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Sub. H. B. No. 341 As Passed by the SenateAs Passed by the Senate
129th General Assembly | Regular Session | 2011-2012 |
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Cosponsors:
Representatives Blair, Schuring, Stebelton, Hackett, Foley, Sears, Hottinger, Amstutz, Hagan, C., Hill, Murray, Thompson
Senators Hite, Beagle, Bacon, Brown, Hughes, Lehner, Peterson, Seitz
A BILL
To amend sections 3903.81, 3907.14, 3921.10, 3921.13,
3921.19, 3921.22, 3921.28, 3921.29, 3921.30,
3921.31, 3921.33, 3922.01, 3922.02, 3922.03,
3922.04, 3922.05, 3922.06, 3922.09, 3922.10,
3922.11, 3922.14, 3922.15, 3922.16, 3922.19, and
3925.08, to enact new section 3921.35 and sections
3921.101 and 3921.191, and to repeal section
3921.35 of the Revised Code to make changes to the
law regulating fraternal benefit societies, the
laws regulating insurance company investments, and
the law regulating adverse benefit determinations.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 3903.81, 3907.14, 3921.10, 3921.13,
3921.19, 3921.22, 3921.28, 3921.29, 3921.30, 3921.31, 3921.33,
3922.01, 3922.02, 3922.03, 3922.04, 3922.05, 3922.06, 3922.09,
3922.10, 3922.11, 3922.14, 3922.15, 3922.16, 3922.19, and 3925.08
be amended and new section 3921.35 and sections 3921.101 and
3921.191 of the Revised Code be enacted to read as follows:
Sec. 3903.81. As used in sections 3903.81 to 3903.93 of the
Revised Code:
(A) "Adjusted RBC report" means an RBC report that has been
adjusted by the superintendent of insurance in accordance with
division (C) of section 3903.82 of the Revised Code.
(B) "Authorized control level RBC" means the number
determined under the risk-based capital formula in accordance with
the RBC instructions.
(C) "Company action level RBC" means the product of 2.0 and
an insurer's authorized control level RBC.
(D) "Corrective order" means an order issued by the
superintendent of insurance in accordance with division (B)(3) of
section 3903.84 of the Revised Code specifying corrective actions
that the superintendent has determined are required.
(E) "Domestic insurer" means any insurance company organized
under Chapter 3907. or 3925. of the Revised Code.
(F) "Foreign insurer" means any insurance company licensed
under section 3909.01 or 3927.01 of the Revised Code.
(G) "Life or health insurer" means any insurance company
licensed under section 3907.08 or 3909.01 of the Revised Code, or
a company possessing a certificate of authority pursuant to
section 3929.01 of the Revised Code that writes only accident and
health insurance, or a fraternal benefit society licensed under
Chapter 3921. of the Revised Code.
(H) "Mandatory control level RBC" means the product of .70
and an insurer's authorized control level RBC.
(I) "NAIC" means the national association of insurance
commissioners.
(J) "Negative trend" means a negative trend over a period of
time for a life or health insurer as determined in accordance with
the trend test calculation included in the RBC instructions.
(K) "Property and casualty insurer" means any insurance
company that has a certificate of authority pursuant to section
3929.01 of the Revised Code. "Property and casualty insurer" does
not include monoline mortgage guarantee insurers, financial
guarantee insurers, or title insurers.
(L) "RBC" means risk-based capital.
(M) "RBC instructions" means the RBC report, including
risk-based capital instructions, as adopted by the NAIC and as
amended by the NAIC from time to time in accordance with the
procedures adopted by the NAIC. "RBC instructions" shall also
include any modifications adopted by the superintendent, as the
superintendent considers to be necessary.
(N) "RBC level" means an insurer's company action level RBC,
regulatory action level RBC, authorized control level RBC, or
mandatory control level RBC.
(O) "RBC plan" means a comprehensive financial plan
containing the elements specified in division (B) of section
3903.83 of the Revised Code.
(P) "Revised RBC plan" means an RBC plan rejected by the
superintendent of insurance and then revised by an insurer with or
without incorporating the superintendent of insurance's
recommendation.
