary,
2-30 deduct contributions to the maintenance of the fund from the
2-31 compensation of officers and employees and pay the deductions into
the
2-32 fund.
2-33 2. The money must be deposited in a state or
national bank or credit
2-34 union authorized to transact business in this state.
2-35 3. Any independent administrator of a fund
created pursuant to this
2-36 section is subject to the licensing requirements of chapter 683A of
NRS.
2-37 4. Any contract with an independent
administrator must be approved
2-38 by the commissioner as to the reasonableness of administrative
charges
2-39 in relation to contributions collected and benefits provided.
2-40 5. The provisions of NRS 689B.030 to 689B.050,
inclusive, apply to
2-41 coverage provided pursuant to this section.
2-42 Sec. 8. 1. A group of five or more employers may not act
as an
2-43 association of
self-insured private employers unless:
2-44 (a) Each member of the group is a member or
associate member of a
2-45 bona fide trade
association, as determined by the commissioner, which:
2-46 (1)
Is incorporated in this state; and
2-47 (2)
Has been in existence for at least 5 years; and
2-48 (b)
The association of self-insured private employers has been issued
2-49 a certificate to act as such an
association by the commissioner.
3-1 2. An
association of private employers that wishes to be issued a
3-2 certificate must
file with the commissioner an application for
3-3 certification.
3-4 3. The
application must include:
3-5 (a)
The name of the association.
3-6 (b) The address of:
3-7 (1) The principal office of the
association; and
3-8 (2) The location where the books and
records of the association will
3-9 be maintained.
3-10 (c)
The date on which the association was organized.
3-11 (d) The name and address of each member of the
association.
3-12 (e) The names of the initial members of the
board of trustees and the
3-13 name of the
initial association’s administrator.
3-14 (f) Such other information as the commissioner
may require.
3-15 4. The
application must be accompanied by:
3-16 (a) A nonrefundable filing fee of $1,000.
3-17 (b) Proof of compliance with section 9 of this
act.
3-18 (c) Proof that the association or its
third-party administrator is
3-19 licensed or
otherwise authorized to conduct business in this state
3-20 pursuant to Title
57 of NRS.
3-21 (d) A copy of the agreements entered into with
the association’s
3-22 administrator and
a third-party administrator.
3-23 (e)
A copy of the bylaws of the association.
3-24 (f)
A copy of an agreement jointly and severally binding the
3-25 association and each member of the
association to secure the provision
3-26 of health coverage pursuant to the
provisions of sections 2 to 42,
3-27 inclusive, of this act.
3-28 (g) A pro forma financial statement prepared
by an independent
3-29 certified public
accountant in accordance with generally accepted
3-30 accounting
principles that shows the financial ability of the association
3-31 to provide health
coverage pursuant to the provisions of sections 2 to 42,
3-32 inclusive, of
this act.
3-33 (h) A financial statement reviewed and
prepared by an independent
3-34 certified public
accountant for each proposed member of the association
3-35 or evidence of
the ability of the association or its proposed members to
3-36 provide a
solvency bond pursuant to subsection 3 of section 9 of this act.
3-37 (i) Proof that each member of the association
will make the initial
3-38 payment to the
association required pursuant to section 29 of this act on
3-39 a date specified
by the commissioner. The payment shall be deemed to be
3-40 a part of the
assessment required to be paid by each member for the first
3-41 year of
self-insurance if certification is issued to the association.
3-42 5.
Any financial information relating to a
member of an association
3-43 received by the commissioner pursuant to
the provisions of this section is
3-44 confidential and must not be disclosed.
3-45 6.
For the purposes of this section,
“associate member of a bona fide
3-46 trade association” means a supplier whose
business, as determined by the
3-47 commissioner:
3-48 (a) Is limited to a specific industry; and
4-1 (b) Primarily involves providing a product or
service that is directly
4-2 used or consumed
by substantially all the members of the trade
4-3 association or
bears a direct relationship to the business of the members
4-4 of the trade
association.
4-5 Sec. 9. 1. An association of
self-insured private employers shall:
4-6 (a) Execute an indemnity agreement jointly and
severally binding the
4-7 association and
each member of the association to secure the provision
4-8 of health
coverage pursuant to sections 2 to 42, inclusive, of this act. The
4-9 indemnity
agreement must be in a form prescribed by the commissioner.
4-10 An association
may add provisions to the indemnity agreement if the
4-11 provisions are
first approved by the commissioner.
4-12 (b) Except as otherwise provided in this
subsection, maintain a policy
4-13 of specific and
aggregate excess insurance in a form and amount
4-14 required by the
commissioner. The excess insurance must be written by
4-15 an insurer
approved by the commissioner. To determine the amount of
4-16 excess insurance
required, the commissioner shall consider:
4-17 (1) The number of members in the
association;
4-18 (2)
The types of services provided by the members of the
4-19 association;
4-20 (3) The number of years the association has
been in existence; and
4-21 (4) Such other information as the
commissioner deems
necessary.
4-22 This paragraph does not prohibit an
association from purchasing
4-23 secondary excess insurance in addition to
the excess insurance required
4-24 by this paragraph.
4-25 (c) Collect an annual assessment from each
member of the
4-26 association in an
aggregate amount of at least $100,000 or in an
4-27 aggregate amount
which the commissioner determines is satisfactory
4-28 based on an
annual review conducted by the commissioner of the
4-29 actuarial
solvency of the association.
