To amend sections 1739.02, 1739.99, 1751.02, 1751.28, 3901.78, and 3999.99 and to enact sections 1739.27 and 3999.18 of the Revised Code to change the assets that are considered to be admitted assets for purposes of meeting the statutory minimum for health insuring corporations, to provide for criminal and financial penalties for persons establishing or operating unlicensed insurers, and to amend provisions governing the issuance of certificates of compliance to insurers.

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

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

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

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

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

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

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

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

(C) Whoever violates section 1739.27 of the Revised Code is guilty of a felony of the fifth degree.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(p) Interest accrued on tax anticipation warrants;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sec. 3901.78.  Upon the filing of each of its annual statements, or as soon thereafter as practicable, the superintendent of insurance shall issue to each insurance company or association authorized to do business in this state but not incorporated under the laws of this state a certificate that it has complied with the laws of this state. Such certificate of compliance shall also contain a statement of the amounts of the paid-up capital stock, assets, liabilities, income, and expenditures of the company or association for the preceding year, as shown by its annual statement for that year. The superintendent shall issue to each newly-applying company or association that the superintendent finds should be authorized to do business in this state, a certificate that it has complied with the laws of this state, which certificate shall contain a statement of the amounts of its paid-up capital stock, assets, liabilities, income, and expenditures as shown by a financial statement submitted by it, under the oath of its officers. of compliance, an original of which must be published in accordance with section 3901.781 of the Revised Code in every county where the insurance company or association has an agency. Upon request or in any other circumstance that the superintendent determines to be appropriate, the superintendent may issue other certificates of compliance, which certificates are not subject to section 3901.781 of the Revised Code, to insurance companies and associations authorized to do business in this state. Certificates of compliance either must be on forms established by the national association of insurance commissioners or on such other forms as the superintendent may prescribe.

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

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

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

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

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

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

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

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

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

(H) Whoever violates division (B) of section 3999.18 of the Revised Code is guilty of a felony of the fifth degree.

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

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