REQUIRES TWO THIRDS MAJORITY VOTE (§§ 8, 16, 38)
(REPRINTED WITH ADOPTED AMENDMENTS)
FIRST REPRINT S.B. 28
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.
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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 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 an agent’s license 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. Title 57 of NRS is hereby amended by adding thereto a
1-2 new chapter to consist of the provisions set forth as sections 2 to 44,
1-3 inclusive, of this act.
1-4 Sec. 2. As used in this chapter, unless the context otherwise
1-5 requires, the words and terms defined in sections 3 to 6, inclusive, of this
1-6 act have the meanings ascribed to them in those sections.
1-7 Sec. 3. “Association of self-insured private employers” means a
1-8 nonprofit, unincorporated association composed of two or more private
1-9 employers that has been issued a certificate by the commissioner and is
1-10 subject to the provisions of this chapter.
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. 4.5. 1. “Employer” means, with respect to a calendar year, an
2-2 employer who employed on business days during the preceding calendar
2-3 year an average of at least 2 employees, but not more than 50 employees,
2-4 who have a normal work week of 30 hours or more, and who employs at
2-5 least 2 employees on the first day of the year. For the purposes of
2-6 determining the number of eligible employees, organizations which are
2-7 affiliated or which are eligible to file a combined tax return for the
2-8 purposes of taxation constitute one employer.
2-9 2. For the purposes of this section, organizations are “affiliated” if
2-10 one directly, or indirectly, through one or more intermediaries, controls
2-11 or is controlled by, or is under common control with, the other, as
2-12 determined pursuant to the provisions of NRS 692C.050.
2-13 Sec. 5. “Tangible net worth” means all the assets of an association
2-14 of self-insured private employers reduced by all the liabilities of the
2-15 association, but does not include:
2-16 1. Accounts receivable, if they are factored or collateralized.
2-17 2. An inventory, except one held for resale and not collateralized.
2-18 3. A prepaid expense.
2-19 4. An unqualified investment.
2-20 5. An allocated bond fund.
2-21 6. An investment in an affiliate.
2-22 7. A restricted fund.
2-23 8. A reserve.
2-24 9. A security cost, such as a capitalized bond cost.
2-25 10. A cash equivalent, unless it is described in the footnotes for the
2-26 balance sheet by item, and for investments, by duration and nature. A
2-27 cash flow statement is not a sufficient description.
2-28 11. A contingency or commitment, including any estimated cost.
2-29 12. Any book adjustment caused by a change in an accounting policy
2-30 or a restatement.
2-31 13. Goodwill or excess cost over the fair market value of assets.
2-32 14. Any other items listed in the assets that are deemed unacceptable
2-33 by the commissioner because they cannot be justified or because they do
2-34 not directly support the ability of the association or the member to pay a
2-35 claim.
2-36 Sec. 6. “Third-party administrator” means a person who contracts
2-37 with an association of self-insured private employers to provide
2-38 administrative services for the association of self-insured private
2-39 employers and to manage claims. The term does not include an
2-40 insurance company.
2-41 Sec. 6.5. An association of self-insured private employers may
2-42 provide health coverage for the employees of an employer that is a
2-43 member of the association only if:
2-44 1. A portion of the premium or benefits are paid by or on behalf of
2-45 the employer;
2-46 2. An eligible employee or his dependent is reimbursed for a portion
2-47 of the premium, whether by wage adjustments or otherwise, by or on
2-48 behalf of the employer; or
3-1 3. The health coverage is considered by the employer or any of his
3-2 eligible employees or dependents as part of a plan or program for the
3-3 purposes of section 106, 125 or 162 of the Internal Revenue Code, 26
3-4 U.S.C. § 106, 125 or 162.
3-5 Sec. 7. 1. An association of self-insured private employers may
3-6 provide health coverage through a trust fund and, where necessary,
3-7 deduct contributions to the maintenance of the fund from the
3-8 compensation of officers and employees and pay the deductions into the
3-9 fund.
3-10 2. The money must be deposited in a state or national bank or credit
3-11 union authorized to transact business in this state.
3-12 3. Any independent administrator of a fund created pursuant to this
3-13 section is subject to the licensing requirements of chapter 683A of NRS.
3-14 4. Any contract with an independent administrator must be approved
3-15 by the commissioner as to the reasonableness of administrative charges
3-16 in relation to contributions collected and benefits provided.
3-17 5. The provisions of NRS 689B.030 to 689B.050, inclusive, apply to
3-18 coverage provided pursuant to this section.
3-19 Sec. 8. 1. A group of two or more employers may not act as an
3-20 association of self-insured private employers unless:
3-21 (a) Each member of the group is a member or associate member of a
3-22 bona fide trade association, as determined by the commissioner, which:
3-23 (1) Is incorporated in this state;
3-24 (2) Has been in existence for at least 5 years;
3-25 (b) The association of self-insured private employers has been issued
3-26 a certificate to act as such an association by the commissioner; and
3-27 (c) The association of self-insured private employers insures at least
3-28 51 employees of members of the association.
3-29 2. An association of private employers that wishes to be issued a
3-30 certificate must file with the commissioner an application for
3-31 certification.
3-32 3. The application must include:
3-33 (a) The name of the association.
3-34 (b) The address of:
3-35 (1) The principal office of the association; and
3-36 (2) The location where the books and records of the association will
3-37 be maintained.
3-38 (c) The date on which the association was organized.
3-39 (d) The name and address of each member of the association.
3-40 (e) The names of the initial members of the board of trustees and the
3-41 name of the initial association’s administrator.
3-42 (f) Such other information as the commissioner may require.
3-43 4. The application must be accompanied by:
3-44 (a) A nonrefundable filing fee of $1,000.
3-45 (b) Proof of compliance with section 9 of this act.
3-46 (c) Proof that the association or its third-party administrator is
3-47 licensed or otherwise authorized to conduct business in this state
3-48 pursuant to Title 57 of NRS.
4-1 (d) A copy of the agreements entered into with the association’s
4-2 administrator and a third-party administrator.
4-3 (e) A copy of the bylaws of the association.
4-4 (f) A copy of an agreement jointly and severally binding the
4-5 association and each member of the association to secure the provision
4-6 of health coverage pursuant to the provisions of this chapter.