(Q) "RBC report" means the report required by section 3903.82
of the Revised Code.
(R) "Regulatory action level RBC" means the product of 1.5
and an insurer's authorized control level RBC.
(S) "Total adjusted capital" means the sum of both of the
following:
(1) An insurer's statutory capital and surplus as determined
in accordance with the statutory accounting applicable to the
annual statements prepared on a form adopted under section 3901.77
of the Revised Code, as required to be filed by sections 3907.19,
3909.06, and 3929.30 of the Revised Code;
(2) Such other items, if any, as the RBC instructions may
provide.
Sec. 3907.14. The capital, surplus, and all accumulations of
every domestic life insurance company shall be invested as
follows:
(A) A domestic company may acquire, hold, and convey real
estate:
(1) Which has been acquired or is acquired for its principal
offices, or which is used in connection therewith, provided that
it shall not invest more than five per cent of its admitted assets
on the preceding thirty-first day of December in such real estate;
(2) Which has been mortgaged to it in good faith by way of
security for loans previously contracted or for money due;
(3) Which has been conveyed to it in satisfaction of debts
previously contracted in the course of its dealings, or which it
may receive in or on account of an exchange for real estate
acquired in its operations;
(4) Which it has purchased at sales under mortgages and on
any legal process in connection with its investments or under
decrees obtained or made for such debts;
(5) Which is acquired, owned, or held for the purpose of
developing, improving, or otherwise utilizing such real estate for
the production of income, without restriction or limitation as to
time, and may acquire, lease, hold, and manage personal property
used in connection therewith. No investments in real estate to be
used primarily for recreational, agricultural, or mining purposes
shall be made under authority of division (A)(5) of this section
and except for investments authorized under divisions (A)(1), (2),
(3), and (4) of this section, no domestic life insurance company
shall invest in real estate under divisions (A)(5) and (R) of this
section a sum exceeding in the aggregate ten per cent of its
admitted assets on the preceding thirty-first day of December.
All real estate specified in divisions (A)(3) and (4) of this
section, which is not necessary for its accommodation in the
convenient transaction of its business, shall be sold by the
company and disposed of within five years after it has acquired
the title to such real estate or within five years after such real
estate has ceased to be necessary for the accommodation of its
business, unless the company procures the certificate of the
superintendent of insurance that its interests will suffer
materially by a forced sale of the real estate, in which event the
time for the sale may be extended to such time as the
superintendent directs in such certificate.
(B) A domestic company may acquire, hold, and convey tangible
personal property or interests therein for the production of
income, provided no domestic company shall invest in excess of two
per cent of its admitted assets as of the preceding thirty-first
day of December under this division.
(C) In loans and liens upon the security of its own policies,
not exceeding the reserve or present value of the policies,
computed according to any standard authorized by law or according
to such higher standard as the company has adopted and maintains
on the policy, the reserve being the amount of debts of the life
insurance company by reason of its outstanding policies in gross,
which may be so treated in the returns for taxation made by it;
(D) In bankers' acceptances and bills of exchange of the
kinds and maturities made eligible by law for rediscount with
federal reserve banks, provided that such acceptances and bills of
exchange are accepted by a bank or trust company incorporated
under the laws of the United States or of this state or any other
bank or trust company which is a member of the federal reserve
system;
(E) In equipment trust obligations or certificates, security
agreements, or other evidences of indebtedness entered into
directly or guaranteed by any company operating wholly or partly
within the United States or Canada, provided that the debt
obligation is secured by a first lien on tangible personal
property which is purchased or secured for payment thereof and the
debt obligation is repayable within twenty years from the date of
issue in annual, semiannual, or more frequent installments
beginning not later than the first year after such date;
(F) In bonds issued by or for federal land banks and any
debentures issued by or for federal intermediate credit banks
under the "Federal Farm Loan Act of 1916," 39 Stat. 360, 12
U.S.C.A. 641 as amended; any debentures issued by or for banks for
cooperatives under the "Farm Credit Act of 1933," 48 Stat. 257, 12
U.S.C.A. 131 as amended;
(G) In bonds issued under the "Home Owners' Loan Act of
1933," 48 Stat. 128, 12 U.S.C.A. 1461;
(H) In notes, bonds, debentures, or other such obligations
issued by the federal housing administrator;
