In this subtitle the following words have the meanings indicated.
“Health care provider” means a chiropractor, dentist, hospital, optometrist, pharmacist, physician, podiatrist, or psychologist.
“Health care services” means chiropractic, dental, hospital, medical, optometric, pharmaceutical, podiatric, or psychological services.
The purpose of this subtitle is:
to regulate the formation and operation of nonprofit health service plans in the State; and
to promote the formation and existence of nonprofit health service plans in the State that:
are committed to a nonprofit corporate structure;
seek to provide individuals, businesses, and other groups with affordable and accessible health insurance; and
recognize a responsibility to contribute to the improvement of the overall health status of the residents of the jurisdictions in which the nonprofit health service plans operate.
A nonprofit health service plan that complies with the provisions of this subtitle is declared to be a public benefit corporation that is exempt from taxation as provided by law.
The mission of a nonprofit health service plan shall be, in accordance with the charter of the nonprofit health service plan, to:
provide affordable and accessible health insurance to the plan’s insureds and those persons insured or issued health benefit plans by affiliates or subsidiaries of the plan;
assist and support public and private health care initiatives for individuals without health insurance; and
promote the integration of a health care system that meets the health care needs of all the residents of the jurisdictions in which the nonprofit health service plan operates.
A nonprofit health service plan shall develop goals, objectives, and strategies for carrying out, in accordance with the charter of the nonprofit health service plan, its statutory mission.
On or before May 31, 2015, and annually thereafter, the Commissioner shall report to the Governor and, in accordance with § 2–1257 of the State Government Article, the Senate Finance Committee and the House Health and Government Operations Committee on the compliance of a nonprofit health service plan subject to § 14–115(d) of this subtitle with the provisions of this subtitle.
Subject to paragraph (2) of this subsection, this section applies to:
a nonprofit health service plan that is issued a certificate of authority in the State, whether or not organized under the laws of the State; and
an insurer or a health maintenance organization, whether or not organized as a nonprofit corporation, that is wholly owned or controlled by a nonprofit health service plan that:
is issued a certificate of authority in the State; and
does business in the State.
To the extent that the legislatively enacted charter of an entity subject to this section, or the laws or administrative rules or regulations of the jurisdiction of domicile of an entity subject to this section, prohibit the entity from complying with a requirement of subsection (c) of this section, the legislatively enacted charter, laws, and administrative rules and regulations of the jurisdiction of domicile shall supersede and take precedence over the requirement of subsection (c) of this section.
A corporation without capital stock organized for the purpose of establishing, maintaining, and operating a nonprofit health service plan through which health care providers provide health care services to subscribers to the plan under contracts that entitle each subscriber to certain health care services shall be governed and regulated by:
this subtitle;
Title 2, Subtitle 2 of this article and §§ 1–206, 3–127, and 12–210 of this article;
Title 2, Subtitle 5 of this article;
§§ 4–113, 4–114, and 4–503 of this article;
Title 5, Subtitles 1, 2, 3, 4, and 5 of this article;
Title 7 of this article, except for § 7–706 and Subtitle 2 of Title 7;
Title 9, Subtitles 1, 2, and 4 of this article;
Title 10, Subtitle 1 of this article;
Title 27 of this article;
Title 33 of this article; and
any other provision of this article that:
is expressly referred to in this subtitle;
expressly refers to this subtitle; or
expressly refers to nonprofit health service plans or persons subject to this subtitle.
The provisions of subsections (d) and (e) of this section and §§ 14–106, 14–106.1, 14–115(d), (e), (f), and (g), and 14–139(d) and (e) of this subtitle do not apply to a nonprofit health service plan that insures between 1 and 10,000 covered lives in Maryland or issues contracts for only one of the following services:
podiatric;
chiropractic;
pharmaceutical;
dental;
psychological; or
optometric.
Each nonprofit health service plan shall disclose on each document, statement, announcement, and advertisement and in any representation it places before the public that the nonprofit health service plan is a private nonprofit corporation.
Each nonprofit health service plan that provides hospital benefits shall furnish a statement of the plan’s principal claims practices as part of the certificate form or booklet describing the coverage to be afforded.
The statement shall include practices for payment for:
surgical procedures performed by two or more surgeons;
services provided in-area by nonparticipating providers; and
services provided out-of-area by affiliated plans and affiliated providers.
If a nonprofit health service plan is successful in an action against a person authorized to provide health care in the State, the nonprofit health service plan may recover the costs and expenses reasonably incurred by it in the action if it shows that:
the person knowingly or willfully made or caused to be made:
a false statement or representation of a material fact in an application for a benefit or payment from a nonprofit health service plan under this subtitle or Title 15 of this article;
a false statement or representation of a material fact for use in determining rights to those benefits or payments; or
a false statement or representation about a procedure, operation, or service alleged to have been performed; or
the person:
engaged in gross, willful, and continued overcharging for a procedure, operation, or service; or
filed false statements for collection of fees for services that were not rendered.
If a nonprofit health service plan is denied relief in an action under this section, the person against whom the action was brought may recover the costs and expenses reasonably incurred by the person in defending the action.
This section does not limit any additional rights or remedies that a nonprofit health service plan may have at law or in equity.
It is the public policy of this State that the exemption from taxation for nonprofit health service plans under § 6–101(b)(1) of this article is granted so that funds which would otherwise be collected by the State and spent for a public purpose shall be used in a like manner and amount by the nonprofit health service plan.
By March 1 of each year or a deadline otherwise imposed by the Commissioner for good cause, each nonprofit health service plan shall file with the Commissioner a premium tax exemption report that:
is in a form approved by the Commissioner; and
demonstrates that the plan has used funds equal to the value of the premium tax exemption provided to the plan under § 6–101(b) of this article, in a manner that serves the public interest in accordance with this section.
A nonprofit health service plan may satisfy the public service requirement of this section by establishing that, to the extent the value of the nonprofit health service plan’s premium tax exemption under § 6–101(b) of this article exceeds the subsidy required under the Senior Prescription Drug Assistance Program established under Title 15, Subtitle 10 of the Health – General Article, the plan has:
increased access to, or the affordability of, one or more health care products or services by offering and selling health care products or services that are not required or provided for by law;
provided financial or in–kind support for public health programs;
employed underwriting standards in a manner that increases the availability of one or more health care services or products;
employed pricing policies that enhance the affordability of health care services or products and result in a higher medical loss ratio than that established by a comparable for–profit health insurer; or
served the public interest by any method or practice approved by the Commissioner.
