REPRESENTATIVES Martin, McGregor, Kearns, Seitz, Husted, Schaffer, Webster, Gibbs, Walcher, Carano, G. Smith, Olman, Wolpert, Faber, Hughes, Daniels, Allen, Barrett, Buehrer, Calvert, Carmichael, Chandler, Collier, DeBose, DeGeeter, Distel, Domenick, C. Evans, Flowers, Gilb, Grendell, Hagan, Hartnett, Harwood, Hoops, Jolivette, Kilbane, Latta, Niehaus, Otterman, S. Patton, Perry, Price, Reidelbach, Schlichter, Schmidt, Setzer, Sferra, D. Stewart, J. Stewart, Strahorn, Taylor, Ujvagi, Wagner, Widener, Yates

To amend sections 1739.02, 1739.99, 1751.02, 1751.28,

1

3901.78, 3905.14, and 3999.99 and to enact

2

sections 1739.27 and 3999.18 of the Revised Code

3

to change the assets that are considered to be

4

admitted assets for purposes of meeting the

5

statutory minimum for health insuring

6

corporations, to provide for criminal and

7

financial penalties for persons establishing or

8

operating unlicensed health care insurers and

9

criminal and administrative penalties for agents

10

selling policies of unlicensed insurers, and to

11

amend provisions governing the issuance of

12

certificates of compliance to insurers.

13

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1739.02, 1739.99, 1751.02, 1751.28,	14
3901.78, 3905.14, and 3999.99 be amended and sections 1739.27 and	15
3999.18 of the Revised Code be enacted to read as follows:	16

Sec. 1739.02.  (A) A trade association, industry association,	17
or professional association that has been organized and maintained	18
in good faith for a continuous period of one year or more for	19
purposes other than obtaining insurance may establish, maintain,	20
or operate a group self-insurance program under a multiple	21
employer welfare arrangement that is chartered and created in this	22
state under sections 1739.01 to 1739.22 of the Revised Code.	23

(B) Except as provided in section 9.833 and sections 1739.01	24
to 1739.22 of the Revised Code, no multiple employer welfare	25
arrangement or other entity by which two or more employers jointly	26
participate in a common employee welfare benefit plan shall	27
operate a group self-insurance program in this state after four	28
months after the effective date of this section.	29

(C) Sections 1739.01 to 1739.22 of the Revised Code do not	30
apply to any entity that establishes, maintains, or operates a	31
fully-insured program.	32

(D) No person shall establish, operate, or maintain a	33
multiple employer welfare arrangement providing benefits through a	34
group self-insurance program in this state unless the multiple	35
employer welfare arrangement has a valid certificate of authority	36
from the superintendent of insurance.	37

Sec. 1739.27.  No insurance agent, broker, or other person	38
shall advertise, solicit, negotiate, collect a premium on, or sell	39
any enrollment in, a group self-insurance program in this state,	40
unless the multiple employer welfare arrangement has a valid	41
certificate of authority from the superintendent of insurance.	42

Sec. 1739.99. (A) Whoever violates division (B) of section	43
1739.02 of the Revised Code is guilty of a felony of the fourth	44
degree.	45

(B) Whoever violates division (D) of section 1739.02 of the	46
Revised Code is guilty of a felony of the fourth degree.	47

(C) Whoever violates section 1739.27 of the Revised Code is	48
guilty of a misdemeanor of the first degree on a first offense and	49
a felony of the fifth degree on each subsequent offense.	50

(D) If a person is found guilty under this section, the court	51
may award restitution in accordance with section 2929.18 of the	52
Revised Code.	53

Sec. 1751.02.  (A) Notwithstanding any law in this state to	54
the contrary, any corporation, as defined in section 1751.01 of	55
the Revised Code, may apply to the superintendent of insurance for	56
a certificate of authority to establish and operate a health	57
insuring corporation. If the corporation applying for a	58
certificate of authority is a foreign corporation domiciled in a	59
state without laws similar to those of this chapter, the	60
corporation must form a domestic corporation to apply for, obtain,	61
and maintain a certificate of authority under this chapter.	62

(B) No person shall establish, operate, or perform the	63
services of a health insuring corporation in this state without	64
obtaining a certificate of authority under this chapter.	65

(C) Except as provided by division (D) of this section, no	66
political subdivision or department, office, or institution of	67
this state, or corporation formed by or on behalf of any political	68
subdivision or department, office, or institution of this state,	69
shall establish, operate, or perform the services of a health	70
insuring corporation. Nothing in this section shall be construed	71
to preclude a board of county commissioners, a county board of	72
mental retardation and developmental disabilities, an alcohol and	73
drug addiction services board, a board of alcohol, drug addiction,	74
and mental health services, or a community mental health board, or	75
a public entity formed by or on behalf of any of these boards,	76
from using managed care techniques in carrying out the board's or	77
public entity's duties pursuant to the requirements of Chapters	78
307., 329., 340., and 5126. of the Revised Code. However, no such	79
board or public entity may operate so as to compete in the private	80
sector with health insuring corporations holding certificates of	81
authority under this chapter.	82