(I)(1)(a) In bonds or other evidences of indebtedness, not in
default as to principal or interest, which are valid obligations
issued, assumed or guaranteed by the United States, by any state
thereof, by the Commonwealth of Puerto Rico, by any territory or
insular possession of the United States, or by the District of
Columbia, or which are valid obligations issued, assumed, or
guaranteed by any county, municipal corporation, district, or
political subdivision, or by any civil division or public
instrumentality of such governmental units, if by statutory or
other legal requirements such obligations are payable, as to both
principal and interest, from taxes levied upon all taxable
property within the jurisdiction of such governmental unit;
(b) In bonds or other obligations issued by or for account of
any such governmental unit having a population of five thousand or
more by the latest official federal or state census, which are
payable as to both principal and interest from revenues or
earnings from the whole or any part of a publicly owned utility
supplying water, gas, sewage disposal facility, or electricity, or
any or all of them, provided that by statute or other applicable
legal requirements, rates from the service or operation of such
utility must be fixed, maintained, and collected at all times so
as to produce sufficient revenues or earnings to pay both
principal and interest of such bonds or obligations as they become
due;
(c) In any bonds or obligations payable from and secured by
revenues of the United States, the Commonwealth of Puerto Rico, or
any state or instrumentality of any of them, or of the District of
Columbia or of any commission, board, or other instrumentality of
one or more of them, provided there is a specific pledge of
revenues, and provided that there is adequate provision for
payment of interest prior to completion of construction and that
rates, fees, tolls, or charges fixed are, after completion of
construction, sufficient to pay all expenses of operation and
maintenance and the principal and interest when due.
(2) In legally authorized and executed bonds, notes,
warrants, and securities which are the direct obligation of or are
guaranteed by Canada, or which are the direct obligation of or are
guaranteed as to both principal and interest by any province of
Canada, or which are the direct obligation of or are guaranteed as
to both principal and interest by any municipality of Canada
having a population of fifty thousand or more by the latest
official census, and which are not in default as to principal or
interest;
(3) In bonds or other evidence of indebtedness, not in
default as to principal or interest, which are valid obligations
issued, assumed, or guaranteed by the United States, by any state
thereof, the Commonwealth of Puerto Rico, or by the District of
Columbia, if by statutory or other legal requirements such
obligations are payable, as to both principal and interest, from
selective taxes levied by such governmental unit.
(J)(1) In mortgage bonds which are the direct obligation of a
railroad, and which are the first lien on a substantial portion of
its property, situated wholly in the United States or partly in
the United States and partly in Canada, the average net yearly
earnings of which, after deducting proper charges for maintenance
of way and equipment, for the five fiscal years preceding such
investments, have been at least one and one-half times the average
yearly interest for the same period on its mortgages, bonds, and
funded debts, and in the junior mortgage bond issues of such
railroad corporations of the same character and under the same
conditions where the average net yearly earnings for the five
fiscal years preceding such investment, after deducting proper
charges for maintenance of way and equipment, have been at least
three times the average yearly interest charges on such issues and
all prior liens; or in the mortgage bonds of any incorporated
railroad company which have been assumed or guaranteed, both as to
principal and interest, by any incorporated railroad company whose
bonds constitute a legal investment under division (J)(1) of this
section. In applying the earnings test to any issuing, assuming,
or guaranteeing company, whether or not in legal existence during
the whole of such five years next preceding the date of investment
by such insurer, which has at any time during such five-year
period acquired the assets of any other company by purchase,
merger, consolidation, or otherwise, substantially as an entirety,
or has been reorganized pursuant to the bankruptcy law, the
earnings of such other predecessor or constituent companies, or of
the company so reorganized, available for interest for such
portion of such period that has preceded such acquisition, or such
reorganization, may be included in the earnings of such issuing,
assuming, or guaranteeing company for such portion of such period
as is determined in accordance with adjusted or pro forma
consolidated earnings statements covering such portion of such
period. In such cases the requirements as to earnings shall be
based upon the mortgages, bonds, and funded debts as they exist
immediately after such acquisitions or such reorganizations.