Notwithstanding subsection (c) of this section, a nonprofit health service plan that is subject to this section and issues comprehensive health care benefits in the State shall:
offer health care products in the individual market;
offer health care products in the small employer group market in accordance with Title 15, Subtitle 12 of this article;
subsidize the Senior Prescription Drug Assistance Program established under Title 15, Subtitle 10 of the Health – General Article;
subsidize the Kidney Disease Program under Title 13, Subtitle 3 of the Health – General Article;
support the costs of the Community Health Resources Commission under Title 19, Subtitle 21 of the Health – General Article, including:
operating grants to community health resources;
funding for a unified data information system;
the documented direct costs of fulfilling the statutory and regulatory duties of the Commission; and
the administrative costs of the Commission; and
subsidize the provision of mental health services to the uninsured under Title 10, Subtitle 2 of the Health – General Article.
Except as provided in subparagraph (ii) of this paragraph, the support provided under paragraph (1)(iv), (v), and (vi) of this subsection to the Kidney Disease Program, the Community Health Resources Commission, and the Maryland Department of Health, respectively, shall be the value of the premium tax exemption less the subsidy required under this subsection for the Senior Prescription Drug Assistance Program.
The subsidy provided under this subsection to the Community Health Resources Commission may not be less than:
$3,000,000 for each of fiscal years 2012 and 2013; and
$8,000,000 for each of fiscal years 2014 through 2022.
For any year, the subsidy and funding required under this subsection by a nonprofit health service plan subject to this section may not exceed the value of the nonprofit health service plan’s premium tax exemption under § 6–101(b) of this article.
The subsidy that a nonprofit health service plan is required to provide to the Senior Prescription Drug Assistance Program under subsection (d)(1)(iii) of this section:
for the period of January 1, 2006 through June 30, 2006, may not exceed $8,000,000;
for fiscal years 2008 through 2021, may not exceed $14,000,000;
for fiscal year 2022, may not exceed $14,000,000; and
for any year after fiscal year 2022, may not exceed the value of the nonprofit health service plan’s premium tax exemption under § 6–101(b) of this article.
Subject to paragraph (2) of this subsection, each report filed with the Commissioner under subsection (b) of this section is a public record.
In accordance with § 4–335 of the General Provisions Article, the Commissioner shall deny inspection of any part of a report filed under subsection (b) of this section that the Commissioner determines contains confidential commercial information or confidential financial information.
Beginning in fiscal year 2006, a nonprofit health service plan shall transfer funds in the amounts provided under § 14–106(d)(2) of this subtitle to:
the Community Health Resources Commission Fund established under § 19–2201 of the Health – General Article to support the costs of the Community Health Resources Commission as provided in § 14–106(d)(1)(v) of this subtitle;
the Maryland Department of Health for the Kidney Disease Program under Title 13, Subtitle 3 of the Health – General Article; and
the Maryland Department of Health for the provision of mental health services to the uninsured under Title 10, Subtitle 2 of the Health – General Article.
By November 1 of each year, the Commissioner shall issue an order notifying each nonprofit health service plan that is required to file a report under § 14–106 of this subtitle of whether the plan has satisfied the requirements of § 14–106 of this subtitle.
If the Commissioner determines that a nonprofit health service plan has not satisfied the requirements of § 14–106 of this subtitle, the Commissioner shall issue an order requiring the nonprofit health service plan to pay the premium tax under Title 6, Subtitle 1 of this article:
for a period of time beginning with the date the plan was determined to be out of compliance with § 14–106 of this subtitle; and
in an amount equal to the amount by which the value of the nonprofit health service plan’s premium tax exemption under § 6–101(b) of this article exceeds the sum of:
the subsidy required under the Senior Prescription Drug Assistance Program established under Title 15, Subtitle 10 of the Health – General Article; and
other funds used by the nonprofit health service plan to meet the public service requirement under § 14–106 of this subtitle.
A nonprofit health service plan that fails to timely file the report required under § 14–106 of this subtitle shall pay the penalties under § 14–121 of this subtitle.
A party aggrieved by an order of the Commissioner issued under this section has a right to a hearing in accordance with §§ 2–210 through 2–215 of this article.
Premium tax revenue collected by the Administration as the result of an order issued under subsection (b) of this section shall be deposited into the Senior Prescription Drug Assistance Program Fund established under § 15–1004 of the Health – General Article.
A corporation subject to this subtitle may not issue contracts for the rendering of health care services to subscribers unless the Commissioner has issued a certificate of authority to the corporation authorizing it to do so.
An applicant for a certificate of authority shall:
file with the Commissioner an application on the form that the Commissioner provides containing the information that the Commissioner considers necessary;
pay to the Commissioner the applicable fee required by § 2-112 of this article; and
file with the Commissioner copies of the following documents, certified by at least two of the executive officers of the corporation:
articles of incorporation, including the applicant’s corporate mission statement, with all amendments;
bylaws with all amendments;
each contract executed or proposed to be executed by the corporation and a health care provider, embodying the terms under which health care services are to be furnished to subscribers to the plan;
each form of contract issued or proposed to be issued to subscribers to the plan and a table of the rates charged or proposed to be charged to subscribers for each form of contract;
a financial statement of the corporation, including the amount of each contribution paid or agreed to be paid to the corporation for working capital, the name of each contributor, and the terms of each contribution;
a list of the names and addresses of and biographical information about the members of the board of directors of the corporation;
a list of the total compensation paid or proposed to be paid to each officer and member of the board of directors of the corporation;
a list of the beginning and ending terms of membership for each member of the board of directors of the corporation; and
any other information or documents that the Commissioner considers necessary to ensure compliance with this subtitle.
The Commissioner shall issue a certificate of authority to an applicant if:
the applicant has paid the applicable fee required by § 2-112 of this article; and
the Commissioner is satisfied:
that the applicant has been organized in good faith for the purpose of establishing, maintaining, and operating a nonprofit health service plan that:
is committed to a nonprofit corporate structure;
in accordance with the charter of the nonprofit health service plan, seeks to provide affordable and accessible health insurance; and
in accordance with the charter of the nonprofit health service plan, recognizes a responsibility to contribute to the improvement of the overall health status of the residents of the jurisdictions in which it operates;
that:
each contract executed or proposed to be executed by the applicant and a health care provider to furnish health care services to subscribers to the nonprofit health service plan, obligates or, when executed, will obligate each health care provider party to the contract to render the health care services to which each subscriber is entitled under the terms and conditions of the various contracts issued or proposed to be issued by the applicant to subscribers to the plan; and
each subscriber is entitled to reimbursement for podiatric, chiropractic, psychological, or optometric services, regardless of whether the service is performed by a licensed physician, licensed podiatrist, licensed chiropractor, licensed psychologist, or licensed optometrist;
that:
each contract issued or proposed to be issued to subscribers to the plan is in a form approved by the Commissioner; and
the rates charged or proposed to be charged for each form of each contract are fair and reasonable;
that the applicant has a surplus, as defined in § 14-117 of this subtitle, of the greater of:
$100,000; and
an amount equal to that required under § 14-117 of this subtitle; and
that, except for a nonprofit health service plan that insures between 1 and 10,000 covered lives in the State, the nonprofit health service plan’s corporate headquarters is located in the State.