(D) A corporation formed by or on behalf of a publicly owned,	83
operated, or funded hospital or health care facility may apply to	84
the superintendent for a certificate of authority under division	85
(A) of this section to establish and operate a health insuring	86
corporation.	87

(E) A health insuring corporation shall operate in this state	88
in compliance with this chapter and Chapter 1753. of the Revised	89
Code, and with sections 3702.51 to 3702.62 of the Revised Code,	90
and shall operate in conformity with its filings with the	91
superintendent under this chapter, including filings made pursuant	92
to sections 1751.03, 1751.11, 1751.12, and 1751.31 of the Revised	93
Code.	94

(F) An insurer licensed under Title XXXIX of the Revised Code	95
need not obtain a certificate of authority as a health insuring	96
corporation to offer an open panel plan as long as the providers	97
and health care facilities participating in the open panel plan	98
receive their compensation directly from the insurer. If the	99
providers and health care facilities participating in the open	100
panel plan receive their compensation from any person other than	101
the insurer, or if the insurer offers a closed panel plan, the	102
insurer must obtain a certificate of authority as a health	103
insuring corporation.	104

(G) An intermediary organization need not obtain a	105
certificate of authority as a health insuring corporation,	106
regardless of the method of reimbursement to the intermediary	107
organization, as long as a health insuring corporation or a	108
self-insured employer maintains the ultimate responsibility to	109
assure delivery of all health care services required by the	110
contract between the health insuring corporation and the	111
subscriber and the laws of this state or between the self-insured	112
employer and its employees.	113

Nothing in this section shall be construed to require any	114
health care facility, provider, health delivery network, or	115
intermediary organization that contracts with a health insuring	116
corporation or self-insured employer, regardless of the method of	117
reimbursement to the health care facility, provider, health	118
delivery network, or intermediary organization, to obtain a	119
certificate of authority as a health insuring corporation under	120
this chapter, unless otherwise provided, in the case of contracts	121
with a self-insured employer, by operation of the "Employee	122
Retirement Income Security Act of 1974," 88 Stat. 829, 29 U.S.C.A.	123
1001, as amended.	124

(H) Any health delivery network doing business in this state,	125
including any health delivery network that is functioning as an	126
intermediary organization doing business in this state, that is	127
not required to obtain a certificate of authority under this	128
chapter shall certify to the superintendent annually, not later	129
than the first day of July, and shall provide a statement signed	130
by the highest ranking official which includes the following	131
information:	132

(1) The health delivery network's full name and the address	133
of its principal place of business;	134

(2) A statement that the health delivery network is not	135
required to obtain a certificate of authority under this chapter	136
to conduct its business.	137

(I) The superintendent shall not issue a certificate of	138
authority to a health insuring corporation that is a provider	139
sponsored organization unless all health care plans to be offered	140
by the health insuring corporation provide basic health care	141
services. Substantially all of the physicians and hospitals with	142
ownership or control of the provider sponsored organization, as	143
defined in division (X) of section 1751.01 of the Revised Code,	144
shall also be participating providers for the provision of basic	145
health care services for health care plans offered by the provider	146
sponsored organization. If a health insuring corporation that is a	147
provider sponsored organization offers health care plans that do	148
not provide basic health care services, the health insuring	149
corporation shall be deemed, for purposes of section 1751.35 of	150
the Revised Code, to have failed to substantially comply with this	151
chapter.	152

Except as specifically provided in this division and in	153
division (C)(A) of section 1751.28 of the Revised Code, the	154
provisions of this chapter shall apply to all health insuring	155
corporations that are provider sponsored organizations in the same	156
manner that these provisions apply to all health insuring	157
corporations that are not provider sponsored organizations.	158

(J) Nothing in this section shall be construed to apply to	159
any multiple employer welfare arrangement operating pursuant to	160
Chapter 1739. of the Revised Code.	161

(K) Any person who violates division (B) of this section, and	162
any health delivery network that fails to comply with division (H)	163
of this section, is subject to the penalties set forth in section	164
1751.45 of the Revised Code.	165

Sec. 1751.28.  (A) As used in this section:

166

(1) "Admitted assets" includes the investments authorized by	167
section 1751.25 of the Revised Code, and, in addition to these	168
investments, only the following:	169

(a) Petty cash and other cash funds that are in the health	170
insuring corporation's principal office or any official branch	171
office and that are under the control of the corporation;	172