4-7 (g) A pro forma financial statement prepared by an independent
4-8 certified public accountant in accordance with generally accepted
4-9 accounting principles that shows the financial ability of the association
4-10 to provide health coverage pursuant to the provisions of this chapter.
4-11 (h) A financial statement reviewed and prepared by an independent
4-12 certified public accountant for each proposed member of the association
4-13 or evidence of the ability of the association or its proposed members to
4-14 provide a solvency bond pursuant to subsection 3 of section 9 of this act.
4-15 (i) Proof that each member of the association will make the initial
4-16 payment to the association required pursuant to section 29 of this act on
4-17 a date specified by the commissioner. The payment shall be deemed to be
4-18 a part of the assessment required to be paid by each member for the first
4-19 year of self-insurance if certification is issued to the association.
4-20 5. Any financial information relating to a member of an association
4-21 received by the commissioner pursuant to the provisions of this section is
4-22 confidential and must not be disclosed.
4-23 6. For the purposes of this section, “associate member of a bona fide
4-24 trade association” means a supplier whose business, as determined by the
4-25 commissioner:
4-26 (a) Is limited to a specific industry; and
4-27 (b) Primarily involves providing a product or service that is directly
4-28 used or consumed by substantially all the members of the trade
4-29 association or bears a direct relationship to the business of the members
4-30 of the trade association.
4-31 Sec. 9. 1. An association of self-insured private employers shall:
4-32 (a) Execute an indemnity agreement jointly and severally binding the
4-33 association and each member of the association to secure the provision
4-34 of health coverage pursuant to this chapter. The indemnity agreement
4-35 must be in a form prescribed by the commissioner. An association may
4-36 add provisions to the indemnity agreement if the provisions are first
4-37 approved by the commissioner.
4-38 (b) Except as otherwise provided in this subsection, maintain a policy
4-39 of specific and aggregate excess insurance in a form and amount
4-40 required by the commissioner. The excess insurance must be written by
4-41 an insurer approved by the commissioner. To determine the amount of
4-42 excess insurance required, the commissioner shall consider:
4-43 (1) The number of members in the association;
4-44 (2) The types of services provided by the members of the
4-45 association;
4-46 (3) The number of years the association has been in existence; and
4-47 (4) Such other information as the commissioner deems
4-48 necessary.
5-1 This paragraph does not prohibit an association from purchasing
5-2 secondary excess insurance in addition to the excess insurance required
5-3 by this paragraph.
5-4 (c) Collect an annual assessment from each member of the
5-5 association in an aggregate amount of at least $100,000 or in an
5-6 aggregate amount which the commissioner determines is satisfactory
5-7 based on an annual review conducted by the commissioner of the
5-8 actuarial solvency of the association.
5-9 (d) Except as otherwise provided in paragraph (e), deposit as security
5-10 with the commissioner a bond executed by the association as principal,
5-11 and by a licensed surety, payable to the State of Nevada, and conditioned
5-12 upon the provision of health coverage to employees of members of the
5-13 association. The bond must be in an amount determined by the
5-14 commissioner to be reasonably sufficient to ensure payment of
5-15 obligations related to the provision of health coverage, but in no event
5-16 may it be less than $100,000.
5-17 (e) In lieu of a bond, deposit with the commissioner a like amount of
5-18 lawful money of the United States or any other form of security
5-19 authorized by NRS 100.065. If security is provided in the form of a
5-20 savings certificate, certificate of deposit or investment certificate, the
5-21 certificate must state that the amount is unavailable for withdrawal
5-22 except upon order of the commissioner.
5-23 2. Except as otherwise provided in subsection 3, in addition to
5-24 complying with the requirements of subsection 1, an association of self-
5-25 insured private employers shall maintain a combined tangible net worth
5-26 of at least $1,000,000.
5-27 3. In lieu of complying with the requirements of subsection 2, the
5-28 association’s administrator shall ensure that a solvency bond, in a form
5-29 prescribed by the commissioner and in an aggregate amount of at least
5-30 $1,000,000, is deposited with the commissioner by the association or
5-31 members of the association on behalf of the association.
5-32 4. The association’s administrator shall deposit with the
5-33 commissioner a bond executed by the association’s administrator as
5-34 principal, and by a licensed surety, payable to the State of Nevada, and
5-35 conditioned upon the faithful performance of his duties. The bond must
5-36 be in an amount determined by the commissioner.
5-37 5. Any third-party administrator providing claims services for the
5-38 association shall deposit with the commissioner a bond executed by the
5-39 third-party administrator as principal, and by a licensed surety, payable
5-40 to the State of Nevada, and conditioned upon the faithful performance of
5-41 its duties. The bond must be in an amount determined by the
5-42 commissioner.
5-43 6. The commissioner may increase or decrease the amount of any
5-44 bond or money required to be deposited by this section in accordance
5-45 with chapter 681B of NRS and his regulations for loss reserves in health
5-46 insurance. If the commissioner requires an association, association’s
5-47 administrator or third-party administrator to increase its deposit, the
5-48 commissioner may specify the form of the additional security. The
5-49 association, association’s administrator or third-party administrator shall
6-1 comply with such a requirement within 60 days after receiving notice
6-2 from the commissioner.
6-3 7. The account for health coverage for associations of self-insured
6-4 private employers is hereby created in the state agency fund for bonds.
6-5 All money received by the commissioner pursuant to this section must be
6-6 deposited with the state treasurer to the credit of the account. All claims
6-7 against this account must be paid as other claims against the state are
6-8 paid.
6-9 Sec. 10. A surety or bonding company shall not furnish a bond or
6-10 any other form of security required by the provisions of this chapter for
6-11 an association of self-insured private employers or a member of such an
6-12 association unless the surety or bonding company holds a certificate of
6-13 authority issued by the commissioner.
6-14 Sec. 11. 1. The commissioner shall grant or deny an application
6-15 for certification as an association of self-insured private employers
6-16 within 60 days after receiving the application. If the application is
6-17 materially incomplete or does not comply with the applicable provisions
6-18 of the law, the commissioner shall notify the applicant of the additional
6-19 information or changes required. Under such circumstances, if the
6-20 commissioner is unable to act upon the application within this 60‑day
6-21 period, he may extend the period for granting or denying the application,
6-22 but for not longer than an additional 90 days.