If the Commissioner determines that a nonprofit health service plan does not continue to satisfy the requirements of this subtitle, the Commissioner may disapprove the renewal of the certificate of authority of the nonprofit health service plan.
The Commissioner shall consider an entity’s inability to comply with the requirements of § 14-102(c) of this subtitle as a result of a conflict with the legislatively enacted charter of the entity or the laws or administrative rules or regulations of the jurisdiction of domicile of the entity in determining whether to issue or renew a certificate of authority under this section.
Subject to the authority of the Commissioner to regulate nonprofit health service plans under this article, a certificate of authority issued under this subtitle authorizes a corporation to:
issue contracts in the form filed with the Commissioner to persons that become subscribers to the plan;
finance capital improvement projects through the Maryland Health and Higher Educational Facilities Authority as provided under Title 10, Subtitle 3 of the Economic Development Article;
finance capital improvement projects through the Maryland Economic Development Corporation as provided under Title 10, Subtitle 1 of the Economic Development Article; and
partner with the State and other public or private entities to provide services or administer programs intended to address community health care needs.
The Commissioner may revoke a certificate of authority issued to a corporation subject to this subtitle, and at any time after revocation may institute proceedings under Title 9, Subtitle 2 of this article to rehabilitate or liquidate the corporation, if:
grounds exist under § 4-113 of this article; or
the Commissioner has reason to believe that the corporation:
is being operated for profit;
is being fraudulently conducted;
is not complying with this subtitle or article;
knowingly is failing to comply with a rule, regulation, or order of the Commissioner; or
has violated the provisions of Title 6.5 of the State Government Article.
In this section the following words have the meanings indicated.
“Board” means the board of directors of a nonprofit health service plan.
“Immediate family member” means a spouse, child, child’s spouse, parent, spouse’s parent, sibling, or sibling’s spouse.
This section applies to a nonprofit health service plan that is:
issued a certificate of authority in the State; and
organized under the laws of the State.
The business and affairs of a nonprofit health service plan shall be managed under the direction of a board of directors.
The board and its individual members are fiduciaries and shall act:
in good faith;
in a manner that is reasonably believed to be in the best interests of the corporation and its controlled affiliates or subsidiaries that offer health benefit plans;
in a manner that is reasonably believed to be in furtherance of the mission of the corporation as a nonprofit health service plan as required under § 14-102(c) of this subtitle; and
with the care that an ordinarily prudent person in a like position would use under similar circumstances.
The board and its individual members may not use board membership for personal or financial enrichment to the detriment of the nonprofit health service plan or the mission of the nonprofit health service plan.
The principal functions of the board shall include:
ensuring that the corporation effectively carries out the nonprofit mission established under § 14-102(c) of this subtitle;
selecting corporate management and evaluating its performance;
ensuring to the extent practicable that human resources and other resources are sufficient to meet corporate objectives;
subject to the provisions of subsection (d) of this section, nominating and selecting suitable candidates for the board;
establishing a system of governance at the board level, including an annual evaluation of board performance; and
before considering any bid or offer to acquire the nonprofit health service plan and to convert to a for-profit entity under Title 6.5 of the State Government Article, ensuring that adequate consideration is given to an independent valuation of the nonprofit health service plan.
Each member of the board shall demonstrate a commitment to the mission of the nonprofit health service plan as required by § 14-102(c) of this subtitle.
An officer or employee of a nonprofit health service plan or any of its affiliates or subsidiaries may not be appointed or elected to the board.
A nonprofit health service plan is subject to the provisions of § 2-419 of the Corporations and Associations Article.
This subsection applies to a corporation that is:
issued a certificate of authority as a nonprofit health service plan; and
the sole member of a corporation issued a certificate of authority as a nonprofit health service plan.
The board shall be composed of at least 11 members and no more than 23 members, including:
one nonvoting member, who is not a member of the Maryland General Assembly, appointed by and serving at the pleasure of the President of the Senate of Maryland;
one nonvoting member, who is not a member of the Maryland General Assembly, appointed by and serving at the pleasure of the Speaker of the House of Delegates; and
no more than 21 voting members selected by the board, in accordance with the bylaws of the corporation, including three consumer members, who are covered by the nonprofit health service plan or its affiliates at the time of their initial election to the board and who satisfy the requirements of paragraphs (13), (14), and (15) of this subsection.
No more than five members of the board may be:
licensed health care professionals;
hospital administrators; or
employees of health care professionals or hospitals.
To the extent possible, the board shall seek to include individuals with a diverse range of experience relevant to the mission of the corporation as a nonprofit health service plan as required under § 14–102 of this subtitle, including experience in data, consumer experience, government programs, population health, geriatrics, diversity, equity and inclusion, audit, human resources, benefit consulting, executive level, actuarial, accounting, information technology, finance, law, large and small businesses, nonprofit businesses, and organized labor.
Except for nonvoting members under paragraph (2)(i) and (ii) of this subsection, the board shall be self–perpetuating.
The board shall have the following standing committees whose duties shall include:
an audit committee responsible for ensuring financial accountability;
a finance committee responsible for reviewing and making recommendations on the annual budget and for developing and recommending long–range financial objectives;
a compensation committee responsible for developing proposed compensation guidelines in accordance with § 14–139(d) of this subtitle;
a nominating committee responsible for identifying, evaluating, and recommending to the board individuals qualified to become board members, including individuals who represent a corporation for which the nonprofit health service plan is the sole member;
a service and quality oversight committee responsible for ensuring that policies and processes are in effect to assess and improve the quality of health insurance products provided to subscribers and certificate holders;
a mission oversight committee responsible for ensuring that the officers of the corporation act in accordance with the mission of the nonprofit health service plan;
a strategic planning committee responsible for examining long–range planning objectives, assessing strategies that may be used to implement the planning objectives, and analyzing the nonprofit health service plan’s role in the insurance marketplace; and
any other committee that the board determines is necessary to carry out its duties.
Each standing committee shall have representation from:
the voting members under paragraph (2) of this subsection; and
each corporation for which the nonprofit health service plan is the sole member.
The compensation committee and the nominating committee shall each include either the appointee of the President of the Senate or the appointee of the Speaker of the House of Delegates.
Each board member shall serve on at least one standing committee.
The chairman of the board shall select a chairman for each board committee.
The board shall approve in advance any action by the nonprofit health service plan, a corporation for which the plan is the sole member, or any affiliate or subsidiary of the nonprofit health service plan to:
materially modify options available in benefit plans marketed in the State;
materially modify Maryland provider networks or Maryland provider reimbursement levels;
materially modify underwriting guidelines for products marketed in the State;
materially modify rates or rating plans that are required to be approved by the Commissioner;
add a product to or withdraw a product from the Maryland market, withdraw from a line or type of business in the State, or withdraw from a geographic region in the State;
materially modify marketing goals and objectives in the State; or
materially impact the availability or affordability of health care in the State.