(2) In mortgage bonds or other interest-bearing obligations
of terminal companies organized under the laws of the United
States or any state thereof, provided such bonds or obligations
have been assumed or guaranteed jointly or severally by two or
more railroad corporations whose bonds constitute legal
investments under division (J)(1) of this section;
(3) In loans to veterans guaranteed in whole or in part by
the United States pursuant to Title III of the "Servicemen's
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C.A. 693, as
amended, provided such guaranteed loans are liens upon real
estate;
(4) In mortgage bonds which are the direct obligation of and
first lien upon the property of a corporation engaged directly and
primarily in the production and sale of, or in the purchase and
sale of electricity or gas, or in the operation of telephone or
telegraph systems or waterworks, or in some combination of them,
and situated wholly in the United States, or the Commonwealth of
Puerto Rico, or partly in the United States and partly in Canada,
the average net yearly earnings of which, after deducting proper
charges for replacements, depreciation, and obsolescence, for the
five fiscal years preceding such investment, have been at least
one and one-half times the average yearly interest for the same
period on its mortgages, bonds, and funded debts;
(5) Any such corporation, or any of its predecessors,
constituent, or successor corporations, must have been in business
not less than ten years prior to the date of the purchase of such
bonds, and must not have defaulted on the interest or principal of
any of its bonds or funded debts outstanding during the five years
immediately preceding the date of purchase, provided that division
(J)(5) of this section does not preclude investments in mortgage
bonds of railroads reorganized through purchase of assets, merger,
consolidation, bankruptcy proceedings, or otherwise if such bonds
are eligible for investment under division (J)(1) of this section;
(6) No investment shall be made under division (J)(1), (2),
(4), or (5) of this section if such railroad or other utility
corporation and its business, and its issue of bonds, funded
debts, and stocks are not under the supervision and control of an
authorized state or federal official or commission, provided that
division (J)(6) of this section does not apply to the mortgage
bonds or other interest-bearing obligations of companies engaged
in the operation of telephone or telegraph systems.
(K)(1) In bonds or notes secured by mortgages or deeds of
trust which are a first lien upon unencumbered fee simple real
estate in any state, the Commonwealth of Puerto Rico, the District
of Columbia, or Canada, provided the amount loaned does not exceed
eighty per cent of the actual market value of such property.
The actual market value of any such property shall be shown
by a valuation and appraisement in writing by a qualified land
appraiser.
In the event the amount loaned under division (K)(1) of this
section exceeds eighty per cent of the actual market value of the
land, the structures on the land must be insured by an authorized
fire insurance company or covered by other comparable
indemnification, and the policies or indemnifications shall be
payable or assigned to the mortgagee or to a trustee in its behalf
and shall be held by the mortgagee or an agent of the mortgagee or
by such trustee; or in lieu of holding such policies or
indemnifications, the mortgagee may purchase a policy or policies
of mortgage protection insurance, payable to the mortgagee or a
trustee in its behalf, insuring the mortgagee against loss
resulting from the failure of the mortgagor to acquire and
maintain, from such an authorized fire insurance company or other
comparable source, insurance or indemnification.