(b) Immediately withdrawable funds on deposit in demand	173
accounts in a bank or trust company, or similar funds that are	174
actually in the health insuring corporation's principal office or	175
any official branch office at statement date and that are in	176
transit to the bank or trust company with authentic deposit credit	177
given prior to the close of business on the fifth bank business	178
day following the statement date;	179

(c) The amount fairly estimated as recoverable on cash	180
deposited in a bank or trust company the operations of which have	181
been suspended or for which a receiver has been appointed, if	182
qualifying under this section prior to the suspension of	183
operations of or the appointment of a receiver for the bank or	184
trust company;	185

(d) Bills and accounts receivable collateralized by	186
securities of the kind in which the health insuring corporation	187
may invest;	188

(e) Premiums receivable from groups or individuals that are	189
not more than ninety days past due;	190

(f) Accounts receivable that are not more than ninety days	191
past due;	192

(g) Amounts due under reinsurance arrangements from insurance	193
companies authorized to do business in this state;	194

(h) Tax refunds due from the United States or any state;

195

(i) The interest accrued on mortgage loans that conform to	196
section 3925.08 of the Revised Code, not exceeding on an	197
individual loan an aggregate amount of one year's total due and	198
accrued interest;	199

(j) The rents accrued and owing to the health insuring	200
corporation on real and personal property, directly or	201
beneficially owned, not exceeding on each individual property the	202
amount of one year's total due and accrued rent;	203

(k) Interest or rents accrued on conditional sales	204
agreements, security interests, chattel mortgages, and real or	205
personal property under lease to other corporations, that conform	206
to section 3925.08 of the Revised Code, not exceeding on any	207
individual investment the amount of one year's total due and	208
accrued interest or rent;	209

(l) The fixed and required interest due and accrued on bonds	210
and other similar evidences of indebtedness, that conform to	211
section 3925.08 of the Revised Code, and not in default;	212

(m) Dividends receivable on shares of stock that conform to	213
section 3925.08 of the Revised Code, provided that the market	214
price taken for valuation purposes does not include the value of	215
the dividend;	216

(n) The interest or dividends due and payable, but not	217
credited, on deposits in banks and trust companies or on accounts	218
with savings and loan associations;	219

(o) Interest accrued on secured loans that conform to section	220
3925.08 of the Revised Code, not exceeding the amount of one	221
year's interest on any loan;	222

(p) Interest accrued on tax anticipation warrants;

223

(q) The amortized value of electronic computer or data	224
processing machines or systems purchased for use in connection	225
with the business of the health insuring corporation, including	226
software purchased and developed specifically for the use and	227
purposes of the corporation;	228

(r) The cost of furniture, equipment, and medical equipment,	229
less accumulated depreciation on the furniture and equipment to be	230
applied pro rata over a period not to exceed five years, and of	231
medical and pharmaceutical supplies, that are under the control of	232
the health insuring corporation, provided these assets do not	233
exceed fifteen per cent of admitted assets;	234

(s) Amounts due from affiliates to the extent that the	235
affiliate has liquid assets with which to pay the balance and	236
maintain its accounts on a current basis. Any amount outstanding	237
more than three months shall be considered not current.	238

(2) "Liabilities" means the liabilities of the health	239
insuring corporation as determined by the superintendent of	240
insurance.	241

(B) All admitted assets of a health insuring corporation must	242
be held in the health insuring corporation's name and must be free	243
and clear of any encumbrances, pledges, or hypothecation.	244

(C)(1) Every health insuring corporation authorized to	245
provide basic health care services, which health insuring	246
corporation is not a provider sponsored organization, shall	247
maintain total admitted assets equal to at least one hundred ten	248
per cent of the liabilities of the corporation. However, at no	249
time shall the corporation's net worth be less than one million	250
two hundred thousand dollars.	251

(2) Every health insuring corporation authorized to provide	252
only supplemental health care services shall maintain total	253
admitted assets equal to at least one hundred ten per cent of the	254
liabilities of the corporation. However, at no time shall the	255
corporation's net worth be less than five hundred thousand	256
dollars.	257

(3) Every health insuring corporation authorized to provide	258
only specialty health care services shall maintain total admitted	259
assets equal to at least one hundred ten per cent of the	260
liabilities of the corporation. However, at no time shall the	261
corporation's net worth be less than two hundred fifty thousand	262
dollars.	263

(4) Every health insuring corporation authorized to provide	264
both basic health care services and supplemental health care	265
services, which health insuring corporation is not a provider	266
sponsored organization, shall maintain total admitted assets equal	267
to at least one hundred ten per cent of the liabilities of the	268
corporation. However, at no time shall the corporation's net worth	269
be less than one million seven hundred thousand dollars.	270