The Commissioner shall adopt regulations that define “material” for purposes of subparagraph (i) of this paragraph.
A decision by the board to convert to a for–profit entity under Title 6.5 of the State Government Article may be rejected by any three members of the board.
The board may delegate approval for the actions listed in subparagraph (i) of this paragraph to a standing committee of the board.
The board shall take and retain complete minutes of all board and committee meetings.
The three consumer members shall be either subscribers or certificate holders of the nonprofit health service plan or its affiliates at the time of their initial election to the board.
Each consumer member of the board:
shall be a member of the general public;
may not be considered an agent or employee of the State for any purpose; and
is entitled to the same rights, powers, and privileges as the other members of the board.
A consumer member of the board may not:
be a licensee of or otherwise be subject to regulation by the Commissioner;
be employed by or have a financial interest in:
a nonprofit health service plan or its affiliates or subsidiaries; or
a person regulated under this article or the Health – General Article; or
within 3 years before appointment, have been employed by, had a financial interest in, or have received compensation from:
a nonprofit health service plan or its affiliates or subsidiaries; or
a person regulated under this article or the Health – General Article.
This subsection does not apply to a board that has fewer than three authorized members.
The term of a member is 3 years.
The terms of the members of a board shall be staggered over a 3–year period as required by the terms provided for members of the board in the bylaws filed and approved by the Commissioner on or after June 1, 2003.
At the end of a term, a member continues to serve until a successor is appointed and qualifies.
A member who is appointed after a term has begun serves only for the rest of the term and until a successor is appointed and qualifies.
A member may not serve for more than:
three full terms; or
a total of more than 9 years.
A person may not be a member of the board if the person:
has defaulted on the payment of a monetary obligation to the nonprofit health service plan;
has been convicted of a criminal offense involving dishonesty or breach of trust or a felony;
habitually has neglected to pay debts; or
has been prohibited under any federal securities law from acting as a director or officer of any corporation.
A member shall meet any other qualifications set forth in the bylaws of the nonprofit health service plan.
A member may not be an immediate family member of another board member or an officer or employee of the nonprofit health service plan.
The board shall elect a chairman from among its members.
The composition of the board shall represent the racial and gender diversity of the State.
The board shall include representation from each geographic region of the State.
The board shall notify the Commissioner of any member who attends less than 65% of the meetings of the board during a period of 12 consecutive months.
Board members may receive the following compensation:
reimbursement for ordinary and necessary expenses; and
an amount of base compensation and compensation for attendance at meetings in accordance with § 14–139 of this subtitle.
A board member may not receive more than the amount specified in paragraph (1) of this subsection for serving on more than one board of a corporation subject to this section.
This paragraph applies to a corporation that is:
issued a certificate of authority as a nonprofit health service plan; and
the sole member of a corporation issued a certificate of authority as a nonprofit health service plan.
On or before June 30 of each calendar year, a corporation subject to this paragraph shall report to the Commissioner on:
the total amount of base compensation, compensation for attendance at meetings, and reimbursement for ordinary and necessary expenses paid to each board member in the preceding calendar year; and
the proposed annual compensation, together with necessary supporting documentation, to be paid to board members for the next calendar year.
In this section, “officer” means any officer that a Maryland corporation is required or permitted to have under § 2-412 of the Corporations and Associations Article.
An officer of a nonprofit health service plan shall act:
in good faith;
in a manner that is reasonably believed to be in the best interests of the corporation and its controlled affiliates or subsidiaries that offer health benefit plans;
in a manner that is consistent with the mission of a nonprofit health service plan as required under § 14-102(c) of this subtitle; and
with the care that an ordinarily prudent person in a like position would use under similar circumstances.
Except for the receipt of reasonable remuneration in conformity with § 14-139 of this subtitle, an officer of a nonprofit health service plan may not use the position of officer for personal or financial enrichment.
A violation of this subsection shall be considered an unsound or unsafe business practice under § 14-116 of this subtitle.
In this section, “unsound or unsafe business practice” means a business practice that:
is detrimental to the financial condition of a nonprofit health service plan and does not conform to sound industry practice;
impairs the ability of a nonprofit health service plan to pay subscriber benefits; or
violates § 14-102, § 14-115, § 14-115.1, or § 14-139(a), (b), or (c) of this subtitle.
“Unsound or unsafe business practice” includes:
failing to comply with the notice requirements of § 14-119 of this subtitle;
willfully hindering an examination of a nonprofit health service plan or its affiliates or subsidiaries; and
failure of a director to attend at least 65% of the meetings of the board during a period of 12 consecutive months.
If the Commissioner believes that an officer or director of a nonprofit health service plan has engaged in an unsound or unsafe business practice, the Commissioner shall send a warning to that individual.
If the Commissioner believes that an officer or director of a nonprofit health service plan has failed to take appropriate action in response to a warning received under paragraph (1) of this subsection, the Commissioner may impose a civil penalty not exceeding $125,000 for each warning.
The Commissioner shall send a copy of the warning or, if a civil penalty is imposed under paragraph (2) of this subsection, a copy of the order:
by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to each director of the nonprofit health service plan; and
if the nonprofit health service plan is a corporation incorporated in a state other than this State, to the insurance commissioner of the state in which the corporation is incorporated.
If the nonprofit health service plan is incorporated in this State, the Commissioner may remove the officer or director if the Commissioner determines after a hearing that the unsound or unsafe business practice continued after the warning.
A copy of the removal order shall be served on the individual removed and each director of the nonprofit health service plan.
The individual removed is entitled to a hearing under Title 2 of this article.
Any person aggrieved by a final decision of the Commissioner under this section may appeal the decision under § 2-215 of this article.
A nonprofit health service plan formed or organized under the laws of this State may not:
form or organize under the laws of another jurisdiction unless the Commissioner determines that it is in the public interest; or
alter its structure, operations, or affiliations, if such alteration results in the for-profit activities of the plan becoming so substantial that the Insurance Commissioner determines that the purpose of the nonprofit health service plan may no longer be characterized as operating a nonprofit health service plan.
The Commissioner may revoke a certificate of authority issued to a foreign corporation subject to this subtitle if:
the foreign corporation operates a nonprofit health service plan that is affiliated with a nonprofit health service plan formed or organized under the laws of this State; and
the affiliation between the foreign nonprofit health service plan and the nonprofit health service plan formed or organized under the laws of this State is terminated.
If the Attorney General has reason to believe that a nonprofit health service plan is engaging in an unsound or unsafe business practice, the Attorney General shall notify the Commissioner.
If the Commissioner fails to take action under this section within 60 days after notification by the Attorney General, the Attorney General may:
investigate the unsound or unsafe business practice; and
initiate an action in circuit court for appropriate relief to remedy the unsound or unsafe business practice, including the removal of an officer or director of the nonprofit health service plan.