4-30 (d) Except as otherwise provided in paragraph
(e), deposit as security
4-31 with the
commissioner a bond executed by the association as principal,
4-32 and by a licensed
surety, payable to the State of Nevada, and conditioned
4-33 upon the
provision of health coverage to their employees. The bond must
4-34 be in an amount
determined by the commissioner to be reasonably
4-35 sufficient to
ensure payment of obligations related to the provision of
4-36 health coverage,
but in no event may it be less than $100,000.
4-37 (e) In lieu of a bond, deposit with the
commissioner a like amount of
4-38 lawful money of
the United States or any other form of security
4-39 authorized by NRS
100.065. If security is provided in the form of a
4-40 savings
certificate, certificate of deposit or investment certificate, the
4-41 certificate must
state that the amount is unavailable for withdrawal
4-42 except upon order
of the commissioner.
4-43 2.
Except as otherwise provided in
subsection 3, in addition to
4-44 complying with the requirements of
subsection 1, an association of self-
4-45 insured private employers shall maintain
a combined tangible net worth
4-46 of all members in the association of at
least $1,000,000.
4-47 3. In
lieu of complying with the requirements of subsection 2, the
4-48 association’s
administrator shall ensure that a solvency bond, in a form
5-1 prescribed by the
commissioner and in an aggregate amount of at least
5-2 $1,000,000, is
deposited with the commissioner by the association or
5-3 members of the
association on behalf of the association.
5-4 4.
The association’s administrator shall
deposit with the
5-5 commissioner a bond executed by the
association’s administrator as
5-6 principal, and by a licensed surety,
payable to the State of Nevada, and
5-7 conditioned upon the faithful performance
of his duties. The bond must
5-8 be in an amount determined by the
commissioner.
5-9 5. Any
third-party administrator providing claims services for the
5-10 association shall
deposit with the commissioner a bond executed by the
5-11 third-party administrator
as principal, and by a licensed surety, payable
5-12 to the State of
Nevada, and conditioned upon the faithful performance of
5-13 its duties. The
bond must be in an amount determined by the
5-14 commissioner.
5-15 6.
The commissioner may increase or
decrease the amount of any
5-16 bond or money required to be deposited by
this section in accordance
5-17 with chapter 681B of NRS and his
regulations for loss reserves in health
5-18 insurance. If the commissioner requires
an association, association’s
5-19 administrator or third-party
administrator to increase its deposit, the
5-20 commissioner may specify the form of the
additional security. The
5-21 association, association’s administrator
or third-party administrator shall
5-22 comply with such a requirement within 60
days after receiving notice
5-23 from the commissioner.
5-24 7. The
account for health coverage for associations of self-insured
5-25 private employers
is hereby created in the state agency fund for bonds.
5-26 All money
received by the commissioner pursuant to this section must be
5-27 deposited with
the state treasurer to the credit of the account. All claims
5-28 against this
account must be paid as other claims against the state are
5-29 paid.
5-30 Sec. 10. A surety or bonding
company shall not furnish a bond or
5-31 any other form of security required by
the provisions of sections 2 to 42,
5-32 inclusive, of this act for an association
of self-insured private employers
5-33 or a member of such an association unless
the surety or bonding
5-34 company holds a certificate of authority
issued by the commissioner.
5-35 Sec. 11. 1. The commissioner
shall grant or deny an application
5-36 for certification as an association of
self-insured private employers
5-37 within 60 days after receiving the
application. If the application is
5-38 materially incomplete or does not comply
with the applicable provisions
5-39 of the law, the commissioner shall notify
the applicant of the additional
5-40 information or changes required. Under
such circumstances, if the
5-41 commissioner is unable to act upon the
application within this 60‑day
5-42 period, he may extend the period for
granting or denying the application,
5-43 but for not longer than an additional 90
days.
5-44 2. Upon
determining that an association is qualified as an
5-45 association of
self-insured private employers, the commissioner shall
5-46 issue a
certificate to that effect to the association and the association’s
5-47 administrator. No
certificate may be issued to an association that, within
5-48 the 2 years
immediately preceding its application, has had its certification
6-1 as an association
of self-insured private employers involuntarily
6-2 withdrawn by the
commissioner.
6-3 3.
A certificate issued pursuant to this
section must include, without
6-4 limitation:
6-5 (a) The name of the association;
6-6 (b)
The name of each employer that the commissioner determines is a
6-7 member of the association at the time of
the issuance of the certificate;
6-8 (c) An identification number assigned to the
association by the
6-9 commissioner; and
6-10 (d) The date on which the certificate was
issued.
6-11 4. A
certificate issued pursuant to this section remains in effect until
6-12 withdrawn by the
commissioner or canceled at the request of the
6-13 association.
Coverage for an association granted a certificate becomes
6-14 effective on the
date of certification or the date specified in the
6-15 certificate, as
appropriate.
6-16 5. The
commissioner shall not grant a request to cancel a certificate
6-17 unless the
association has insured or reinsured all incurred obligations
6-18 with an insurer
authorized to do business in this state pursuant to an
6-19 agreement filed
with and approved by the commissioner. The agreement
6-20 must include
coverage for actual claims and claims filed with the
6-21 association but
not reported, and the expenses associated with those
6-22 claims.