(5) Every health insuring corporation authorized to provide	271
both basic health care services and specialty health care	272
services, which health insuring corporation is not a provider	273
sponsored organization, shall maintain total admitted assets equal	274
to at least one hundred ten per cent of the liabilities of the	275
corporation. However, at no time shall the corporation's net worth	276
be less than one million four hundred fifty thousand dollars.	277

(6) Every health insuring corporation authorized to provide	278
basic health care services, which health insuring corporation is a	279
provider sponsored organization, shall maintain total admitted	280
assets equal to at least one hundred ten per cent of the	281
liabilities of the corporation. However, at no time shall the	282
corporation's net worth be less than one million dollars.	283

(7) Every health insuring corporation authorized to provide	284
both basic health care services and supplemental health care	285
services, which health insuring corporation is a provider	286
sponsored organization, shall maintain total admitted assets equal	287
to at least one hundred ten per cent of the liabilities of the	288
corporation. However, at no time shall the corporation's net worth	289
be less than one million five hundred thousand dollars.	290

(8) Every health insuring corporation authorized to provide	291
both basic health care services and specialty health care	292
services, which health insuring corporation is a provider	293
sponsored organization, shall maintain total admitted assets equal	294
to at least one hundred ten per cent of the liabilities of the	295
corporation. However, at no time shall the corporation's net worth	296
be less than one million two hundred fifty thousand dollars.	297

(D) The admitted value of any real estate owned by a health	298
insuring corporation, whether used for the accommodation of the	299
health insuring corporation's business operations or otherwise,	300
shall be the original cost plus the cost of improvements, less	301
encumbrances and accumulated depreciation.	302

(E)(B) The net worth otherwise required by this section shall	303
be reduced by an amount representing credit given to reserve	304
liabilities when a health insuring corporation carries reinsurance	305
with an admitted reinsurer. However, such an amount shall not	306
affect the minimum amounts set forth in this section and section	307
1751.27 of the Revised Code.	308

(C) A health insuring corporation may only consider those	309
admitted assets in connection with this section that are	310
consistent with the forms, instructions, and manuals for the	311
preparation and reporting of statutory financial statements and	312
other financial information set forth in section 1751.47 of the	313
Revised Code and any rules adopted under that section.	314

(D) All health insuring corporations must comply with this	315
section, as amended, for calendar year 2004 and each calendar year	316
thereafter.	317

Sec. 3901.78.  Upon the filing of each of its annual	318
statements, or as soon thereafter as practicable, the	319
superintendent of insurance shall issue to each insurance company	320
or association authorized to do business in this state but not	321
incorporated under the laws of this state a certificate that it	322
has complied with the laws of this state. Such certificate of	323
compliance shall also contain a statement of the amounts of the	324
paid-up capital stock, assets, liabilities, income, and	325
expenditures of the company or association for the preceding year,	326
as shown by its annual statement for that year. The superintendent	327
shall issue to each newly-applying company or association that the	328
superintendent finds should be authorized to do business in this	329
state, a certificate that it has complied with the laws of this	330
state, which certificate shall contain a statement of the amounts	331
of its paid-up capital stock, assets, liabilities, income, and	332
expenditures as shown by a financial statement submitted by it,	333
under the oath of its officers.of compliance, an original of	334
which must be published in accordance with section 3901.781 of the	335
Revised Code in every county where the insurance company or	336
association has an agency. Upon request or in any other	337
circumstance that the superintendent determines to be appropriate,	338
the superintendent may issue other certificates of compliance,	339
which certificates are not subject to section 3901.781 of the	340
Revised Code, to insurance companies and associations authorized	341
to do business in this state. Certificates of compliance either	342
must be on forms established by the national association of	343
insurance commissioners or on such other forms as the	344
superintendent may prescribe.	345

Sec. 3905.14.  (A) As used in sections 3905.14 to 3905.16 of	346
the Revised Code:	347

(1) "Insurance agent" includes a limited lines insurance	348
agent, surety bail bond agent, and surplus line broker.	349

(2) "Refusal to issue or renew" means the decision of the	350
superintendent of insurance not to process either the initial	351
application for a license as an agent or the renewal of such a	352
license.	353

(3) "Revocation" means the permanent termination of all	354
authority to hold any license as an agent in this state.	355

(4) "Surrender for cause" means the voluntary termination of	356
all authority to hold any license as an agent in this state, in	357
lieu of a revocation or suspension order.	358

(5) "Suspension" means the termination of all authority to	359
hold any license as an agent in this state, for either a specified	360
period of time or an indefinite period of time and under any terms	361
or conditions determined by the superintendent.	362