In the course of any investigation conducted by the Attorney General, the Attorney General may:
subpoena witnesses;
administer oaths;
examine an individual under oath;
compel production of records, books, papers, contracts, and other documents; and
obtain all necessary assistance from the Administration.
In this section the following words have the meanings indicated.
“Assets” means assets that are:
authorized under § 14-120 of this subtitle; and
determined by the Commissioner to be admitted assets under the guidelines issued by the National Association of Insurance Commissioners.
“Assets” does not include:
cash, notes, or receivables that result from the sale of an asset of a nonprofit health service plan or its affiliate or subsidiary if the purchaser may require the plan to repurchase the asset; or
stock of an affiliate or subsidiary of the plan if the stock has not been issued in accordance with a public offering or is not publicly traded on a recognized stock exchange.
Notwithstanding subparagraph (ii)2 of this paragraph, “assets” includes stock of an affiliate or subsidiary of a nonprofit health service plan to the extent that the Commissioner determines that the stock has a value that could be made available for the payment of claims and losses.
“Earned premium” means earned premiums under:
insurance contracts and policies; and
the insured part of other contracts.
“Surplus” means the amount by which assets exceed liabilities described in § 5-103 of this article.
Except as provided in subsection (d) of this section, a corporation authorized under this subtitle shall maintain a surplus in an amount equal to the greater of:
$75,000; and
8% of the total earned premium received by the corporation in the immediately preceding calendar year.
If the size and structure of the corporation requires, the Commissioner may require the differentiation of the corporation’s activities into risk and nonrisk business for the purpose of determining the corporation’s income that is derived from earned premium and other sources.
If the Commissioner determines after a hearing that a larger surplus is necessary for the protection of subscribers to a nonprofit health service plan, the Commissioner may require a corporation authorized under this subtitle to maintain a surplus in an amount greater than the amount required by subsection (b) of this section.
The surplus of a corporation authorized under this subtitle may be considered to be excessive only if:
the surplus is greater than the appropriate risk based capital requirements as determined by the Commissioner for the immediately preceding calendar year; and
after a hearing, the Commissioner determines that the surplus is unreasonably large.
After the Commissioner has determined the surplus of a corporation authorized under this subtitle to be excessive, the Commissioner:
may order the corporation to submit a plan for distribution of the excess in a fair and equitable manner; or
if the corporation fails to submit a plan of distribution within 60 days, may compile a plan and order the corporation to implement it.
A distribution ordered under paragraph (2) of this subsection may be made only to subscribers who are covered by the corporation’s nonprofit health service plan at the time the distribution is made.
The Commissioner may not order a distribution or plan for distribution under subsection (e) of this section if the distribution would render the corporation impaired or insolvent under the laws of its domiciliary state or any other state in which the corporation is authorized to do business.
If the minimum surplus of a corporation authorized under this subtitle required to be maintained by § 14-117 of this subtitle becomes impaired, the Commissioner immediately may determine the amount of deficiency and serve notice on the corporation and its board of directors to cure the deficiency within the time period specified by the Commissioner, which may not exceed 120 days after service of the notice.
The corporation may cure the deficiency in cash or in assets eligible for the investment of the corporation’s funds under § 14-120 of this subtitle.
Except as provided in subsection (d) of this section, if a corporation that has been notified of a deficiency under subsection (a) of this section does not cure the deficiency and file proof that it has done so with the Commissioner within the time period specified by the Commissioner:
the corporation may be considered insolvent; and
the Commissioner may institute delinquency proceedings against the corporation under Title 9, Subtitle 2 of this article.
The corporation may apply for a single extension of not more than 60 days to cure a deficiency.
The Commissioner may grant the extension if:
the corporation shows good cause why the deficiency was not cured in the initial time period specified by the Commissioner; and
the deficiency exists because the Commissioner required an increased surplus, disallowed certain assets, or reduced the value of certain assets carried in the corporation’s accounts.
In addition to the requirements of § 9-231 of this article, if a chief executive officer, chief financial officer, treasurer, or director knows that a nonprofit health service plan or its affiliate or subsidiary is impaired, that individual immediately shall notify the Commissioner of the impairment, unless the Commissioner has already been notified of the impairment by the chief executive officer, chief financial officer, treasurer, or director.
The provisions of § 9-231(d), (f), and (g) of this article apply to notice provided to the Commissioner under this section.
In this section, “group health care” means a practice by which an affiliate or subsidiary of a nonprofit health service plan engages the services of health care specialists who provide health care at predetermined locations in accordance with a prepaid health plan.
Except as provided in paragraph (2) of this subsection, a corporation subject to this subtitle may invest its funds only in assets allowed for the investment of the funds of life insurers under §§ 5-101 and 5-102 and Title 5, Subtitle 5 of this article.
If the Commissioner determines that a corporation subject to this subtitle is engaged principally in the business of group health care rather than the sale of an insurance product or plan described in § 14-102 of this subtitle, the Commissioner may allow the corporation to invest a sum not to exceed 50% of its assets in real estate for use as medical facilities and fixed medical equipment to be used solely for the purpose of engaging in group health care.
On or before March 1 of each year, unless the Commissioner extends the time for good cause, each nonprofit health service plan shall file with the Commissioner a complete statement of its financial condition, transactions, and affairs for the immediately preceding calendar year.
The annual statement shall:
be in the form and have the content approved for current use by the National Association of Insurance Commissioners or its successor organization; and
contain any additional information that the Commissioner requires.
The applicable fee required by § 2–112 of this article shall be submitted at the same time as the statement.
Unless the Commissioner extends the time for filing, a nonprofit health service plan that fails to file an annual statement on or before March 10 shall pay a penalty of:
$100 for each day from March 1 to March 10, both inclusive; and
$150 for each day from March 11 to the day before the Commissioner receives the statement, both inclusive.
At any time, the Commissioner may require a nonprofit health service plan doing business in the State to file an interim statement containing the information that the Commissioner considers necessary.
Except as provided in paragraph (2) of this subsection, on or before June 1 of each year, a nonprofit health service plan shall file with the Commissioner an audited financial report for the immediately preceding calendar year.
The nonprofit health service plan shall have the audited financial report prepared by an independent certified public accountant.
The Commissioner may:
set requirements for the form and content of the audited financial report; and
for good cause, extend the time for filing the audited financial report.
With 90 days’ advance notice, the Commissioner may require a nonprofit health service plan to file an audited financial report earlier than the date specified in paragraph (1) of this subsection.
This paragraph does not apply to:
a health maintenance organization required to file an annual report under § 19–717 of the Health – General Article; or
an authorized insurer required to file an annual report under § 4–116 of this article.
On or before June 1 of each year, a nonprofit health service plan shall file with the Commissioner an audited financial report for each affiliate and subsidiary owned by or under the control of the nonprofit health service plan during the immediately preceding calendar year.