6-23 Sec. 12. 1. An association
certified as an association of self-
6-24 insured private
employers directly assumes the responsibility for
6-25 providing health
coverage to the employees of the members of the
6-26 association and
their beneficiaries pursuant to sections 2 to 42, inclusive,
6-27 of this act.
6-28 2. The
claims of employees and their beneficiaries while in the
6-29 employment of a
member of an association must be handled in the
6-30 manner provided
by sections 2 to 42, inclusive, of this act, and the
6-31 association is
subject to the regulations of the commissioner with respect
6-32 to payment of
those claims.
6-33 3. The
security deposited pursuant to section 9 of this act does not
6-34 relieve an
association from responsibility for the administration of claims
6-35 and the provision
of health coverage pursuant to sections 2 to 42,
6-36 inclusive, of
this act.
6-37 Sec. 13. 1. An association of
self-insured private employers must
6-38 be operated by a
board of trustees consisting of at least five members
6-39 whom the members
of the association elect for terms set forth in the
6-40 bylaws of the
association. At least two-thirds of the members of the board
6-41 of trustees must
be employees, officers or directors of the members of the
6-42 association. No
association’s administrator or third-party administrator
6-43 employed by the
association, or any owner, officer, employee or other
6-44 person affiliated
with the association’s administrator or third-party
6-45 administrator,
may serve as a member of the board of trustees. Each
6-46 member of the
board of trustees must be a resident of this state or an
6-47 officer of a
corporation authorized to do business in this state.
6-48 2.
The board of trustees of an association
shall:
7-1 (a) Ensure the prompt payment of claims
relating to the health
7-2 coverage provided
pursuant to sections 2 to 42, inclusive, of this act.
7-3 (b) Take such actions as are necessary to
protect the assets of the
7-4 association.
7-5 (c) Employ full time an association’s administrator
to carry out the
7-6 policies of the
board of trustees and perform such duties as the board
7-7 delegates to him.
An association’s administrator shall not perform any of
7-8 the duties
assigned to a third-party administrator.
7-9 (d) Employ a third-party administrator to
carry out the duties set forth
7-10 in section 41 of
this act.
7-11 (e) Employ an independent certified public
accountant to prepare the
7-12 statement of
financial condition required by section 25 of this act.
7-13 (f) Maintain minutes of its meetings and make
the minutes available
7-14 for inspection by
the commissioner.
7-15 3. The
board of trustees of an association shall not:
7-16 (a)
Extend credit to any member of the association for the payment of
7-17 the annual assessment for that member,
except pursuant to a payment
7-18 plan approved by the commissioner; or
7-19 (b)
Borrow any money from the association or in the name of the
7-20 association, except in the ordinary
course of its business, without the
7-21 prior approval of the commissioner.
7-22 Sec. 14. 1. The board of
trustees of an association of self-insured
7-23 private employers
is responsible for the money collected and disbursed by
7-24 the association.
7-25 2. The
board of trustees shall:
7-26 (a) Establish a claims account in a federally
insured financial
7-27 institution in
this state approved by the commissioner. Except as
7-28 otherwise
provided in subsection 3, at least 75 percent of the annual
7-29 assessment
collected by the association from its members must be
7-30 deposited in this
account to pay:
7-31 (1) Claims;
7-32 (2) Expenses related to those claims; and
7-33 (3) The costs associated with the
association’s policy of excess
7-34 insurance.
7-35 (b) Establish an administrative account in a
federally insured
7-36 financial
institution in this state approved by the commissioner. The
7-37 amount of the
annual assessment collected by the association that is not
7-38 deposited in its
claims account must be deposited in the administrative
7-39 account to pay
the administrative expenses of the association.
7-40 3. The
commissioner may authorize an association to deposit less
7-41 than 75 percent
of its annual assessment in its claims account if the
7-42 association
presents evidence satisfactory to the commissioner that:
7-43 (a) More than 25 percent of the association’s
annual assessment is
7-44 needed to
maintain its program for loss control; and
7-45 (b) The association’s policy of excess
insurance attaches at less than
7-46 75 percent.
7-47 4. The
board of trustees may invest the money of the association not
7-48 needed to pay the
obligations of the association pursuant to chapter 682A
7-49 of NRS.
8-1 5. The
commissioner shall review the accounts of an association
8-2 established
pursuant to this section at such times as he deems necessary
8-3 to ensure
compliance with the provisions of this section.
8-4 Sec. 15. 1. An association’s
administrator employed by an
8-5 association of
self-insured private employers, or an employee, officer or
8-6 director of an
association’s administrator, may not be an employee,
8-7 officer or
director of a third-party administrator employed by the
8-8 association or
have a direct or indirect financial interest in the third-
8-9 party
administrator of the association.
8-10 2. The
third-party administrator of an association of self-insured
8-11 private
employers, or an employee, officer or director of the third-party
8-12 administrator,
may not be an employee, officer or director of an
8-13 association’s
administrator employed by the association or have a direct
8-14 or indirect
financial interest in that association’s administrator.