6-23 2. Upon determining that an association is qualified as an
6-24 association of self-insured private employers, the commissioner shall
6-25 issue a certificate to that effect to the association and the association’s
6-26 administrator. No certificate may be issued to an association that, within
6-27 the 2 years immediately preceding its application, has had its certification
6-28 as an association of self-insured private employers involuntarily
6-29 withdrawn by the commissioner.
6-30 3. A certificate issued pursuant to this section must include, without
6-31 limitation:
6-32 (a) The name of the association;
6-33 (b) The name of each employer that the commissioner determines is a
6-34 member of the association at the time of the issuance of the certificate;
6-35 (c) An identification number assigned to the association by the
6-36 commissioner; and
6-37 (d) The date on which the certificate was issued.
6-38 4. A certificate issued pursuant to this section remains in effect until
6-39 withdrawn by the commissioner or canceled at the request of the
6-40 association. Coverage for an association granted a certificate becomes
6-41 effective on the date of certification or the date specified in the
6-42 certificate, as appropriate.
6-43 5. The commissioner shall not grant a request to cancel a certificate
6-44 unless the association has insured or reinsured all incurred obligations
6-45 with an insurer authorized to do business in this state pursuant to an
6-46 agreement filed with and approved by the commissioner. The agreement
6-47 must include coverage for all incurred claims, including claims that have
6-48 been incurred but not reported to the association, as well as those that
7-1 have been incurred and reported but not yet paid, and the expenses
7-2 associated with those claims.
7-3 Sec. 12. 1. An association certified as an association of self-
7-4 insured private employers directly assumes the responsibility for
7-5 providing health coverage to the employees of the members of the
7-6 association and their beneficiaries pursuant to this chapter.
7-7 2. The claims of employees and their beneficiaries while in the
7-8 employment of a member of an association must be handled in the
7-9 manner provided by this chapter, and the association is subject to the
7-10 regulations of the commissioner with respect to payment of those claims.
7-11 3. The security deposited pursuant to section 9 of this act does not
7-12 relieve an association from responsibility for the administration of claims
7-13 and the provision of health coverage pursuant to this chapter.
7-14 Sec. 13. 1. An association of self-insured private employers must
7-15 be operated by a board of trustees consisting of at least five members
7-16 whom the members of the association elect for terms set forth in the
7-17 bylaws of the association. At least two-thirds of the members of the board
7-18 of trustees must be employees, officers or directors of the members of the
7-19 association. No association’s administrator or third-party administrator
7-20 employed by the association, or any owner, officer, employee or other
7-21 person affiliated with the association’s administrator or third-party
7-22 administrator, may serve as a member of the board of trustees. Each
7-23 member of the board of trustees must be a resident of this state or an
7-24 officer of a corporation authorized to do business in this state.
7-25 2. The board of trustees of an association shall:
7-26 (a) Ensure the prompt payment of claims relating to the health
7-27 coverage provided pursuant to this chapter.
7-28 (b) Take such actions as are necessary to protect the assets of the
7-29 association.
7-30 (c) Employ full time an association’s administrator to carry out the
7-31 policies of the board of trustees and perform such duties as the board
7-32 delegates to him. An association’s administrator shall not perform any of
7-33 the duties assigned to a third-party administrator.
7-34 (d) Employ a third-party administrator to carry out the duties set forth
7-35 in section 41 of this act.
7-36 (e) Employ an independent certified public accountant to prepare the
7-37 statement of financial condition required by section 25 of this act.
7-38 (f) Maintain minutes of its meetings and make the minutes available
7-39 for inspection by the commissioner.
7-40 3. The board of trustees of an association shall not:
7-41 (a) Extend credit to any member of the association for the payment of
7-42 the annual assessment for that member, except pursuant to a payment
7-43 plan approved by the commissioner; or
7-44 (b) Borrow any money from the association or in the name of the
7-45 association, except in the ordinary course of its business, without the
7-46 prior approval of the commissioner.
7-47 Sec. 14. 1. The board of trustees of an association of self-insured
7-48 private employers is responsible for the money collected and disbursed by
7-49 the association.
8-1 2. The board of trustees shall:
8-2 (a) Establish a claims account in a federally insured financial
8-3 institution in this state approved by the commissioner. Except as
8-4 otherwise provided in subsection 3, at least 75 percent of the annual
8-5 assessment collected by the association from its members must be
8-6 deposited in this account to pay:
8-7 (1) Claims;
8-8 (2) Expenses related to those claims; and
8-9 (3) The costs associated with the association’s policy of excess
8-10 insurance.
8-11 (b) Establish an administrative account in a federally insured
8-12 financial institution in this state approved by the commissioner. The
8-13 amount of the annual assessment collected by the association that is not
8-14 deposited in its claims account must be deposited in the administrative
8-15 account to pay the administrative expenses of the association.
8-16 3. The commissioner may authorize an association to deposit less
8-17 than 75 percent of its annual assessment in its claims account if the
8-18 association presents evidence satisfactory to the commissioner that the
8-19 association’s policy of excess insurance is sufficient.
8-20 4. The board of trustees may invest the money of the association not
8-21 needed to pay the obligations of the association pursuant to chapter 682A
8-22 of NRS.
8-23 5. The commissioner shall review the accounts of an association
8-24 established pursuant to this section at such times as he deems necessary
8-25 to ensure compliance with the provisions of this section.
8-26 Sec. 15. 1. An association’s administrator employed by an
8-27 association of self-insured private employers, or an employee, officer or
8-28 director of an association’s administrator, may not be an employee,
8-29 officer or director of a third-party administrator employed by the
8-30 association or have a direct or indirect financial interest in the third-
8-31 party administrator of the association.
8-32 2. The third-party administrator of an association of self-insured
8-33 private employers, or an employee, officer or director of the third-party
8-34 administrator, may not be an employee, officer or director of an
8-35 association’s administrator employed by the association or have a direct
8-36 or indirect financial interest in that association’s administrator.