The Commissioner may, for good cause, extend the time for filing the audited financial reports.
The audited financial reports:
shall contain the information required by the Commissioner; and
be certified by an independent certified public accountant as to the financial condition, transactions, and affairs of each affiliate and subsidiary for the immediately preceding calendar year.
As part of the audited financial reports required under subsection (c)(3) of this section, each nonprofit health service plan shall:
file a consolidated financial statement that:
covers the nonprofit health service plan and each of its affiliates and subsidiaries; and
consists of the financial statements of the nonprofit health service plan and each of its affiliates and subsidiaries, certified by an independent certified public accountant as to the financial condition, transactions, and affairs of the plan and its affiliates and subsidiaries for the immediately preceding calendar year;
provide a list of:
the names and addresses of and biographical information about the members of the board of directors of the nonprofit health service plan;
the total compensation, including all cash and deferred compensation in addition to salary, of:
each member of the board of directors of the nonprofit health service plan;
each officer of the nonprofit health service plan or any affiliate or subsidiary of the plan; and
any employee of the nonprofit health service plan or any affiliate or subsidiary of the plan designated by the Commissioner; and
provide any other information or documents necessary for the Commissioner to ensure compliance with this subtitle.
Unless the Commissioner extends the time for filing, a nonprofit health service plan that fails to file an audited financial report on or before June 10 shall pay a penalty of:
$100 for each day from June 1 to June 10, both inclusive; and
$150 for each day from June 11 to the day before the Commissioner receives the report, both inclusive.
The statements and reports required under this section shall be in the form required by the Commissioner.
Whenever a corporation authorized under this subtitle makes a change that would result in a change in any of the information required under subsection (d) of this section, the corporation shall notify the Commissioner within 30 days after the change becomes effective.
The Commissioner may conduct any investigation or hearing that the Commissioner considers necessary to enforce this subtitle.
In conducting a hearing or investigation under this section, the Commissioner has the same powers with respect to nonprofit health service plans as are granted to the Commissioner under Titles 2 and 4 of this article with respect to any other activity regulated under this article.
If another state enacts a law or takes a regulatory action that requires a nonprofit health service plan operating in this State to provide a program or benefits for the residents of the other state or to distribute or reduce its surplus on the grounds that the surplus is excessive in whole or in part, the Commissioner may hold a quasi–legislative hearing or a hearing under Title 2 of this article or conduct an examination to review and evaluate the impact of the law or regulatory action on the nonprofit health service plan, including the impact on:
surplus;
premium rates for policies issued or delivered in this State; and
solvency.
Based on the review and evaluation under paragraph (3) of this subsection, the Commissioner shall determine whether the impact on the nonprofit health service plan is harmful to the interests of subscribers covered by policies issued or delivered in this State.
If the Commissioner determines the program or benefits for the residents of another state or the surplus distribution or reduction have an impact on the nonprofit health service plan that is harmful to the interests of subscribers covered by policies issued or delivered in this State, the Commissioner shall issue an appropriate order to protect the subscribers.
The order issued under subparagraph (i) of this paragraph may include:
a prohibition on the nonprofit health service plan subsidizing the program or benefits for the residents of another state through:
premiums charged to subscribers under policies issued or delivered in this State; or
use of any surplus earned through policies issued or delivered in this State;
a prohibition on the nonprofit health service plan distributing or reducing its surplus for the benefit of residents of another state; or
any other action the Commissioner considers necessary to protect the interests of the subscribers covered by policies issued or delivered in this State.
A nonprofit health service plan may not distribute or reduce its surplus under a law or regulatory action the impact of which is subject to a hearing or an examination under paragraph (3) of this subsection, except with the approval of the Commissioner.
The Commissioner may adopt regulations to carry out this subtitle.
The Commissioner may commence a delinquency proceeding against a corporation operating under this subtitle for any of the reasons set forth in § 9–211(a) and (b) of this article.
The Commissioner or an examiner of the Administration may inspect and examine the affairs of a corporation authorized under this subtitle and an affiliate or subsidiary of a corporation authorized under this subtitle.
In conducting an inspection or examination under this section, the Commissioner or examiner:
shall have free access to all of the books and documents of the corporation and its affiliates or subsidiaries; and
may subpoena and examine under oath any person, including an officer, agent, or employee of the corporation or its affiliates and subsidiaries, in relation to the affairs, transactions, and condition of the corporation or its affiliates and subsidiaries.
The Commissioner may delegate the authority provided under this section to a designee of the Commissioner.
The corporation or its affiliate or subsidiary whose affairs are examined under this section shall pay the expenses of examination in accordance with § 2-208 of this article.
A corporation subject to this subtitle may not amend its certificate of incorporation, bylaws, or the terms and provisions of contracts issued or proposed to be issued to subscribers to the plan until the proposed amendments have been submitted to and approved by the Commissioner and the applicable fees required by § 2–112 of this article have been paid.
A corporation subject to this subtitle may not change the table of rates charged or proposed to be charged to subscribers for a form of contract issued or to be issued for health care services until the proposed change has been submitted to and approved by the Commissioner.
A nonprofit health service plan that offers a health benefit plan, as defined in § 11–601 of this article, is subject to Title 11, Subtitle 6 of this article for the health benefit plan.
If the provisions of Title 11, Subtitle 6 of this article conflict with the provisions of this section, the provisions of Title 11, Subtitle 6 of this article shall prevail.
The Commissioner shall approve an amendment to the articles of incorporation or bylaws under paragraph (1) of this subsection unless the Commissioner determines the amendment is contrary to the public interest.
An amendment may not take effect until 60 days after it is filed with the Commissioner.
The Commissioner may extend the initial waiting period described in subparagraph (i) of this paragraph for up to an additional 30 days if the Commissioner gives to a corporation subject to this subtitle notice of the extension before the initial waiting period ends.
If an amendment is not accompanied by the information needed to support it and the Commissioner does not have sufficient information to determine whether the filing meets the requirements of this section, the Commissioner shall require the nonprofit health service plan to provide the needed information.
If the Commissioner requires additional information, the waiting period under this paragraph shall begin again on the date the needed information is provided.
On written application by the nonprofit health service plan, the Commissioner may authorize an amendment that the Commissioner has reviewed to become effective before the expiration of the waiting period or any extension of the waiting period or at a later date.
A filing is deemed approved unless disapproved by the Commissioner within the waiting period or any extension of the waiting period.
The Commissioner shall disapprove or modify the proposed change if:
the table of rates appears by statistical analysis and reasonable assumptions to be inadequate, unfairly discriminatory, or excessive in relation to benefits; or
the form contains provisions that are unjust, unfair, inequitable, inadequate, misleading, or deceptive or encourage misrepresentations of the coverage.