8-15 3. Any
contract entered into by an association of self-insured private
8-16 employers and a
third-party administrator must include a provision
8-17 which states
that, unless the commissioner otherwise provides, the third-
8-18 party
administrator shall administer any claim or other obligation of the
8-19 association to
its conclusion during the period of the contract.
8-20 Sec. 16. 1. Except as
otherwise provided in this section, a person
8-21 shall not
advertise or offer for sale in this state any policies or
8-22 memberships, or
solicit or receive any money, subscriptions, applications,
8-23 premiums,
assessments, memberships or any other fee or charge in
8-24 connection with a
proposed association of self-insured private employers
8-25 unless he has
obtained a solicitor’s permit from the commissioner.
8-26 2. To
obtain a solicitor’s permit, a person must file a written
8-27 application with
the commissioner. The application must include:
8-28 (a) The name, type and purposes of the
association formed or
8-29 proposed to be
formed or financed;
8-30 (b) The name, residential address, business,
professional or
8-31 employment
experience for the preceding 10 years and qualifications of
8-32 each person
associated or to be associated as director, promoter,
8-33 manager, member
of the board or in any other similar capacity in the
8-34 association, or
in the formation of the proposed association or in the
8-35 proposed
financing, together with the fingerprints of each person so
8-36 associated or to
be associated, on forms furnished by the commissioner;
8-37 (c) A full disclosure of the terms of all
pertinent understandings and
8-38 agreements
existing or proposed among any persons or entities so
8-39 associated or to
be associated, and a copy of each such agreement;
8-40 (d) A copy of the articles of incorporation
and bylaws of a solicitor, if
8-41 incorporated;
8-42 (e) The plan according to which solicitations
are to be made and a
8-43 reasonably
detailed estimate of all administrative and sales expenses to
8-44 be incurred;
8-45 (f) A copy of any certificate proposed to be
offered, and a copy of any
8-46 proposed
application of any certificate proposed to be offered;
8-47 (g) A copy of any prospectus, offering
circular, advertising or sales
8-48 literature or
materials proposed to be used;
9-1 (h) Proof of an escrow account and agreement
for the deposit of all
9-2 money collected
during the formation of the association; and
9-3 (i) Such additional pertinent information as
the commissioner may
9-4 reasonably
require.
9-5 3. The
application must be accompanied by a fee of $500 for the
9-6 filing of the
application and for the issuance of the permit, if granted. A
9-7 solicitor must
submit this fee each year thereafter if he continues to
9-8 recruit new
members for an association.
9-9 4. A
person who violates subsection 1 is guilty of a category D felony
9-10 and shall be
punished as provided in NRS 193.130.
9-11 5. The
provisions of this section do not apply to:
9-12 (a) A bona fide trade association that has
been in existence for at least
9-13 5 years and
solicits members of its trade association; or
9-14 (b) A person who is employed by:
9-15 (1) Current members of an association; or
9-16 (2) Employers that are considering
membership in an
association,
9-17 whose primary
duties do not include solicitation of potential members of
9-18 the association.
9-19 Sec. 17. 1. After the filing
of an application for a solicitor’s permit,
9-20 the commissioner
shall promptly cause an investigation to be made of:
9-21 (a) The identity, character, reputation,
experience, financial standing
9-22 and motives of
the persons proposing to organize, promote or finance the
9-23 association of
self-insured private employers;
9-24 (b) The character, financial responsibility, management
experience
9-25 and business
qualifications of the officers, directors and managers of the
9-26 existing or
proposed association; and
9-27 (c)
Any other aspects of the solicitor, association or proposed
9-28 financing as the commissioner deems
advisable.
9-29 2. The
commissioner shall expeditiously examine an application for
9-30 a solicitor’s
permit and complete the investigation required pursuant to
9-31 subsection 1.
Except as otherwise provided in subsection 3, if the
9-32 commissioner
finds, after performing an examination and investigation,
9-33 that:
9-34 (a) The application is complete and the
applicable fee has been paid;
9-35 (b) The documents filed with the application
are proper in form; and
9-36 (c) The proposed financing is reasonable and
adequate in amount for
9-37 the purposes
intended and the applicant is otherwise entitled to the
9-38 permit,
9-39 the commissioner
shall issue a permit and assign a permit number to the
9-40 applicant.
9-41 3. If
the commissioner does not so find, or finds that:
9-42 (a) The applicant is not competent,
trustworthy, financially
9-43 responsible or of
good personal and business reputation;
9-44 (b) Any of the persons associated or to be
associated with the
9-45 association are
not of good reputation as to business affairs or financial
9-46 responsibility;
or
9-47 (c)
There is material variance, adverse to the applicant, as between
the information furnished by the applicant in connection with the
10-1 application and that determined by the
commissioner on
investigation,
10-2 the commissioner
shall give notice to the applicant that a permit will not
10-3 be granted,
stating the particulars of the grounds for the denial. The
10-4 commissioner
shall not refund the fee for the filing of the application.
10-5 Sec. 18. 1. The commissioner
may suspend or revoke a solicitor’s
10-6 permit if he
reasonably believes that:
10-7 (a) A violation of Title 57 of NRS or the
terms of the permit or any
10-8 proper order of
the commissioner has occurred; or
10-9 (b) A material misrepresentation in the
offering or sale of securities,
10-10 policies or
memberships pursuant to the permit has occurred.