8-37 3. Any contract entered into by an association of self-insured private
8-38 employers and a third-party administrator must include a provision
8-39 which states that, unless the commissioner otherwise provides, the third-
8-40 party administrator shall administer any claim or other obligation of the
8-41 association to its conclusion during the period of the contract.
8-42 Sec. 16. A person shall not advertise or offer for sale in this state
8-43 any policies or memberships, or solicit or receive any money,
8-44 subscriptions, applications, premiums, assessments, memberships or any
8-45 other fee or charge in connection with a proposed association of self-
8-46 insured private employers unless licensed as an agent pursuant to
8-47 chapter 683A of NRS.
9-1 Secs. 17-19. (Deleted by amendment.)
9-2 Sec. 20. 1. If an employer wishes to become a member of an
9-3 association of self-insured private employers, the employer must:
9-4 (a) Submit an application for membership to the board of trustees or
9-5 third-party administrator of the association; and
9-6 (b) Enter into an indemnity agreement as required by section 9 of this
9-7 act.
9-8 2. The membership of the applicant becomes effective when all
9-9 members of the association have indicated their approval of the
9-10 application or on a later date specified by the association. The
9-11 application for membership and the action taken on the application must
9-12 be maintained as permanent records of the board of trustees.
9-13 3. Each member who is a member of an association during the 12
9-14 months immediately following the formation of the association must have
9-15 a tangible net worth of at least $200,000. Any employer who seeks to
9-16 become a member of the association subsequently must meet the
9-17 requirement for tangible net worth of at least $200,000 unless the
9-18 commissioner adjusts the requirement for membership in the association
9-19 after conducting an annual review of the actuarial solvency of the
9-20 association in accordance with subsection 1 of section 9 of this act.
9-21 4. A member of an association may terminate his membership at any
9-22 time. To terminate his membership, a member must submit to the
9-23 association’s administrator a notice of intent to withdraw from the
9-24 association at least 120 days before the effective date of withdrawal. The
9-25 association’s administrator shall, within 10 days after receipt of the
9-26 notice, notify the commissioner of the employer’s intent to withdraw from
9-27 the association.
9-28 5. The members of an association may cancel the membership of any
9-29 member of the association in accordance with the bylaws of the
9-30 association.
9-31 6. The association shall:
9-32 (a) Notify the commissioner of the termination or cancellation of the
9-33 membership of any member of the association within 10 days after the
9-34 termination or cancellation; and
9-35 (b) At the expense of the member whose membership is terminated or
9-36 canceled, maintain coverage for that member for 30 days after notice is
9-37 given pursuant to paragraph (a), unless the association first receives
9-38 notice from the commissioner that the member has:
9-39 (1) Become a member of another association of self-insured private
9-40 employers; or
9-41 (2) Become insured by an insurer.
9-42 7. If a member of an association changes his name or form of
9-43 organization, the member remains liable for any obligations incurred or
9-44 any responsibilities imposed pursuant to this chapter under his former
9-45 name or form of organization.
9-46 8. An association is liable for the payment of any obligations
9-47 required to be paid by a member of the association pursuant to this
9-48 chapter during his period of membership. The insolvency or bankruptcy
10-1 of a member does not relieve the association of liability for the provision
10-2 of health coverage.
10-3 Sec. 21. An association of self-insured private employers shall notify
10-4 the commissioner of any change in the information submitted in its
10-5 application for certification or in the manner of its compliance with
10-6 section 9 of this act not later than 30 days after the change.
10-7 Sec. 22. 1. The commissioner may examine the books, records,
10-8 accounts and assets of an association of self-insured private employers as
10-9 he deems necessary to carry out the provisions of this chapter.
10-10 2. The expense of any examination conducted pursuant to this
10-11 section must be paid by the association.
10-12 Sec. 23. An association of self-insured private employers shall be
10-13 deemed to have appointed the commissioner as its resident agent to
10-14 receive any initial legal process authorized by law to be served upon the
10-15 association for as long as the association is obligated to provide health
10-16 coverage pursuant to this chapter.
10-17 Sec. 24. 1. An association of self-insured private employers may
10-18 merge with another association of self-insured private employers if:
10-19 (a) The members of the merging associations are engaged in the same
10-20 or similar trade;
10-21 (b) The resulting association assumes in full all obligations of the
10-22 merging associations; and
10-23 (c) The merger is approved by the commissioner.
10-24 2. The commissioner shall conduct a hearing on the proposed
10-25 merger if any member of the merging associations so requests. The
10-26 commissioner may on his own motion conduct such a hearing.
10-27 Sec. 25. 1. An association of self-insured private employers shall
10-28 file with the commissioner an audited statement of financial condition
10-29 prepared by an independent certified public accountant. The statement
10-30 must be filed on or before April 1 of each year or, if the fiscal year of the
10-31 association does not coincide with the calendar year, within 90 days after
10-32 the conclusion of the association’s fiscal year, and contain information
10-33 for the previous fiscal year.
10-34 2. The statement required by subsection 1 must be in a form
10-35 prescribed by the commissioner and include, without limitation:
10-36 (a) A statement of the reserves for:
10-37 (1) Actual claims and expenses;
10-38 (2) Claims filed with the association but not reported, and the
10-39 expenses associated with those claims;
10-40 (3) Assessments that are due, but not paid; and
10-41 (4) Unpaid debts, which must be shown as liabilities.
10-42 (b) An actuarial opinion regarding reserves that is prepared by a
10-43 member of the American Academy of Actuaries or another specialist in
10-44 loss reserves identified in the annual statement adopted by the National
10-45 Association of Insurance Commissioners. The actuarial opinion must
10-46 include a statement of:
10-47 (1) Actual claims and the expenses associated with those claims;
10-48 and
11-1 (2) Claims filed with the association but not reported, and the
11-2 expenses associated with those claims.
11-3 3. The commissioner may adopt a uniform financial reporting system
11-4 for associations of self-insured private employers to ensure the accurate
11-5 and complete reporting of financial information.
11-6 4. The commissioner may require the filing of such other reports as
11-7 he deems necessary to carry out the provisions of this section.
11-8 Sec. 26. The annual assessment required to be paid by each member
11-9 of an association of self-insured private employers must be calculated
11-10 pursuant to regulations adopted by the commissioner.