In determining whether to disapprove or modify the form or table of rates, the Commissioner shall consider, to the extent appropriate:
past and prospective loss experience within and outside the State;
underwriting practice and judgment;
a reasonable margin for reserve needs;
past and prospective expenses, both countrywide and those specifically applicable to the State; and
any other relevant factors within and outside the State.
On the adoption of an amendment or change, after approval by the Commissioner, the corporation shall file with the Commissioner a copy of the amendment or change that has been certified by at least two executive officers of the corporation.
At any time, the Commissioner may require a nonprofit health service plan in the State to demonstrate that its filings, including the terms and provisions of its contracts, its table of rates, and its method for setting rates, comply with subsections (a) and (b) of this section, notwithstanding that the Commissioner had previously approved the filings.
If, after the applicable review period established under subsection (b) of this section, the Commissioner finds that a filing does not meet the requirements of this section, the Commissioner shall issue to the filer an order that specifies the ways in which the filing fails to meet the requirements of this section and states when, within a reasonable period after the order, the filing will no longer be effective.
The Commissioner shall hold a hearing before issuing an order under paragraph (1) of this subsection.
The Commissioner shall give written notice of the hearing to the filer at least 10 days before the hearing.
The written notice shall specify the matters to be considered at the hearing.
An order issued under paragraph (1) of this subsection does not:
affect a contract or policy made or issued before the expiration of the period set forth in the order; or
directly affect an existing contract or policy between a nonprofit health service plan and a subscriber established in accordance with a collective bargaining agreement.
The Commissioner may adopt regulations to allow a type or kind of form to be effective upon receipt of the filing by the Commissioner.
If a nonprofit health service plan uses a form which becomes effective in accordance with the provisions of subparagraph (i) of this paragraph and the form would be subject to disapproval under subsection (b)(3) of this section, the Commissioner may:
subsequently disapprove the form; and
impose on the nonprofit service plan a penalty under § 4–113 of this article.
If a nonprofit health service plan files a form with the Commissioner which becomes effective in accordance with paragraph (1) of this subsection, the nonprofit health service plan shall pay the applicable filing fee provided in § 2–112 of this article.
Each decision or finding of the Commissioner about rates and forms made under § 14-126 of this subtitle is subject to judicial review in accordance with Title 11, Subtitle 5 of this article.
All other decisions and findings of the Commissioner about a corporation subject to this subtitle are subject to judicial review in accordance with § 2-215 of this article.
In Part V of this subtitle, “health insurer” means an insurer authorized to write health insurance.
In this section the following words have the meanings indicated.
“Affiliate” means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a corporation subject to this subtitle.
“Control” has the meaning stated in § 7–101(c) of this article.
“Subsidiary” has the meaning stated in § 7–101(g) of this article.
A nonprofit health service plan may not invest in or otherwise acquire an affiliate or subsidiary unless:
the affiliate or subsidiary is licensed by the Commissioner; or
the affiliate or subsidiary is majority owned by the nonprofit health service plan; and
the business of the affiliate or subsidiary is directly related to the operation of the nonprofit health service plan or the administration of a health benefits program.
A nonprofit health service plan shall submit a statement of proposed action to the Commissioner before the plan may:
create, acquire, or invest in an affiliate or subsidiary in order to control the affiliate or subsidiary;
alter the structure, organization, purpose, or ownership of the plan or an affiliate or subsidiary of the corporation;
make an investment exceeding $500,000; or
make an investment in an affiliate or subsidiary.
The nonprofit health service plan shall file the statement of proposed action required under this subsection at least 60 days before the effective date of the proposed action.
The nonprofit health service plan may not engage in a proposed action described under paragraph (1)(i) through (iii) of this subsection unless the Commissioner approves the action in writing.
The Commissioner shall either approve or disapprove the proposed action within 60 days after the Commissioner receives the statement of proposed action.
The Commissioner shall approve a statement of proposed action under this section unless the Commissioner determines the proposed action is contrary to the public interest.
The Commissioner may authorize a corporation to comply with the law of its domiciliary jurisdiction if the corporation is domiciled in a jurisdiction that has adopted by statute or regulation provisions that limit the ownership and operation of an affiliate or subsidiary in substantially the same manner as provided in this section.
If an affiliate or subsidiary of a corporation regulated under this subtitle does not comply with this section, the Commissioner shall require the corporation to file a plan of divestiture or liquidation of the affiliate or subsidiary.
The plan of divestiture or liquidation:
shall state the reasons for noncompliance clearly;
shall provide the Commissioner with the information that the Commissioner considers necessary to approve the divestiture or liquidation; and
is proprietary and confidential commercial information under § 4–335 of the General Provisions Article.
Before a divestiture or liquidation under this section, the plan of divestiture or liquidation must be approved by the Commissioner.
Any action by the Commissioner under this section may be appealed in accordance with Title 2 of this article.
Nonprofit health service plans are subject to Title 27 of this article.
A corporation authorized under this subtitle that maintains or operates a nonprofit health service plan may not:
deny a claim made under a contract, certificate, or policy of a nonprofit health service plan for an unfair or unfairly discriminatory reason;
without just cause, require a person making a claim under a contract, certificate, or policy of a nonprofit health service plan to accept less than the amount due; or
fail to notify in writing a subscriber or certificate holder of a nonprofit health service plan of a denial of a properly completed claim within 60 days after the plan receives the claim.
If it appears to the Commissioner that an act or practice or proposed act or practice of a corporation authorized under this subtitle that maintains or operates a nonprofit health service plan is in violation of subsection (b) of this section or Title 27 of this article, the burden of persuasion is on the corporation to show that the act or practice or proposed act or practice is not in violation of subsection (b) of this section or Title 27 of this article.
A nonprofit health service plan may not issue, renew, or deliver an individual or group contract in the State that excludes coverage for hospital or medical expenses based on a violation of:
a provision of Title 21 of the Transportation Article; or
a provision of the Natural Resources Article.
Except as provided in subsection (b), (c), or (d) of this section, a nonprofit health service plan or Blue Cross or Blue Shield plan may not disclose specific medical information contained in a subscriber’s or certificate holder’s medical or claims records.
A nonprofit health service plan or Blue Cross or Blue Shield plan may disclose specific medical information or medical data contained in a subscriber’s or certificate holder’s medical or claims records:
to the individual or individual’s agent or representative; or
if the individual authorizes the disclosure.