10-11 2. If
the commissioner suspends or revokes a permit pursuant to
10-12 subsection 1, he
shall expeditiously conduct a hearing, giving the holder
10-13 of the permit a
reasonable opportunity to appear and be heard.
10-14 Sec. 19. 1. Any advertising
or written material that solicits
10-15 employers to join
an association of self-insured private employers must
10-16 contain the
permit number of the solicitor.
10-17 2. A
solicitor shall provide to the commissioner upon request a copy
10-18 of any document
relating to a solicitation which was prepared after the
10-19 solicitor filed
his application for a permit.
10-20 Sec. 20. 1. If an employer
wishes to become a member of an
10-21 association of
self-insured private employers, the employer must:
10-22 (a) Submit an application for membership to the
board of trustees or
10-23 third-party
administrator of the association; and
10-24 (b) Enter into an indemnity agreement as
required by section 9 of this
10-25 act.
10-26 2. The
membership of the applicant becomes effective when all
10-27 members of the
association have indicated their approval of the
10-28 application or on
a later date specified by the association. The
10-29 application for
membership and the action taken on the application must
10-30 be maintained as
permanent records of the board of trustees.
10-31 3. Each
member who is a member of an association during the 12
10-32 months
immediately following the formation of the association must have
10-33 a tangible net
worth of at least $200,000. Any employer who seeks to
10-34 become a member
of the association subsequently must meet the
10-35 requirement for
tangible net worth of at least $200,000 unless the
10-36 commissioner
adjusts the requirement for membership in the association
10-37 after conducting
an annual review of the actuarial solvency of the
10-38 association in
accordance with subsection 1 of section 9 of this act.
10-39 4. A
member of an association may terminate his membership at any
10-40 time. To
terminate his membership, a member must submit to the
10-41 association’s
administrator a notice of intent to withdraw from the
10-42 association at
least 120 days before the effective date of withdrawal. The
10-43 association’s
administrator shall, within 10 days after receipt of the
10-44 notice, notify
the commissioner of the employer’s intent to withdraw from
10-45 the association.
10-46 5. The
members of an association may cancel the membership of any
10-47 member of the
association in accordance with the bylaws of the
10-48 association.
11-1 6. The
association shall:
11-2 (a) Notify the commissioner of the termination
or cancellation of the
11-3 membership of any
member of the association within 10 days after the
11-4 termination or
cancellation; and
11-5 (b) At the expense of the member whose
membership is terminated or
11-6 canceled,
maintain coverage for that member for 30 days after notice is
11-7 given pursuant to
paragraph (a), unless the association first receives
11-8 notice from the
commissioner that the member has:
11-9 (1) Become a member of another association
of self-insured private
11-10 employers; or
11-11 (2) Become insured by an insurer.
11-12 7. If a
member of an association changes his name or form of
11-13 organization, the
member remains liable for any obligations incurred or
11-14 any
responsibilities imposed pursuant to sections 2 to 42, inclusive, of
11-15 this act under
his former name or form of organization.
11-16 8. An
association is liable for the payment of any obligations
11-17 required to be
paid by a member of the association pursuant to sections 2
11-18 to 42, inclusive,
of this act during his period of membership. The
11-19 insolvency or
bankruptcy of a member does not relieve the association of
11-20 liability for the
provision of health coverage.
11-21 Sec. 21. An association of self-insured private employers shall
notify
11-22 the commissioner
of any change in the information submitted in its
11-23 application for
certification or in the manner of its compliance with
11-24 section 9 of this
act not later than 30 days after the change.
11-25 Sec. 22. 1. The commissioner
may examine the books, records,
11-26 accounts and
assets of an association of self-insured private employers as
11-27 he deems
necessary to carry out the provisions of sections 2 to 42,
11-28 inclusive, of
this act.
11-29 2. The
expense of any examination conducted pursuant to this
11-30 section must be
paid by the association.
11-31 Sec. 23. An association of self-insured private employers shall be
11-32 deemed to have
appointed the commissioner as its resident agent to
11-33 receive any
initial legal process authorized by law to be served upon the
11-34 association for
as long as the association is obligated to provide health
11-35 coverage pursuant
to sections 2 to 42, inclusive, of this act.
11-36 Sec. 24. 1. An association of
self-insured private employers may
11-37 merge with
another association of self-insured private employers if:
11-38 (a) The members of the merging associations are
engaged in the same
11-39 or similar trade;
11-40 (b) The resulting association assumes in full
all obligations of the
11-41 merging
associations; and
11-42 (c)
The merger is approved by the commissioner.
11-43 2. The
commissioner shall conduct a hearing on the proposed
11-44 merger if any
member of the merging associations so requests. The
11-45 commissioner may
on his own motion conduct such a hearing.
11-46 Sec. 25. 1. An association of
self-insured private employers shall
11-47 file with the
commissioner an audited statement of financial condition
11-48 prepared by an
independent certified public accountant. The statement
11-49 must be filed on
or before April 1 of each year or, if the fiscal year of the
12-1 association does
not coincide with the calendar year, within 90 days after
12-2 the conclusion of
the association’s fiscal year, and contain information
12-3 for the previous
fiscal year.