(2) In bonds or notes secured by mortgages insured by the
federal housing administrator;
(3) In bonds or notes secured by mortgages or deeds of trust
which are a first lien on leasehold estates in wholly or partly
improved real property, unencumbered, except rentals accruing from
the property to the owner of the fee, provided that any loan
secured by a leasehold estate must provide for amortization by
repayment of principal at least once in each year in amounts
sufficient to repay the loan within a period of four-fifths of the
unexpired term of the leasehold but within a period of not more
than thirty years, and further provided that the amount loaned on
the leasehold estate does not exceed seventy-five per cent of
total market value of the leasehold estate determined by
appraisements in writing made under oath by two real estate
owners, residents of the county or local district in which the
real estate is located, or by a qualified land appraiser; if the
amount loaned exceeds seventy-five per cent of the value of that
portion of the leasehold estate represented by the value of the
land, exclusive of improvements on the land, such improvements
shall be insured against fire for the benefit of the mortgagee in
an amount not less than the difference between seventy-five per
cent of the value of such land, exclusive of buildings, and the
amount loaned; the policies for such amount shall be payable to
and held by the mortgagee or a trustee named in the lease who
shall be required by the terms of said lease to use and apply the
proceeds of such insurance for repairing, restoring, or rebuilding
such buildings;
(4) The following shall not be considered as prior liens or
encumbrances in the construction and application of this section:
leasehold estates of any duration, rights-of-way, servitudes,
joint driveways, easements, party wall agreements, current taxes
and assessments not delinquent, and restrictions as to building,
use, and occupancy.
(5) This section does not prohibit a domestic life insurance
company from renewing or extending a loan for the original or a
lesser amount nor does it prohibit a company from accepting as
part payment for real estate sold by it a mortgage on the real
estate for a greater percentage of the purchase price of the real
estate than is otherwise permitted by this section.
(L) In bonds, notes, or other evidences of indebtedness of
corporations, trusts, partnerships, or similar business entities
organized under the laws of the United States, or any state
thereof, the Commonwealth of Puerto Rico, the District of
Columbia, or Canada or any province of Canada, secured by
assignment of lease or leases or the rentals payable under such
leases, of real or personal property or both to (1) the United
States or any instrumentality thereof, or any state of the United
States, the Commonwealth of Puerto Rico, or the District of
Columbia, or any county, city, town, school, or water district,
authority, or other political subdivision in any such government,
or Canada, any province of Canada, or any municipal corporation of
Canada that has a population of fifty thousand or more by the
latest official census; or (2) one or more corporations, trusts,
partnerships, or similar business entities organized under the
laws of the United States, any state thereof, the Commonwealth of
Puerto Rico, the District of Columbia, or Canada or any province
of Canada, provided that (a) the fixed rentals assigned shall be
sufficient to repay the indebtedness within the unexpired term of
the lease, exclusive of the term which may be provided by an
enforceable option of renewal; (b) such lessee has not defaulted
in payment of interest or principal on any of its bonds, notes,
debentures, or other evidences of indebtedness during the five
years immediately preceding the date of the investment, and
provided the average net earnings available for fixed charges of
such lessee under division (L)(2) of this section for not less
than five fiscal years preceding such investment have been at
least one and one-half times average fixed charges for that period
and during either of the last two years of such period, the net
earnings available for fixed charges shall have been not less than
one and one-half times fixed charges for such year, except that
railroad companies and utility companies may qualify as lessees
herein by application of the earnings test provided for railroads
under division (J)(1) of this section and for utilities under
division (J)(4) of this section; and (c) a first lien on the
interest of the lessor in the unencumbered property so leased
shall be obtained as additional security for the indebtedness;
(M) In ground rents, land trust certificates, or fee
ownership certificates representing or evidencing beneficial
ownership of or interest in improved real estate under lease for
not less than twenty-five years from the date of such lease, in
which it must be provided that the lessee shall pay all taxes and
assessments levied on or assessed against said real estate, shall
maintain the improvements on the real estate in good repair, and
shall provide and maintain fire insurance in an amount equal to
the insurable value of the building on the real estate; provided:
(1) The value of the land and improvements shall be evidenced
by an appraisement made under oath by a disinterested appraiser
resident in and the owner of real estate in the city in which the
property is situated, and such appraisement shall not be less than
one and sixty-seven hundredths times the amount of such land trust
certificates, which amount shall be not less than twenty times the
net annual rental distributable to holders of outstanding
certificates;
(2) Such beneficial interests shall only be in properties on
which actual earning records for five years immediately preceding
are available;
(3) Such declaration of trust or other trust instrument shall
provide for a depreciation or other similar fund, in an amount
which is not less than nine per cent of the net annual
distributable rental, for the benefit of the holders of
outstanding certificates.