11-11 Sec. 27. 1. The commissioner shall cause to be conducted at least
11-12 annually an audit of each association of self-insured private employers to
11-13 verify:
11-14 (a) The number of employees of each member of the association;
11-15 (b) The assessment required to be paid by each member of the
11-16 association; and
11-17 (c) Any other information the commissioner determines is necessary.
11-18 2. The audit required by this section must be conducted by an auditor
11-19 approved by the commissioner.
11-20 3. A report of the audit must be filed with the commissioner in a
11-21 form required by the commissioner.
11-22 4. The expenses of any audit conducted pursuant to this section must
11-23 be paid by the association.
11-24 Sec. 28. 1. If the assets of an association of self-insured private
11-25 employers exceed the amount necessary for the association to:
11-26 (a) Pay its obligations and administrative expenses;
11-27 (b) Carry reasonable reserves; and
11-28 (c) Provide for contingencies,
11-29 the board of trustees of the association may, after obtaining the approval
11-30 of the commissioner, declare and distribute dividends to the members of
11-31 the association.
11-32 2. Any dividend declared pursuant to subsection 1 must be
11-33 distributed not less than 12 months after the end of the fiscal year.
11-34 3. A dividend may be paid only to those members who are members
11-35 of the association for the entire fiscal year. The payment of a dividend
11-36 must not be conditioned upon the member continuing his membership in
11-37 the association after the fiscal year.
11-38 4. An association shall give to each prospective member of the
11-39 association a written description of its plan for distributing dividends
11-40 when the prospective member applies for membership in the association.
11-41 Sec. 29. 1. Each association of self-insured private employers shall
11-42 adopt a plan for the payment of annual assessments by the members of
11-43 the association which must be approved by the commissioner.
11-44 2. The plan must include a requirement for:
11-45 (a) An initial payment, in advance, of a portion of the annual
11-46 assessment due from each member of the association. The initial
11-47 payment must be in an amount equal to at least 25 percent of the
11-48 member’s annual assessment.
12-1 (b) Payment of the balance of the annual assessment due in quarterly
12-2 or monthly installments.
12-3 Sec. 30. Each association of self-insured private employers shall
12-4 maintain:
12-5 1. Actuarially appropriate loss reserves. Such reserves must include
12-6 reserves for:
12-7 (a) Actual claims and the expenses associated with those claims; and
12-8 (b) Claims filed with the association but not reported, and the
12-9 expenses associated with those claims.
12-10 2. Reserves for uncollected debts.
12-11 Sec. 31. 1. If the assets of an association of self-insured private
12-12 employers are insufficient to make certain the prompt payment of claims
12-13 relating to the health coverage provided pursuant to this chapter and to
12-14 maintain the reserves required by section 30 of this act, the association
12-15 shall immediately notify the commissioner of the deficiency and:
12-16 (a) Transfer any surplus acquired from a previous fiscal year to the
12-17 current fiscal year to make up the deficiency;
12-18 (b) Transfer money from its administrative account to its claims
12-19 account;
12-20 (c) Collect an additional assessment from its members in an amount
12-21 required to make up the deficiency; or
12-22 (d) Take any other action to make up the deficiency which is approved
12-23 by the commissioner.
12-24 2. If the association wishes to transfer any surplus from one fiscal
12-25 year to another, the association must first notify the commissioner of the
12-26 transfer.
12-27 3. The commissioner shall order the association to make up any
12-28 deficiency pursuant to subsection 1 if the association fails to do so within
12-29 30 days after notifying the commissioner of the deficiency. The
12-30 association shall be deemed insolvent if it fails to:
12-31 (a) Collect an additional assessment from its members within 30 days
12-32 after being ordered to do so by the commissioner; or
12-33 (b) Make up the deficiency in any other manner within 60 days after
12-34 being ordered to do so by the commissioner.
12-35 Sec. 32. 1. The commissioner may issue an order requiring an
12-36 association of self-insured private employers or a member of the
12-37 association to cease and desist from engaging in any act or practice
12-38 found to be in violation of any provision of this chapter or any regulation
12-39 adopted pursuant to this chapter.
12-40 2. If the commissioner determines that an association or a member
12-41 of the association has violated an order to cease and desist, the
12-42 commissioner may impose an administrative fine of not more than
12-43 $10,000 for each violation of the order, not to exceed an aggregate
12-44 amount of $100,000, or withdraw the certificate of the association, or
12-45 both.
12-46 Sec. 33. 1. The commissioner may impose an administrative fine
12-47 for each violation of any provision of this chapter or any regulation
12-48 adopted pursuant to this chapter. Except as otherwise provided in this
13-1 chapter, the amount of the fine may not exceed $1,000 for each violation
13-2 or an aggregate amount of $10,000.
13-3 2. The commissioner may withdraw the certificate of an association
13-4 of self-insured private employers if:
13-5 (a) The certificate was obtained by fraud;
13-6 (b) The application for certification contained a material
13-7 misrepresentation;
13-8 (c) The association is found to be insolvent;
13-9 (d) The association fails to have two or more members;
13-10 (e) The association fails to pay the costs of any examination or any
13-11 penalty, fee or assessment required by the provisions of this chapter;
13-12 (f) The association fails to comply with any of the provisions of this
13-13 chapter or any regulation adopted pursuant to this chapter;
13-14 (g) The association fails to comply with any order of the commissioner
13-15 within the time prescribed by the provisions of this chapter or in the
13-16 order of the commissioner;
13-17 (h) The association or its third-party administrator misappropriates,
13-18 converts, illegally withholds or refuses to pay any money to which a
13-19 person is entitled and that was entrusted to the association in its fiduciary
13-20 capacity; or
13-21 (i) The association markets or operates in another state without being
13-22 licensed or certified in that state to do so.
13-23 3. If the commissioner withdraws the certification of an association
13-24 of self-insured private employers, each employer who is a member of the
13-25 association remains liable for his obligations incurred before and after
13-26 the order of withdrawal.
13-27 Sec. 34. 1. Before any action may be taken pursuant to subsection
13-28 2, the commissioner shall arrange an informal meeting with an
13-29 association of self-insured private employers to discuss and seek
13-30 correction of any conduct which would be grounds for withdrawal of the
13-31 certificate of the association.