12-4 2. The
statement required by subsection 1 must be in a form
12-5 prescribed by the
commissioner and include, without limitation:
12-6 (a) A statement of the reserves for:
12-7 (1) Actual claims and expenses;
12-8 (2) Claims filed with the association but
not reported, and the
12-9 expenses
associated with those claims;
12-10 (3) Assessments that are due, but not paid;
and
12-11 (4) Unpaid debts, which must be shown as
liabilities.
12-12 (b) An actuarial opinion regarding reserves
that is prepared by a
12-13 member of the
American Academy of Actuaries or another specialist in
12-14 loss reserves
identified in the annual statement adopted by the National
12-15 Association of
Insurance Commissioners. The actuarial opinion must
12-16 include a
statement of:
12-17 (1) Actual claims and the expenses associated
with those claims;
12-18 and
12-19 (2) Claims filed with the association but not
reported, and the
12-20 expenses
associated with those claims.
12-21 3. The
commissioner may adopt a uniform financial reporting system
12-22 for associations
of self-insured private employers to ensure the accurate
12-23 and complete
reporting of financial information.
12-24 4. The
commissioner may require the filing of such other reports as
12-25 he deems
necessary to carry out the provisions of this section.
12-26 Sec. 26. The annual assessment required to be paid by each member
12-27 of an association
of self-insured private employers must be calculated
12-28 pursuant to
regulations adopted by the commissioner.
12-29 Sec. 27. 1. The commissioner
shall cause to be conducted at least
12-30 annually an audit
of each association of self-insured private employers to
12-31 verify:
12-32 (a) The number of employees of each member of
the association;
12-33 (b) The assessment required to be paid by each
member of the
12-34 association; and
12-35 (c) Any other information the commissioner
determines is necessary.
12-36 2. The
audit required by this section must be conducted by an auditor
12-37 approved by the
commissioner.
12-38 3. A
report of the audit must be filed with the commissioner in a
12-39 form required by
the commissioner.
12-40 4. The
expenses of any audit conducted pursuant to this section must
12-41 be paid by the
association.
12-42 Sec. 28. 1. If the assets of
an association of self-insured private
12-43 employers exceed
the amount necessary for the association to:
12-44 (a) Pay its obligations and administrative
expenses;
12-45 (b) Carry reasonable reserves; and
12-46 (c) Provide for contingencies,
12-47 the board of
trustees of the association may, after obtaining the approval
12-48 of the
commissioner, declare and distribute dividends to the members of
12-49 the association.
13-1 2. Any
dividend declared pursuant to subsection 1 must be
13-2 distributed not
less than 12 months after the end of the fiscal year.
13-3 3. A
dividend may be paid only to those members who are members
13-4 of the
association for the entire fiscal year. The payment of a dividend
13-5 must not be
conditioned upon the member continuing his membership in
13-6 the association
after the fiscal year.
13-7 4. An
association shall give to each prospective member of the
13-8 association a
written description of its plan for distributing dividends
13-9 when the
prospective member applies for membership in the association.
13-10 Sec. 29. 1. Each association
of self-insured private employers shall
13-11 adopt a plan for
the payment of annual assessments by the members of
13-12 the association
which must be approved by the commissioner.
13-13 2. The
plan must include a requirement for:
13-14 (a) An initial payment, in advance, of a
portion of the annual
13-15 assessment due
from each member of the association. The initial
13-16 payment must be
in an amount equal to at least 25 percent of the
13-17 member’s annual
assessment.
13-18 (b) Payment of the balance of the annual
assessment due in quarterly
13-19 or monthly
installments.
13-20 Sec. 30. Each association of self-insured private employers shall
13-21 maintain:
13-22 1. Actuarially
appropriate loss reserves. Such reserves must include
13-23 reserves for:
13-24 (a) Actual claims and the expenses associated
with those claims; and
13-25 (b) Claims filed with the association but not
reported, and the
13-26 expenses
associated with those claims.
13-27 2. Reserves
for uncollected debts.
13-28 Sec. 31. 1. If the assets of
an association of self-insured private
13-29 employers are
insufficient to make certain the prompt payment of claims
13-30 relating to the
health coverage provided pursuant to sections 2 to 42,
13-31 inclusive, of
this act and to maintain the reserves required by section 30
13-32 of this act, the
association shall immediately notify the commissioner of
13-33 the deficiency
and:
13-34 (a) Transfer any surplus acquired from a
previous fiscal year to the
13-35 current fiscal
year to make up the deficiency;
13-36 (b)
Transfer money from its administrative account to its claims
13-37 account;
13-38 (c) Collect an additional assessment from its
members in an amount
13-39 required to make
up the deficiency; or
13-40 (d) Take any other action to make up the
deficiency which is approved
13-41 by the commissioner.
13-42 2. If
the association wishes to transfer any surplus from one fiscal
13-43 year to another,
the association must first notify the commissioner of the
13-44 transfer.
13-45 3. The
commissioner shall order the association to make up any
13-46 deficiency
pursuant to subsection 1 if the association fails to do so within
13-47 30 days after
notifying the commissioner of the deficiency. The
13-48 association shall
be deemed insolvent if it fails to:
14-1 (a) Collect an additional assessment from its
members within 30 days
14-2 after being
ordered to do so by the commissioner; or
14-3 (b) Make up the deficiency in any other manner
within 60 days after
14-4 being ordered to
do so by the commissioner.