(N)(1) In certificates of deposit or other evidence of
indebtedness of a savings and loan association provided the
certificates or other evidence of deposit are insured pursuant to
the "Financial Institutions Reform, Recovery, and Enforcement Act
of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;
(2) In interest-bearing obligations, including savings
accounts and time certificates of deposit of a national bank or
state bank provided such bank is a member of the federal deposit
insurance corporation created pursuant to the "Banking Act of
1933," 92 Stat. 624, 12 U.S.C.A. 624, as amended.
(O) In obligations issued, assumed, or guaranteed by the
international finance corporation or by the international bank for
reconstruction and development, the Asian development bank, the
inter-American development bank, the African development bank, or
other similar development bank in which the president, as
authorized by congress and on behalf of the United States, has
accepted membership;
(P)(1) In the preferred stocks of any company organized under
the laws of the United States or of any state thereof engaged
directly and primarily in the production and sale of, or in the
purchase and sale of electricity or gas, or in the operation of
telephone or telegraph systems or water works, or in some
combination of them, if the average annual net earnings of such
company, for not less than five fiscal years preceding purchase
thereof, after deduction of interest on all mortgages, bonds,
debentures, and funded debts and after deduction of the proper
charges for replacements, depreciation, and obsolescence, have
been at least two times the average yearly amount which is
required to pay the dividends or distributions on all preferred
stocks; and in which the mortgages, bonds, debentures, funded
debts, and preferred stocks shall not in the aggregate exceed
seventy per cent of the total capitalization of such company,
including mortgages, bonds, debentures, funded debts, and
preferred and common stocks;
(2) In the preferred stocks of any other company organized
under the laws of the United States, or of any state thereof if
the average annual net earnings of such company for a period of
not less than five fiscal years preceding purchase thereof, after
deduction of interest on all mortgages, bonds, debentures, and
funded debts and after deduction of the proper charges for
replacements, depreciation, and obsolescence, have been at least
four times the amount which is required to pay the dividends or
distributions on all preferred stocks, and in which the mortgages,
bonds, debentures, funded debts, and preferred stocks shall not in
the aggregate exceed sixty per cent of the total capitalization of
such company, including mortgages, bonds, debentures, funded
debts, and preferred and common stocks;
(3) A domestic life insurance company shall not purchase any
preferred stocks when the total market values of such stocks then
owned with those purchased exceed in the aggregate of book values
and purchase price the capital, surplus, and contingency funds,
excluding all reserves required by law, of such company on the
thirty-first day of December preceding the date of such purchase,
or contemplated purchase, provided that in case of appreciations
in values of stocks owned the cost rather than the market values
shall be used in arriving at such aggregate; the purpose being to
restrict the investments of such company in all preferred stocks
to capital, surplus, and contingency funds.
(4) In the bonds, notes, debentures, or other evidences of
indebtedness of a solvent corporation, trust, partnership, or
similar business entity existing under the laws of the United
States, of any state thereof, the Commonwealth of Puerto Rico, or
Canada or any province of Canada, provided that either:
(a) The bonds, notes, debentures, or other evidences of
indebtedness of such corporation, trust, partnership, or similar
business entity are rated 1 or 2 by the securities valuation
office of the national association of insurance commissioners;
(b) The corporation, trust, partnership, or similar business
entity has not defaulted in payment of interest or principal on
any of its bonds, notes, debentures, or other evidences of
indebtedness during the five years immediately preceding the date
of purchase, and the average annual net earnings of such
corporation, trust, partnership, or similar business entity that
are available for fixed charges for not less than five fiscal
years preceding such purchase have been at least one and one-half
times the average fixed charges of such corporation, trust,
partnership, or similar business entity for that period and during
either of the last two years of such period, the net earnings
available for fixed charges shall have been not less than one and
one-half times the fixed charges of such corporation, trust,
partnership, or similar business entity for such year.