13-32 2. Except as otherwise provided in subsection 3, before the
13-33 commissioner may withdraw the certificate of any association of self-
13-34 insured private employers, the commissioner must give written notice to
13-35 the association by certified mail that its certificate will be withdrawn 10
13-36 days after receipt of the notice unless, within that time, the association
13-37 corrects the conduct set forth in the notice as the reason for the
13-38 withdrawal or submits a written request for a hearing to the
13-39 commissioner.
13-40 3. The commissioner may grant additional time, not to exceed an
13-41 additional 120 days, before the withdrawal of the certificate of an
13-42 association if:
13-43 (a) The grounds for withdrawal of the certificate of the association
13-44 are based on paragraph (d) of subsection 2 of section 33 of this act; and
13-45 (b) The association is financially sound and capable of fulfilling its
13-46 commitments.
13-47 4. If the association requests a hearing:
14-1 (a) The commissioner shall set a date for a hearing within 20 days
14-2 after receiving the request and give the association at least 10 business
14-3 days’ notice of the time and place of the hearing.
14-4 (b) A record of the hearing must be kept, but it need not be
14-5 transcribed unless requested by the association with the cost of
14-6 transcription to be charged to the association.
14-7 (c) Within 5 business days after the hearing, the commissioner shall
14-8 either affirm or disaffirm the withdrawal of the certificate of the
14-9 association and give the association written notice thereof by certified
14-10 mail. If withdrawal of certification is affirmed, the withdrawal becomes
14-11 effective 10 business days after the association receives notice of the
14-12 affirmance unless within that period the association corrects the conduct
14-13 which was grounds for the withdrawal or petitions for judicial review of
14-14 the affirmance.
14-15 5. If the withdrawal of certification is affirmed following judicial
14-16 review, the withdrawal becomes effective 5 days after entry of the final
14-17 decree of affirmance.
14-18 Sec. 35. 1. If for any reason the status of an association of self-
14-19 insured private employers as an association of self-insured employers is
14-20 terminated, the security deposited pursuant to section 9 of this act must
14-21 remain on deposit for at least 36 months in such an amount as is
14-22 necessary to secure the outstanding and contingent liability arising from
14-23 the provision of health coverage secured by the security.
14-24 2. At the expiration of the 36-month period, or such other period as
14-25 the commissioner deems proper, the commissioner may accept in lieu of
14-26 any security so deposited a policy of paid-up insurance in a form
14-27 approved by the commissioner.
14-28 Sec. 36. Any association of self-insured private employers that is
14-29 aggrieved by a decision of the commissioner may petition for judicial
14-30 review in the manner provided by chapter 233B of NRS.
14-31 Sec. 37. 1. For the purposes of this chapter, an association of self-
14-32 insured private employers is insolvent if it is unable to pay its outstanding
14-33 obligations as they mature in the regular course of its business.
14-34 2. A licensed surety providing a surety bond pursuant to section 9 of
14-35 this act may terminate liability on its surety bond by giving the
14-36 commissioner and the association, association’s administrator or third-
14-37 party administrator 90 days’ written notice. The termination does not
14-38 limit liability that was incurred under the surety bond before the
14-39 termination. If the association fails to requalify as an association of self-
14-40 insured private employers on or before the termination date, the
14-41 association’s certificate is withdrawn when the termination becomes
14-42 effective.
14-43 Sec. 38. 1. The commissioner may assess all associations of self-
14-44 insured private employers to provide for claims against any insolvent
14-45 association.
14-46 2. All money received from such assessments must be deposited with
14-47 the state treasurer to the credit of the account for insolvent associations
14-48 of self-insured private employers, which is hereby created in the fund for
14-49 self-insured providers of health coverage, which is hereby created in the
15-1 state treasury as a special revenue fund. Money in the account must be
15-2 used solely to carry out the provisions of this section. All claims against
15-3 the account must be paid as other claims against the state are paid. The
15-4 state treasurer shall invest money in the account in the same manner and
15-5 in the same securities in which he may invest money in the state general
15-6 fund. Income realized from the investment of the money in the account
15-7 must be credited to the account.
15-8 Sec. 39. The commissioner may adopt such regulations as are
15-9 necessary to carry out the provisions of this chapter.
15-10 Sec. 40. 1. An association of self-insured private employers may
15-11 enter into a contract to have its plan of health coverage administered by a
15-12 third-party administrator.
15-13 2. An association shall not enter into a contract with any person for
15-14 the administration of any part of the plan of health coverage unless that
15-15 person maintains an office in this state and has a valid certificate issued
15-16 by the commissioner pursuant to NRS 683A.085.
15-17 Sec. 41. 1. A person shall not act as a third-party administrator for
15-18 an association of self-insured private employers pursuant to this chapter
15-19 without first obtaining a certificate issued by the commissioner pursuant
15-20 to NRS 683A.085.
15-21 2. A person who acts as a third-party administrator pursuant to this
15-22 chapter shall:
15-23 (a) Administer from one or more offices located in this state all the
15-24 claims arising under each plan of health coverage that he administers
15-25 and maintain in those offices all the records concerning those claims;
15-26 (b) Administer each plan of health coverage directly, without
15-27 subcontracting with another third-party administrator; and
15-28 (c) Upon the termination of his contract with an association, transfer
15-29 forthwith to a certified third-party administrator chosen by the
15-30 association all the records in his possession concerning claims arising
15-31 under the plan of health coverage.
15-32 3. The commissioner may, under exceptional circumstances, waive
15-33 the requirements of subsection 2.
15-34 Sec. 42. The commissioner shall impose an administrative fine of
15-35 not more than $1,000 against a third-party administrator for each
15-36 violation and may withdraw the certification of a third-party
15-37 administrator who:
15-38 1. Fails to comply with any regulation adopted by the commissioner
15-39 regarding reports or other requirements necessary to carry out the
15-40 purposes of this chapter; or
15-41 2. Violates any provision of section 41 of this act or any regulation
15-42 adopted by the commissioner concerning the administration of the plan
15-43 of health coverage.