(B) The superintendent may suspend, revoke, or refuse to	363
issue or renew any license of an insurance agent, assess a civil	364
penalty, or impose any other sanction or sanctions authorized	365
under this chapter, for one or more of the following reasons:	366

(1) Providing incorrect, misleading, incomplete, or	367
materially untrue information in a license or appointment	368
application;	369

(2) Violating or failing to comply with any insurance law,	370
rule, subpoena, consent agreement, or order of the superintendent	371
or of the insurance authority of another state;	372

(3) Obtaining or attempting to obtain a license through	373
misrepresentation or fraud;	374

(4) Improperly withholding, misappropriating, or converting	375
any money or property received in the course of doing insurance	376
business;	377

(5) Intentionally misrepresenting the terms, benefits, value,	378
cost, or effective dates of any actual or proposed insurance	379
contract or application for insurance;	380

(6) Having been convicted of a felony;

381

(7) Having been convicted of a misdemeanor that involves the	382
misuse or theft of money or property belonging to another, fraud,	383
forgery, dishonest acts, or breach of a fiduciary duty, that is	384
based on any act or omission relating to the business of	385
insurance, securities, or financial services, or that involves	386
moral turpitude;	387

(8) Having admitted to committing, or having been found to	388
have committed, any insurance unfair trade act or practice or	389
insurance fraud;	390

(9) Using fraudulent, coercive, or dishonest practices, or	391
demonstrating incompetence, untrustworthiness, or financial	392
irresponsibility, in the conduct of business in this state or	393
elsewhere;	394

(10) Having an insurance agent license, or its equivalent,	395
denied, suspended, or revoked in any other state, province,	396
district, or territory;	397

(11) Forging or causing the forgery of an application for	398
insurance or any document related to or used in an insurance	399
transaction;	400

(12) Improperly using notes or any other reference material	401
to complete an examination for an insurance agent license;	402

(13) Knowingly accepting insurance business from an	403
individual who is not licensed;	404

(14) Failing to comply with any administrative or court order	405
directing payment of state income tax;	406

(15) Failing to timely submit an application for insurance.	407
For purposes of division (B)(15) of this section, a submission is	408
considered timely if it occurs within the time period expressly	409
provided for by the insurer, or within seven days after the	410
insurance agent accepts a premium or an order to bind coverage	411
from a policyholder or applicant for insurance, whichever is	412
later.	413

(16) Failing to disclose to an applicant for insurance or	414
policyholder upon accepting a premium or an order to bind coverage	415
from the applicant or policyholder, that the person has not been	416
appointed by the insurer;	417

(17) Having any professional license suspended or revoked as	418
a result of a mishandling of funds or breach of fiduciary	419
responsibilities or having been subject to a cease and desist	420
order or permanent injunction for unlicensed activities;	421

(18) Causing or permitting a policyholder or applicant for	422
insurance to designate the insurance agent or the insurance	423
agent's spouse, parent, child, or sibling as the beneficiary of a	424
policy or annuity sold by the insurance agent, unless the	425
insurance agent or a relative of the insurance agent is the	426
insured or applicant;	427

(19) Failing to provide a written response to the department	428
of insurance within twenty-one calendar days after receipt of any	429
written inquiry from the department, unless a reasonable extension	430
of time has been requested of, and granted by, the superintendent;	431

(20) Transferring or placing insurance with an insurer other	432
than the insurer expressly chosen by the applicant for insurance	433
or policyholder without the consent of the applicant or	434
policyholder or absent extenuating circumstances;	435

(21) Failing to inform a policyholder or applicant for	436
insurance of the identity of the insurer or insurers, or the	437
identity of any other insurance agent or licensee known to be	438
involved in procuring, placing, or continuing the insurance for	439
the policyholder or applicant, upon the binding of the coverage;	440

(22) In the case of an agent that is a business entity,	441
failing to report an individual licensee's violation to the	442
department when the violation was known or should have been known	443
by one or more of the partners, officers, managers, or members of	444
the business entity;	445

(23) Submitting or using a document in the conduct of the	446
business of insurance when the person knew or should have known	447
that the document contained the forged signature of another	448
person;	449

(24) Misrepresenting the person's qualifications or using in	450
any way a professional designation that has not been conferred	451
upon the person by the appropriate accrediting organization;	452

(25) Obtaining a premium loan or causing a premium loan to be	453
made to or in the name of an insured without that person's	454
knowledge and written authorization;	455

(26) Using paper, software, or any other materials of or	456
provided by an insurer after the insurer has terminated the	457
authority of the licensee, if the use of such materials would	458
cause a reasonable person to believe that the licensee was acting	459
on behalf of or otherwise representing the insurer;	460

(27) Soliciting, procuring an application for, or placing,	461
either directly or indirectly, any insurance policy when the	462
person is not authorized under this chapter to engage in such	463
activity;	464