A nonprofit health service plan or Blue Cross or Blue Shield plan may disclose specific medical information contained in a subscriber’s or certificate holder’s medical records without the authorization of the subscriber or certificate holder:
to a medical review committee, accreditation board, or commission, if the information is requested by or is in furtherance of the purpose of the committee, board, or commission;
in response to legal process;
to another nonprofit health service plan, Blue Cross or Blue Shield plan, or insurer to coordinate benefit payments under multiple sickness and accident, dental, or hospital medical contracts;
to a government agency performing its lawful duties as authorized by an act of the General Assembly or United States Congress;
to a researcher, on request, for medical and health care research in accordance with a protocol approved by an institutional review board;
in accordance with a cost containment contractual obligation to verify that benefits paid by the nonprofit health service plan were proper contractually;
to a third party payor if:
the third party payor does not further disclose the specific medical or claims information; and
the information is required for an audit of the billing made by the plan to the payor;
to evaluate and adjust a claim for benefits under a policy or to evaluate and calculate provider fiscal incentives or other types of provider payments; or
to the individual’s treating providers for the sole purposes of enhancing or coordinating patient care or assisting the treating providers’ clinical decision making, provided that:
a disclosure under this item is subject to the additional limitations in § 4–307 of the Health – General Article on disclosure of a medical record developed primarily in connection with the provision of mental health services;
medical information or medical data contained in an insured’s medical or claims records may be disclosed only in accordance with the federal Health Insurance Portability and Accountability Act of 1996, any regulations adopted under the Act, and any other applicable federal privacy laws, and disclosures under this item may not be made in violation of the prohibited uses or disclosures under the federal Health Insurance Portability and Accountability Act of 1996;
a nonprofit health service plan or Blue Cross or Blue Shield plan that discloses medical information or medical data contained in an insured’s medical or claims records in accordance with this item shall provide a notice consistent with the requirements of 45 C.F.R. § 164.520 specifying the information to be shared, with whom it will be shared, and the specific types of uses and disclosures that the nonprofit health service plan or Blue Cross or Blue Shield plan may make in accordance with this item;
the notice required by item (iii) of this item shall include an opportunity for the individual to opt–out of the sharing of the individual’s medical information or medical data contained in an individual’s medical or claims records with the individual’s treating providers for the purposes identified in this item; and
if a nonprofit health service plan or Blue Cross or Blue Shield plan discloses medical information or medical data through an infrastructure that provides organizational and technical capabilities for the exchange of protected health information, as defined in § 4–301 of the Health – General Article, among entities not under common ownership, the nonprofit health service plan or Blue Cross or Blue Shield plan is subject to the requirements of §§ 4–302.2 and 4–302.3 of the Health – General Article.
This section does not prohibit the use of medical records, data, or statistics if the use does not disclose the identity of a particular subscriber or certificate holder.
A nonprofit health service plan that knowingly violates this section is liable to a plaintiff for any damages recoverable in a civil action, including reasonable attorney’s fees.
An officer, director, or employee of a corporation operating under this subtitle may not:
willfully violate a provision of this article or a regulation adopted under this article;
willfully misrepresent or conceal a material fact in a statement, report, record, or communication provided to the Commissioner;
willfully misrepresent or conceal a material fact to the board of directors;
misappropriate or fail to account properly for money that belongs to the corporation, an insurer, insurance producer, subscriber, or certificate holder;
engage in fraudulent or dishonest practices in connection with the provision or administration of a health service plan;
willfully fail to produce records or allow an examination under § 14-125 of this subtitle; or
willfully fail to comply with a lawful order of the Commissioner.
An officer, director, or trustee of a corporation operating under this subtitle may not receive any immediate or future remuneration as the result of an acquisition or proposed acquisition, as defined under § 6.5-101 of the State Government Article, except in the form of compensation paid for continued employment with the company or acquiring entity.
A director, trustee, officer, executive, or employee of a corporation operating under this subtitle may only approve or receive from the assets of the corporation fair and reasonable compensation in the form of salary, bonuses, or perquisites for work actually performed for the benefit of the corporation.
The compensation committee of the board shall:
identify nonprofit health service plans in the United States that are similar in size and scope to the nonprofit health service plan managed by the board; and
develop proposed guidelines, for approval by the board:
for compensation, including salary, bonuses, and perquisites, of all officers and executives that is reasonable in comparison to compensation for officers and executives of similar nonprofit health service plans; and
for compensation for board members that is reasonable in comparison to compensation for board members of similar nonprofit health service plans.
The board shall review the proposed guidelines at least annually.
The board shall:
provide a copy of the approved guidelines:
to each officer and executive of the nonprofit health service plan;
to each candidate for an officer or executive position with the nonprofit health service plan;
to each board member of the nonprofit health service plan; and
on or before September 1, 2004, and annually thereafter, to the Commissioner; and
adhere to the approved guidelines in compensating the officers, executives, and board members of the nonprofit health service plan.
On an annual basis, the Commissioner shall review:
the compensation paid by the nonprofit health service plan to each officer and executive; and
the base compensation and compensation for attendance at meetings paid by the nonprofit health service plan to board members.
If the Commissioner finds that the compensation exceeds the amount authorized under the approved guidelines, the Commissioner shall issue an order prohibiting payment of the excess amount.
The approval or receipt of remuneration in violation of an order issued under subsection (d)(5) of this section is a violation of § 14-115(c) of this subtitle and shall be considered an unsound or unsafe business practice under § 14-116 of this subtitle.
Except for an employee under subsection (c) of this section, a person that violates subsection (a) or (c) of this section is subject to a civil penalty not exceeding $10,000 for each violation.
Instead of or in addition to imposing a civil penalty, the Commissioner may require the violator to make restitution to any person that has suffered financial injury as a result of the violation.
In determining the amount of financial penalty to be imposed, the Commissioner shall consider:
the seriousness of the violation;
the good faith of the violator;
the violator’s history of previous violations;
the deleterious effect of the violation on the public and the nonprofit health service industry; and
the assets of the violator.
Before assessing a civil penalty or restitution, the Commissioner shall serve by certified mail, return receipt requested, on the person to be charged a notice that contains:
the specifications of the charge; and
the time and place of a hearing to be held on the charges.
The Commissioner shall hold a hearing on the charges at least 20 days after the date of mailing the notice.
The Commissioner or designee of the Commissioner shall conduct a hearing on the charges in accordance with Title 2, Subtitle 2 of this article.
Subject to Title 2, Subtitle 2 of this article, an appeal may be taken from a final order of the Commissioner to the Circuit Court for Baltimore City.
In addition to any other penalty or remedy under this section, a person that is found to have gained financially from a violation of a provision of this article or a regulation adopted by the Commissioner shall forfeit the gain.
This section does not prevent a person damaged by a director, officer, manager, employee, or agent of a corporation subject to this subtitle from bringing a separate action in a court of competent jurisdiction.
A person may not engage in the business of operating a nonprofit health service plan unless the person has a certificate of authority issued by the Commissioner under this subtitle.
A person that violates this subsection is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50,000 for each violation.
A person may not:
violate a provision of this subtitle; or
make a willfully false statement in a written document required by this subtitle to be filed with the Commissioner.
A person that violates this subsection is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $5,000 for each violation or imprisonment not exceeding 1 year or both.
A person that willfully makes a false statement while under an oath administered by the Commissioner or designee of the Commissioner at an investigation or hearing conducted by the Commissioner or designee of the Commissioner is guilty of perjury.