14-5 Sec. 32. 1. The commissioner
may issue an order requiring an
14-6 association of
self-insured private employers or a member of the
14-7 association to
cease and desist from engaging in any act or practice
14-8 found to be in
violation of any provision of sections 2 to 42, inclusive, of
14-9 this act or any
regulation adopted pursuant to those sections.
14-10 2. If
the commissioner determines that an association or a member
14-11 of the
association has violated an order to cease and desist, the
14-12 commissioner may
impose an administrative fine of not more than
14-13 $10,000 for each
violation of the order, not to exceed an aggregate
14-14 amount of
$100,000, or withdraw the certificate of the association, or
14-15 both.
14-16 Sec. 33. 1. The commissioner
may impose an administrative fine
14-17 for each
violation of any provision of sections 2 to 42, inclusive, of this
14-18 act or any
regulation adopted pursuant to those sections. Except as
14-19 otherwise
provided in those sections, the amount of the fine may not
14-20 exceed $1,000 for
each violation or an aggregate amount of $10,000.
14-21 2. The
commissioner may withdraw the certificate of an association
14-22 of self-insured
private employers if:
14-23 (a) The certificate was obtained by fraud;
14-24 (b) The application for certification contained
a material
14-25 misrepresentation;
14-26 (c) The association is found to be insolvent;
14-27 (d)
The association fails to have five or more members;
14-28 (e)
The association fails to pay the costs of any examination or any
14-29 penalty, fee or assessment required by
the provisions of sections 2 to 42,
14-30 inclusive, of this act;
14-31 (f) The association fails to comply with any of
the provisions of
14-32 sections 2 to 42,
inclusive, of this act or any regulation adopted pursuant
14-33 to those
sections;
14-34 (g) The association fails to comply with any
order of the commissioner
14-35 within the time
prescribed by the provisions of sections 2 to 42, inclusive,
14-36 of this act or in
the order of the commissioner; or
14-37 (h) The association or its third-party administrator
misappropriates,
14-38 converts,
illegally withholds or refuses to pay any money to which a
14-39 person is
entitled and that was entrusted to the association in its fiduciary
14-40 capacity.
14-41 3. If
the commissioner withdraws the certification of an association
14-42 of self-insured
private employers, each employer who is a member of the
14-43 association
remains liable for his obligations incurred before and after
14-44 the order of
withdrawal.
14-45 Sec. 34. 1. Before any action
may be taken pursuant to subsection
14-46 2, the
commissioner shall arrange an informal meeting with an
14-47 association of
self-insured private employers to discuss and seek
14-48 correction of any
conduct which would be grounds for withdrawal of the
14-49 certificate of
the association.
15-1 2. Except
as otherwise provided in subsection 3, before the
15-2 commissioner may
withdraw the certificate of any association of self-
15-3 insured private
employers, the commissioner must give written notice to
15-4 the association
by certified mail that its certificate will be withdrawn 10
15-5 days after
receipt of the notice unless, within that time, the association
15-6 corrects the
conduct set forth in the notice as the reason for the
15-7 withdrawal or
submits a written request for a hearing to the
15-8 commissioner.
15-9 3. The
commissioner may grant additional time, not to exceed an
15-10 additional 120
days, before the withdrawal of the certificate of an
15-11 association if:
15-12 (a) The grounds for withdrawal of the
certificate of the association
15-13 are based on
paragraph (d) of subsection 2 of section 33 of this act; and
15-14 (b) The association is financially sound and
capable of fulfilling its
15-15 commitments.
15-16 4. If
the association requests a hearing:
15-17 (a) The commissioner shall set a date for a
hearing within 20 days
15-18 after receiving
the request and give the association at least 10 business
15-19 days’ notice of
the time and place of the hearing.
15-20 (b) A record of the hearing must be kept, but
it need not be
15-21 transcribed
unless requested by the association with the cost of
15-22 transcription to
be charged to the association.
15-23 (c) Within 5 business days after the hearing,
the commissioner shall
15-24 either affirm or
disaffirm the withdrawal of the certificate of the
15-25 association and
give the association written notice thereof by certified
15-26 mail. If
withdrawal of certification is affirmed, the withdrawal becomes
15-27 effective 10
business days after the association receives notice of the
15-28 affirmance unless
within that period the association corrects the conduct
15-29 which was grounds
for the withdrawal or petitions for judicial review of
15-30 the affirmance.
15-31 5. If
the withdrawal of certification is affirmed following judicial
15-32 review, the
withdrawal becomes effective 5 days after entry of the final
15-33 decree of
affirmance.
15-34 Sec. 35. 1. If for any reason
the status of an association of self-
15-35 insured private
employers as an association of self-insured employers is
15-36 terminated, the
security deposited pursuant to section 9 of this act must
15-37 remain on deposit
for at least 36 months in such an amount as is
15-38 necessary to
secure the outstanding and contingent liability arising from
15-39 the provision of
health coverage secured by the security.
15-40 2. At
the expiration of the 36-month period, or such other period as
15-41 the commissioner
deems proper, the commissioner may accept in lieu of
15-42 any security so
deposited a policy of paid-up insurance in a form
15-43 approved by the
commissioner.
15-44 Sec. 36. Any association of self-insured private employers that is
15-45 aggrieved by a
decision of the commissioner may petition for judicial
15-46 review in the
manner provided by chapter 233B of NRS.