(28) Soliciting, marketing, or selling any product or service	465
that offers benefits similar to insurance but is not regulated by	466
the superintendent, without fully disclosing to the prospective	467
purchaser that the product or service is not insurance and is not	468
regulated by the superintendent;	469

(29) Failing to fulfill a refund obligation to a policyholder	470
or applicant in a timely manner. For purposes of division (B)(29)	471
of this section, a rebuttable presumption exists that a refund	472
obligation is not fulfilled in a timely manner unless it is	473
fulfilled within one of the following time periods:	474

(a) Thirty days after the date the policyholder, applicant,	475
or insurer takes or requests action resulting in a refund;	476

(b) Thirty days after the date of the insurer's refund check,	477
if the agent is expected to issue a portion of the total refund;	478

(c) Forty-five days after the date of the agent's statement	479
of account on which the refund first appears.	480

The presumption may be rebutted by proof that the	481
policyholder or applicant consented to the delay or agreed to	482
permit the agent to apply the refund to amounts due for other	483
coverages.	484

(30) With respect to a surety bail bond agent license,	485
rebating or offering to rebate, or unlawfully dividing or offering	486
to divide, any commission;	487

(31) Using a license for the principal purpose of procuring,	488
receiving, or forwarding applications for insurance of any kind,	489
other than life, or soliciting, placing, or effecting such	490
insurance directly or indirectly upon or in connection with the	491
property of the licensee or that of relatives, employers,	492
employees, or that for which they or the licensee is an agent,	493
custodian, vendor, bailee, trustee, or payee;	494

(32) In the case of an insurance agent that is a business	495
entity, using a life license for the principal purpose of	496
soliciting or placing insurance on the lives of the business	497
entity's officers, employees, or shareholders, or on the lives of	498
relatives of such officers, employees, or shareholders, or on the	499
lives of persons for whom they, their relatives, or the business	500
entity is agent, custodian, vendor, bailee, trustee, or payee;	501

(33) Offering within this state, in person or by	502
advertisement, poster, letter, circular, or otherwise, to sell,	503
procure, or obtain, selling, soliciting, or negotiating policies,	504
contracts, agreements, or applications for life insurance, or	505
annuities providing fixed, variable, or fixed and variable	506
benefits, or contractual payments, or any form of sickness and	507
accident insurance, for or on behalf of any life insurance	508
corporation, association, or organization, or mutual protective or	509
mutual benefit association or organization,insurer or multiple	510
employer welfare arrangement not authorized to transact business	511
in this state, or for or on behalf of any spurious, fictitious,	512
nonexistent, dissolved, inactive, liquidated or liquidating, or	513
bankrupt life insurance corporation, association, or organization,	514
or mutual protective or mutual benefit association or organization	515
insurer or multiple employer welfare arrangement.	516

(C) Before denying, revoking, suspending, or refusing to	517
issue any license or imposing any penalty under this section, the	518
superintendent shall provide the licensee or applicant with notice	519
and an opportunity for hearing as provided in Chapter 119. of the	520
Revised Code, except as follows:	521

(1)(a) Any notice of opportunity for hearing, the hearing	522
officer's findings and recommendations, or the superintendent's	523
order shall be served by certified mail at the last known address	524
of the licensee or applicant. Service shall be evidenced by return	525
receipt signed by any person.	526

For purposes of this section, the "last known address" is the	527
residential address of a licensee or applicant, or the	528
principal-place-of-business address of a business entity, that is	529
contained in the licensing records of the department.	530

(b) If the certified mail envelope is returned with an	531
endorsement showing that service was refused, or that the envelope	532
was unclaimed, the notice and all subsequent notices required by	533
Chapter 119. of the Revised Code may be served by ordinary mail to	534
the last known address of the licensee or applicant. The mailing	535
shall be evidenced by a certificate of mailing. Service is deemed	536
complete as of the date of such certificate provided that the	537
ordinary mail envelope is not returned by the postal authorities	538
with an endorsement showing failure of delivery. The time period	539
in which to request a hearing, as provided in Chapter 119. of the	540
Revised Code, begins to run on the date of mailing.	541

(c) If service by ordinary mail fails, the superintendent may	542
cause a summary of the substantive provisions of the notice to be	543
published once a week for three consecutive weeks in a newspaper	544
of general circulation in the county where the last known place of	545
residence or business of the party is located. The notice is	546
considered served on the date of the third publication.	547

(d) Any notice required to be served under Chapter 119. of	548
the Revised Code shall also be served upon the party's attorney by	549
ordinary mail if the attorney has entered an appearance in the	550
matter.	551

(e) The superintendent may, at any time, perfect service on a	552
party by personal delivery of the notice by an employee of the	553
department.	554