(5) In common stocks or shares of any solvent incorporated
company organized under the laws of the United States, or of any
state, district, or territory thereof, or the Commonwealth of
Puerto Rico, provided that a dividend or distribution has been
paid by the corporation in the preceding twelve months upon such
stock to be purchased, or that such corporation, together with its
predecessor corporation or corporations, has been in existence for
a period of at least five years. No domestic company shall invest
in common stock or shares under divisions (P)(5) and (R) of this
section a sum exceeding in the aggregate ten per cent of its
admitted assets on the preceding thirty-first day of December.
(6) In the stocks
or, limited liability company membership
interests, limited partnership interests, or limited liability
partnership interests of insurance, financial, investment, and
investment management companies, which investment management
companies are registered with the securities and exchange
commission under the "Investment Company Act of 1940," 54 Stat.
789, 15 80a-1, as amended, or the stocks, limited liability
company membership interests, limited partnership interests, or
limited liability partnership interests in an entity wholly owned
by a domestic company or by a domestic company and its affiliates,
that is formed and maintained to acquire or hold specific assets
or liabilities for bankruptcy remoteness or limitation of
liability purposes, except its own stock, but no domestic life
insurance company shall invest in such stocks
or, limited
liability company membership interests, or limited liability
partnership interests under division (P)(6) of this section,
exclusive of its investments in stocks or limited liability
company membership interests of insurance company subsidiaries or
subsidiaries engaged exclusively in the ownership of insurance
company subsidiaries, a sum exceeding the lesser of fifty per cent
of its policyholder surplus or ten per cent of its admitted assets
as of the preceding thirty-first day of December unless the
approval of the superintendent of insurance is first obtained.
Whenever the superintendent has reason to believe that the
retention, investment, or acquisition of the stock
or, limited
liability company membership interest, limited partnership
interest, or limited liability partnership interest of any such
company substantially lessens competition generally in the
business of insurance or creates a monopoly therein the
superintendent shall proceed under section 3901.13 of the Revised
Code to cause such domestic insurance company to divest itself of
such stock
or, limited liability company membership interest,
limited partnership interest, or limited liability partnership
interest.
(7)(a) In bonds, notes, debentures, or other evidences of
indebtedness issued, assumed, or guaranteed by a solvent
corporation, trust, or partnership formed or existing under the
laws of a foreign jurisdiction, provided each such foreign
investment is of the same kind and quality as United States
investments authorized under this section; or in common or
preferred stock or, shares, membership interest, or partnership
interest of any solvent corporation business entity formed or
existing under the laws of a foreign jurisdiction provided each
such foreign investment is of the same kind and quality as United
States investments authorized under this section; or in bonds or
other evidences of indebtedness issued, assumed, or guaranteed by
a foreign jurisdiction.
An insurer shall not invest in foreign investments under
division (P)(7) of this section, including investments denominated
in foreign currency, a sum exceeding in the aggregate fifteen per
cent of its admitted assets as of the preceding thirty-first day
of December. The aggregate amount of investments held by an
insurer in a single foreign jurisdiction shall not exceed three
per cent of its admitted assets as of the preceding thirty-first
day of December.
As used in division (P)(7)(a) of this section, "foreign
jurisdiction" means a jurisdiction outside the United States,
Puerto Rico, or canada, whose bonds are rated 1 by the securities
valuation office of the national association of insurance
commissioners.
(b) An insurer may acquire investments denominated in foreign
currency whether or not they are foreign investments.
An insurer shall not invest in investments denominated in
foreign currency a sum exceeding in the aggregate ten per cent of
its admitted assets as of the preceding thirty-first day of
December. The aggregate amount of investments denominated in a
single foreign currency held by an insurer shall not exceed three
per cent of an insurer's admitted assets as of the preceding
thirty-first day of December.
(c) As used in division (P)(7) of this section, "foreign
currency" means a currency other than that of the United States.
(8) An insurer may invest without limitation in investments
of government money market funds. As used in division (P)(8) of
this section, "government money market fund" means a mutual fund
that at all times invests in obligations issued, guaranteed, or
insured by the federal government of the United States, or
collateralized repurchase agreements comprised of these
obligations, and that qualifies for investment without a reserve
pursuant to the purposes and procedures of the securities
valuation office of the national association of insurance
commissioners.