15-44 Sec. 43. 1. The commissioner may adopt regulations to define
15-45 when an association of self-insured private employers is considered to be
15-46 in a hazardous financial condition and to set forth the standards to be
15-47 considered by the commissioner in determining whether the continued
15-48 operation of an association of self-insured private employers transacting
16-1 business in this state may be considered to be hazardous to its members
16-2 or creditors or to the general public.
16-3 2. If the commissioner determines after a hearing that any
16-4 association of self-insured private employers is in a hazardous financial
16-5 condition, he may, instead of suspending or revoking the certificate of
16-6 the association of self-insured private employers, limit the association’s
16-7 certificate as he deems reasonably necessary to correct, eliminate or
16-8 remedy any conduct, condition or ground that is deemed to be a cause of
16-9 the hazardous financial condition.
16-10 3. An order or decision of the commissioner under this section is
16-11 subject to review in accordance with NRS 679B.310 to 679B.370,
16-12 inclusive, at the request of any party to the proceedings whose interests
16-13 are substantially affected.
16-14 Sec. 44. 1. An association of self-insured private employers is
16-15 subject to the provisions of this chapter and, to the extent reasonably
16-16 applicable:
16-17 (a) Chapter 679B of NRS.
16-18 (b) Chapter 686A of NRS.
16-19 (c) The provisions of NRS 689B.0285, 689B.061 to 689B.069,
16-20 inclusive, and 689B.245 to 689B.330, inclusive.
16-21 (d) The provisions of NRS 689C.107, 689C.109, 689C.111, 689C.156,
16-22 689C.1565, 689C.158 to 689C.207, inclusive, 689C.265, 689C.310,
16-23 689C.320 and 689C.355.
16-24 (e) Chapter 696B of NRS.
16-25 2. For the purposes of this section, unless the context otherwise
16-26 requires, any reference in a section of NRS included in paragraphs (a) to
16-27 (e), inclusive, of subsection 1 to:
16-28 (a) “Health benefit plan,” “policy of group health insurance” or
16-29 “policy of group insurance” must be replaced by “health coverage
16-30 provided by an association of self-insured private employers”;
16-31 (b) “Insurer” or “carrier” must be replaced by “association of self-
16-32 insured private employers”;
16-33 (c) “Producer” must be replaced by “agent licensed pursuant to
16-34 chapter 683A of NRS”; and
16-35 (d) “Small employer” must be replaced by “employer.”
16-36 Sec. 45. NRS 232.550 is hereby amended to read as follows:
16-37 232.550 As used in NRS 232.550 to 232.700, inclusive, unless the
16-38 context otherwise requires:
16-39 1. “Administrator” means the administrator of the division.
16-40 2. “Director” means the director of the department of business and
16-41 industry.
16-42 3. “Division” means the division of industrial relations of the
16-43 department of business and industry.
16-44 4. “Insurer” includes:
16-45 (a) A self-insured employer;
16-46 (b) An association of self-insured public employers[;] as defined in
16-47 NRS 616A.055;
16-48 (c) An association of self-insured private employers[;] as defined in
16-49 NRS 616A.050; and
17-1 (d) A private carrier.
17-2 Sec. 46. NRS 244.33505 is hereby amended to read as follows:
17-3 244.33505 1. In a county in which a license to engage in a business
17-4 is required, the board of county commissioners shall not issue such a
17-5 license unless the applicant for the license signs an affidavit affirming that
17-6 the business:
17-7 (a) Has received coverage by a private carrier as required pursuant to
17-8 chapters 616A to 616D, inclusive, and chapter 617 of NRS;
17-9 (b) Maintains a valid certificate of self-insurance pursuant to chapters
17-10 616A to 616D, inclusive, of NRS;
17-11 (c) Is a member of an association of self-insured public or private
17-12 employers; or
17-13 (d) Is not subject to the provisions of chapters 616A to 616D, inclusive,
17-14 or chapter 617 of NRS.
17-15 2. In a county in which such a license is not required, the board of
17-16 county commissioners shall require a business, when applying for a post
17-17 office box, to submit to the board the affidavit required by subsection 1.
17-18 3. Each board of county commissioners shall submit to the
17-19 administrator of the division of industrial relations of the department of
17-20 business and industry monthly a list of the names of those businesses
17-21 which have submitted an affidavit required by subsections 1 and 2.
17-22 4. Upon receiving an affidavit required by this section, a board of
17-23 county commissioners shall provide the owner of the business with a
17-24 document setting forth the rights and responsibilities of employers and
17-25 employees to promote safety in the workplace, in accordance with
17-26 regulations adopted by the division of industrial relations of the department
17-27 of business and industry pursuant to NRS 618.376.
17-28 5. As used in this section:
17-29 (a) “Association of self-insured private employers” has the meaning
17-30 ascribed to it in NRS 616A.050.
17-31 (b) “Association of self-insured public employers” has the meaning
17-32 ascribed to it in NRS 616A.055.
17-33 Sec. 47. NRS 268.0955 is hereby amended to read as follows:
17-34 268.0955 1. In an incorporated city in which a license to engage in a
17-35 business is required, the city council or other governing body of the city
17-36 shall not issue such a license unless the applicant for the license signs an
17-37 affidavit affirming that the business:
17-38 (a) Has received coverage by a private carrier as required pursuant to
17-39 chapters 616A to 616D, inclusive, and chapter 617 of NRS;
17-40 (b) Maintains a valid certificate of self-insurance pursuant to chapters
17-41 616A to 616D, inclusive, of NRS;
17-42 (c) Is a member of an association of self-insured public or private
17-43 employers; or
17-44 (d) Is not subject to the provisions of chapters 616A to 616D, inclusive,
17-45 or chapter 617 of NRS.
17-46 2. In an incorporated city in which such a license is not required, the
17-47 city council or other governing body of the city shall require a business,
17-48 when applying for a post office box, to submit to the governing body the
17-49 affidavit required by subsection 1.
18-1 3. Each city council or other governing body of an incorporated city
18-2 shall submit to the administrator of the division of industrial relations of
18-3 the department of business and industry monthly a list of the names of
18-4 those businesses which have submitted an affidavit required by subsections
18-5 1 and 2.
18-6 4. Upon receiving an affidavit required by this section, the city council
18-7 or other governing body of an incorporated city shall provide the applicant
18-8 with a document setting forth the rights and responsibilities of employers
18-9 and employees to promote safety in the workplace in accordance with
18-10 regulations adopted by the division of industrial relations of the department
18-11 of business and industry pursuant to NRS 618.376.