(f) Notices regarding the scheduling of hearings and all	555
other matters not described in division (C)(1)(a) of this section	556
shall be sent by ordinary mail to the party and to the party's	557
attorney.	558

(2) Any subpoena for the appearance of a witness or the	559
production of documents or other evidence at a hearing, or for the	560
purpose of taking testimony for use at a hearing, shall be served	561
by certified mail, return receipt requested, by an attorney or by	562
an employee of the department designated by the superintendent.	563
Such subpoenas shall be enforced in the manner provided in section	564
119.09 of the Revised Code. Nothing in this section shall be	565
construed as limiting the superintendent's other statutory powers	566
to issue subpoenas.	567

(D) If the superintendent determines that a violation	568
described in this section has occurred, the superintendent may	569
take one or more of the following actions:	570

(1) Assess a civil penalty in an amount not exceeding	571
twenty-five thousand dollars per violation;	572

(2) Assess administrative costs to cover the expenses	573
incurred by the department in the administrative action, including	574
costs incurred in the investigation and hearing processes. Any	575
costs collected shall be paid into the state treasury to the	576
credit of the department of insurance operating fund created in	577
section 3901.021 of the Revised Code.	578

(3) Suspend all of the person's licenses for all lines of	579
insurance for either a specified period of time or an indefinite	580
period of time and under such terms and conditions as the	581
superintendent may determine;	582

(4) Permanently revoke all of the person's licenses for all	583
lines of insurance;	584

(5) Refuse to issue a license;

585

(6) Refuse to renew a license;

586

(7) Prohibit the person from being employed in any capacity	587
in the business of insurance and from having any financial	588
interest in any insurance agency, company, surety bail bond	589
business, or third-party administrator in this state. The	590
superintendent may, in the superintendent's discretion, determine	591
the nature, conditions, and duration of such restrictions.	592

(8) Order corrective actions in lieu of or in addition to the	593
other penalties listed in division (D) of this section. Such an	594
order may provide for the suspension of civil penalties, license	595
revocation, license suspension, or refusal to issue or renew a	596
license if the licensee complies with the terms and conditions of	597
the corrective action order.	598

(9) Accept a surrender for cause offered by the licensee,	599
which shall be for at least five years and shall prohibit the	600
licensee from seeking any license authorized under this chapter	601
during that time period. A surrender for cause shall be in lieu of	602
revocation or suspension and may include a corrective action order	603
as provided in division (D)(8) of this section.	604

(E) The superintendent may consider the following factors in	605
denying a license, imposing suspensions, revocations, fines, or	606
other penalties, and issuing orders under this section:	607

(1) Whether the person acted in good faith;

608

(2) Whether the person made restitution for any pecuniary	609
losses suffered by other persons as a result of the person's	610
actions;	611

(3) The actual harm or potential for harm to others;

612

(4) The degree of trust placed in the person by, and the	613
vulnerability of, persons who were or could have been adversely	614
affected by the person's actions;	615

(5) Whether the person was the subject of any previous	616
administrative actions by the superintendent;	617

(6) The number of individuals adversely affected by the	618
person's acts or omissions;	619

(7) Whether the person voluntarily reported the violation,	620
and the extent of the person's cooperation and acceptance of	621
responsibility;	622

(8) Whether the person obstructed or impeded, or attempted to	623
obstruct or impede, the superintendent's investigation;	624

(9) The person's efforts to conceal the misconduct;

625

(10) Remedial efforts to prevent future violations;

626

(11) If the person was convicted of a criminal offense, the	627
nature of the offense, whether the conviction was based on acts or	628
omissions taken under any professional license, whether the	629
offense involved the breach of a fiduciary duty, the amount of	630
time that has passed, and the person's activities subsequent to	631
the conviction;	632

(12) Such other factors as the superintendent determines to	633
be appropriate under the circumstances.	634

(F)(1) A violation described in division (B)(1), (2), (3),	635
(4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (16),	636
(17), (18), (20), (21), (22), (23), (24), (25), (26), (27), (28),	637
(29), (30), (31), (32), or (33) of this section is a class A	638
offense for which the superintendent may impose any penalty set	639
forth in division (D) of this section.	640

(2) A violation described in division (B)(15) or (19) of this	641
section, or a failure to comply with section 3905.061, 3905.071,	642
or 3905.22 of the Revised Code, is a class B offense for which the	643
superintendent may impose any penalty set forth in division	644
(D)(1), (2), (8), or (9) of this section.	645

(3) If the superintendent determines that a violation	646
described in division (B)(33) of this section has occurred, the	647
superintendent shall impose a minimum of a two-year suspension on	648
all of the person's licenses for all lines of insurance.	649