15-47 Sec. 37. 1. For the purposes
of sections 2 to 42, inclusive, of this
15-48 act, an
association of self-insured private employers is insolvent if it is
16-1 unable to pay its
outstanding obligations as they mature in the regular
16-2 course of its
business.
16-3 2. If
an association of self-insured private employers becomes
16-4 insolvent,
institutes any voluntary proceeding pursuant to the Federal
16-5 Bankruptcy Act,
11 U.S.C. §§ 101 et seq., or is named in any voluntary
16-6 proceeding
thereunder, makes a general or special assignment for the
16-7 benefit of
creditors or fails to pay obligations pursuant to sections 2 to
16-8 42, inclusive, of
this act after an order for the payment of any claim
16-9 becomes final,
the commissioner may, after giving at least 10 days’ notice
16-10 to the
association and any insurer or guarantor, use money or interest on
16-11 securities, sell
securities or institute legal proceedings on surety bonds
16-12 deposited with
the commissioner to the extent necessary to make those
16-13 payments.
16-14 3. A
licensed surety providing a surety bond pursuant to section 9 of
16-15 this act may
terminate liability on its surety bond by giving the
16-16 commissioner and
the association, association’s administrator or third-
16-17 party
administrator 90 days’ written notice. The termination does not
16-18 limit liability
that was incurred under the surety bond before the
16-19 termination. If
the association fails to requalify as an association of self-
16-20 insured private
employers on or before the termination date, the
16-21 association’s
certificate is withdrawn when the termination becomes
16-22 effective.
16-23 Sec. 38. 1. The commissioner
may assess all associations of self-
16-24 insured private
employers to provide for claims against any insolvent
16-25 association.
16-26 2. All
money received from such assessments must be deposited with
16-27 the state treasurer
to the credit of the account for insolvent associations
16-28 of self-insured
private employers, which is hereby created in the fund for
16-29 self-insured
providers of health coverage, which is hereby created in the
16-30 state treasury as
a special revenue fund. Money in the account must be
16-31 used solely to
carry out the provisions of this section. All claims against
16-32 the account must
be paid as other claims against the state are paid. The
16-33 state treasurer
shall invest money in the account in the same manner and
16-34 in the same
securities in which he may invest money in the state general
16-35 fund. Income
realized from the investment of the money in the account
16-36 must be credited
to the account.
16-37 Sec. 39. The commissioner may adopt such regulations as are
16-38 necessary to
carry out the provisions of sections 2 to 42, inclusive, of this
16-39 act.
16-40 Sec. 40. 1. An association of
self-insured private employers may
16-41 enter into a contract
to have its plan of health coverage administered by a
16-42 third-party
administrator.
16-43 2. An
association shall not enter into a contract with any person for
16-44 the
administration of any part of the plan of health coverage unless that
16-45 person maintains
an office in this state and has a valid certificate issued
16-46 by the
commissioner pursuant to NRS 683A.085.
16-47 Sec. 41. 1. A person shall
not act as a third-party administrator for
16-48 an association of
self-insured private employers pursuant to sections 2 to
17-1 42, inclusive, of
this act without first obtaining a certificate issued by the
17-2 commissioner
pursuant to NRS 683A.085.
17-3 2. A
person who acts as a third-party administrator pursuant to
17-4 sections 2 to 42,
inclusive, of this act shall:
17-5 (a) Administer from one or more offices
located in this state all the
17-6 claims arising
under each plan of health coverage that he administers
17-7 and maintain in
those offices all the records concerning those claims;
17-8 (b) Administer each plan of health coverage
directly, without
17-9 subcontracting
with another third-party administrator; and
17-10 (c)
Upon the termination of his contract with an association, transfer
17-11 forthwith to a certified third-party
administrator chosen by the
17-12 association all the records in his
possession concerning claims arising
17-13 under the plan of health coverage.
17-14 3. The
commissioner may, under exceptional circumstances, waive
17-15 the requirements
of subsection 2.
17-16 Sec. 42. The commissioner shall impose an administrative fine of
17-17 not more than
$1,000 against a third-party administrator for each
17-18 violation and may
withdraw the certification of a third-party
17-19 administrator
who:
17-20 1. Fails
to comply with any regulation adopted by the commissioner
17-21 regarding reports
or other requirements necessary to carry out the
17-22 purposes of
sections 2 to 42, inclusive, of this act; or
17-23 2. Violates
any provision of section 41 of this act or any regulation
17-24 adopted by the
commissioner concerning the administration of the plan
17-25 of health
coverage.
17-26 Sec. 43. NRS 689C.015 is hereby amended to read as follows:
17-27 689C.015 Except as otherwise
provided in [this chapter,] NRS
17-28 689C.015 to 689C.980, inclusive, as used in [this chapter,]
NRS 689C.015
17-29 to 689C.980, inclusive, unless the context otherwise requires, the words
17-30 and terms defined in NRS
689C.017 to 689C.106, inclusive, have the
17-31 meanings ascribed to them in
those sections.
17-32 Sec. 44. The amendatory provisions of this act do not apply to
17-33 offenses committed before
July 1, 2001.
17-34 Sec. 45. This act becomes effective on July 1, 2001.
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