18-12 5. As used in this section:
18-13 (a) “Association of self-insured private employers” has the meaning
18-14 ascribed to it in NRS 616A.050.
18-15 (b) “Association of self-insured public employers” has the meaning
18-16 ascribed to it in NRS 616A.055.
18-17 Sec. 48. NRS 281.153 is hereby amended to read as follows:
18-18 281.153 1. The employer of a police officer or fireman may establish
18-19 a program that allows a police officer or fireman whom it employs who has
18-20 suffered a catastrophe resulting in temporary total disability to elect to
18-21 continue to receive his normal salary for a period of not more than 1 year
18-22 in lieu of receiving the compensation for the industrial injury or
18-23 occupational disease for which he is eligible pursuant to chapters 616A to
18-24 616D, inclusive, or 617 of NRS, unless the police officer or fireman has
18-25 made an election pursuant to NRS 281.390.
18-26 2. A program established pursuant to subsection 1:
18-27 (a) Must prescribe the conditions pursuant to which a police officer or
18-28 fireman is eligible to receive his normal salary in accordance with an
18-29 election pursuant to subsection 1; and
18-30 (b) May allow a police officer or fireman to return to light-duty
18-31 employment or employment modified according to his physical restrictions
18-32 or limitations and receive his normal salary during the period of his
18-33 election pursuant to subsection 1.
18-34 3. Unless the employer is self-insured or a member of an association of
18-35 self-insured public or private employers, the employer shall notify the
18-36 insurer that provides industrial insurance for that employer of the election
18-37 by a police officer or fireman pursuant to subsection 1. When the police
18-38 officer or fireman is no longer eligible to receive his normal salary
18-39 pursuant to such an election, the employer shall notify the insurer so that
18-40 the insurer may begin paying to the police officer or fireman the benefits, if
18-41 any, for industrial insurance for which the police officer or fireman is
18-42 eligible. If the employer is self-insured or a member of such an association
18-43 of self-insured public or private employers and the police officer or
18-44 fireman is no longer eligible to receive his normal salary in accordance
18-45 with an election pursuant to subsection 1, the employer shall begin paying
18-46 the benefits, if any, for industrial insurance to which the police officer or
18-47 fireman is entitled.
18-48 4. During the period in which the police officer or fireman elects to
18-49 receive his normal salary pursuant to subsection 1, he accrues sick leave,
19-1 annual leave and retirement benefits at the same rate at which he accrued
19-2 such leave and benefits immediately before the election.
19-3 5. As used in this section:
19-4 (a) “Association of self-insured private employers” has the meaning
19-5 ascribed to it in NRS 616A.050.
19-6 (b) “Association of self-insured public employers” has the meaning
19-7 ascribed to it in NRS 616A.055.
19-8 (c) “Catastrophe” means an illness or accident arising out of or in the
19-9 course of employment which is life threatening or which will require a
19-10 period of convalescence that an attending physician expects to exceed 30
19-11 days and because of which the employee is unable to perform the duties of
19-12 his position.
19-13 [(b)] (d) “Police officer” has the meaning ascribed to it in NRS
19-14 617.135.
19-15 Sec. 49. NRS 624.256 is hereby amended to read as follows:
19-16 624.256 1. Before granting an original or renewal of a contractor’s
19-17 license to any applicant, the board shall require that the applicant submit to
19-18 the board:
19-19 (a) Proof of industrial insurance and insurance for occupational diseases
19-20 which covers his employees;
19-21 (b) A copy of his certificate of qualification as a self-insured employer
19-22 which was issued by the commissioner of insurance;
19-23 (c) If the applicant is a member of an association of self-insured public
19-24 or private employers, a copy of the certificate issued to the association by
19-25 the commissioner of insurance; or
19-26 (d) An affidavit signed by the applicant affirming that he is not subject
19-27 to the provisions of chapters 616A to 616D, inclusive, or chapter 617 of
19-28 NRS because:
19-29 (1) He has no employees;
19-30 (2) He is not or does not intend to be a subcontractor for a principal
19-31 contractor; and
19-32 (3) He has not or does not intend to submit a bid on a job for a
19-33 principal contractor or subcontractor.
19-34 2. The board shall notify the fraud control unit for industrial insurance
19-35 established pursuant to NRS 228.420 whenever the board learns that an
19-36 applicant or holder of a contractor’s license has engaged in business as or
19-37 acted in the capacity of a contractor within this state without having
19-38 obtained industrial insurance or insurance for occupational diseases in
19-39 violation of the provisions of chapters 616A to 617, inclusive, of NRS.
19-40 3. As used in this section:
19-41 (a) “Association of self-insured private employers” has the meaning
19-42 ascribed to it in NRS 616A.050.
19-43 (b) “Association of self-insured public employers” has the meaning
19-44 ascribed to it in NRS 616A.055.
19-45 Sec. 50. 1. The commissioner of insurance of the department of
19-46 business and industry shall award certificates to not more than three
19-47 associations of self-insured private employers on or before January 1,
19-48 2003. Not more than two such associations may be formed in Clark County
19-49 and not more than one in northern Nevada. The commissioner shall award
20-1 the certificates in the order in which associations satisfy all the
20-2 requirements for certification.
20-3 2. On or before February 1, 2003, the commissioner shall submit to the
20-4 director of the legislative counsel bureau for transmittal to the 72nd session
20-5 of the Nevada legislature a report on the effectiveness and safety of
20-6 associations of self-insured private employers in providing health coverage
20-7 to employees of certain small employers.
20-8 3. The commissioner shall not suspend or revoke the certificate of an
20-9 association of self-insured private employers awarded a certificate pursuant
20-10 to sections 2 to 44, inclusive, of this act so long as the association complies
20-11 with all the provisions of sections 2 to 44, inclusive, of this act and any
20-12 regulations adopted by the commissioner pursuant thereto.
20-13 Sec. 51. The amendatory provisions of this act do not apply to
20-14 offenses committed before July 1, 2001.
20-15 Sec. 52. This act becomes effective on July 1, 2001.
20-16 H