(G) If a violation described in this section has caused, is	650
causing, or is about to cause substantial and material harm, the	651
superintendent may issue an order requiring that person to cease	652
and desist from engaging in the violation. Notice of the order	653
shall be mailed by certified mail, return receipt requested, or	654
served in any other manner provided for in this section,	655
immediately after its issuance to the person subject to the order	656
and to all persons known to be involved in the violation. The	657
superintendent may thereafter publicize or otherwise make known to	658
all interested parties that the order has been issued.	659

The notice shall specify the particular act, omission,	660
practice, or transaction that is subject to the cease-and-desist	661
order and shall set a date, not more than fifteen days after the	662
date of the order, for a hearing on the continuation or revocation	663
of the order. The person shall comply with the order immediately	664
upon receipt of notice of the order.	665

The superintendent may, upon the application of a party and	666
for good cause shown, continue the hearing. Chapter 119. of the	667
Revised Code applies to such hearings to the extent that that	668
chapter does not conflict with the procedures set forth in this	669
section. The superintendent shall, within fifteen days after	670
objections are submitted to the hearing officer's report and	671
recommendation, issue a final order either confirming or revoking	672
the cease-and-desist order. The final order may be appealed as	673
provided under section 119.12 of the Revised Code.	674

The remedy under this division is cumulative and concurrent	675
with the other remedies available under this section.	676

(H) If the superintendent has reasonable cause to believe	677
that an order issued under this section has been violated in whole	678
or in part, the superintendent may request the attorney general to	679
commence and prosecute any appropriate action or proceeding in the	680
name of the state against such person.	681

The court may, in an action brought pursuant to this	682
division, impose any of the following:	683

(1) For each violation, a civil penalty of not more than	684
twenty-five thousand dollars;	685

(2) Injunctive relief;

686

(3) Restitution;

687

(4) Any other appropriate relief.

688

(I) With respect to a surety bail bond agent license:

689

(1) Upon the suspension or revocation of a license, or the	690
eligibility of a surety bail bond agent to hold a license, the	691
superintendent likewise may suspend or revoke the license or	692
eligibility of any surety bail bond agent who is employed by or	693
associated with that agent and who knowingly was a party to the	694
act that resulted in the suspension or revocation.	695

(2) The superintendent may revoke a license as a surety bail	696
bond agent if the licensee is adjudged bankrupt.	697

(J) Nothing in this section shall be construed to create or	698
imply a private cause of action against an agent or insurer.	699

Sec. 3999.18.  (A) No person shall establish, operate, or	700
maintain any entity that delivers, issues for delivery, or renews	701
any policy of sickness and accident insurance or contract for	702
health care services in this state if the entity is required to,	703
but does not, have a valid certificate of authority under Chapter	704
1751. or Title XXXIX of the Revised Code.	705

(B) No insurance agent, broker, or other person shall	706
advertise, solicit, negotiate, collect a premium on, or sell any	707
policy of sickness and accident insurance or contract for health	708
care services in this state unless the entity that delivers,	709
issues for delivery, or renews the policy or contract is subject	710
to and has complied with division (A) of this section.	711

Sec. 3999.99.  (A) Whoever violates section 3999.02 of the	712
Revised Code is guilty of a misdemeanor of the second degree.	713

(B) Whoever violates section 3999.03, 3999.07, 3999.13,	714
3999.14, or 3999.15 of the Revised Code is guilty of a misdemeanor	715
of the first degree.	716

(C) Whoever violates section 3999.04, 3999.05, 3999.08, or	717
3999.09 of the Revised Code is guilty of a misdemeanor of the	718
fourth degree.	719

(D) Whoever violates section 3999.10 or 3999.11 of the	720
Revised Code shall be fined five hundred dollars for a first	721
offense and shall be fined one thousand dollars for each	722
subsequent offense.	723

(E) Whoever violates section 3999.12 of the Revised Code	724
shall be fined not less than ten nor more than one thousand	725
dollars.	726

(F) Whoever violates division (F) of section 3999.32,	727
division (B) of section 3999.36, or section 3999.37 or 3999.38 of	728
the Revised Code is guilty of a felony of the fourth degree.	729

(G) Whoever violates division (A) of section 3999.18 of the	730
Revised Code is guilty of a felony of the fourth degree.	731

(H) Whoever violates division (B) of section 3999.18 of the	732
Revised Code is guilty of a misdemeanor of the first degree on a	733
first offense and a felony of the fifth degree on each subsequent	734
offense.	735

(I) If a person is found guilty under this section, the court	736
may award restitution in accordance with section 2929.18 of the	737
Revised Code.	738

Section 2. That existing sections 1739.02, 1739.99, 1751.02,	739
1751.28, 3901.78, 3905.14, and 3999.99 of the Revised Code are	740
hereby repealed.	741