(Q) In loans upon the pledge of any securities in which such
companies are authorized by this section to invest, provided that
any loan upon such a pledge shall not exceed eighty per cent of
the cash market value of the collateral at the time of the making
of such loan and at the end of each twelve-month period
thereafter, and such company, through the collateral pledged to
it, shall not exceed the amounts which it may, under this section,
invest in one corporation so that, in the stocks and securities
which may be owned and those which are pledged to it, the
limitations in this section might be indirectly evaded;
(R)(1) Any domestic legal reserve life insurance company may
loan or invest its funds, to an extent not exceeding in the
aggregate five per cent of its total admitted assets, in loans or
investments not permitted under this section. Any such company may
also invest up to an additional five per cent of its total
admitted assets, in loans or investments in small businesses
having more than half of their assets or employees in this state
and in venture capital firms having an office within this state,
provided that, as a condition of a company making an investment in
a venture capital firm, the firm must agree to use its best
efforts to make investments, in an aggregate amount at least equal
to the investment to be made by the company in that venture
capital firm, in small businesses having their principal offices
within this state and having either more than one-half of their
assets within this state or more than one-half of their employees
employed within this state.
As used in division (R) of this section:
(a) "Small businesses" means any corporation, partnership,
proprietorship, or other entity that either does not have more
than four hundred employees, or would qualify as a small business
for the purpose of receiving financial assistance from small
business investment companies licensed under the "Small Business
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as
amended, and rules of the small business administration.
(b) "Venture capital firms" means any corporation,
partnership, proprietorship, or other entity, the principal
business of which is or will be the making of investments in small
businesses.
(c) "Investments" means any equity investment, including
limited partnership interests and other equity interests in which
liability is limited to the amount of the investment, but does not
include general partnership interests or other interests involving
general liability.
(2) In the event that, subsequent to being made under
provisions of division (R) of this section, an investment is
determined to have become qualified as an investment for a
domestic life insurance company as provided for in this section,
the company may consider such investment as held under the
applicable provisions of the foregoing divisions (A) to (Q) of
this section and such investment shall no longer be considered as
having been made under the provisions of this division.
(S)(1) No domestic life insurance company shall subscribe to
or participate in any underwriting for the purchase or sale of
securities or property, nor shall it enter into any such
transaction for purchase or sale on account of said company
jointly with any other person, nor shall any such company enter
into any agreement to withhold from sale any of its property, but
the disposition of its property shall be at all times within the
control of its board of directors. Nothing contained in division
(S)(1) of this section shall be construed to invalidate or
prohibit an agreement by an insurance company for the purchase for
its own account of an entire issue of the securities of a
corporation or to invalidate or prohibit an agreement by an
insurance company and one or more other investors to join and
share in the purchase of investments for their individual accounts
and for bona fide investment purposes.
(2) In the determination of capitalization in this section
the value of all bonds, debentures, and funded debts, and
nonconvertible or nonparticipating preferred stocks shall be
figured at par. Participating or convertible preferred shares
shall be figured at par or market on the preceding thirty-first
day of December, whichever is higher, and the value of all common
shares shall be figured at the market on the preceding
thirty-first day of December.
(3) As used in this section:
(a) "Funded debt" means all interest-bearing obligations
maturing in more than one year from their issuance and all
guaranteed or assumed interest-bearing obligations or stock.
Securities or stock of a corporation pledged to secure other
funded debt of the corporation are not included in the funded
debt.
(b) "Fixed charges" include actual interest incurred in each
year on funded and unfunded debt and annual apportionment of debt
discount or premium. Where interest is partially or entirely
contingent upon earnings, "fixed charges" include contingent
interest payments.
(c) "Net earnings available for fixed charges" means income
after deducting operating and maintenance expenses, taxes other
than income taxes, depreciation, and depletion. Extraordinary,
nonrecurring items of income or expense shall be excluded.
(4) Except as provided in a plan of mutualization adopted
pursuant to the provisions of sections 3913.01 to 3913.10 of the
Revised Code, no domestic life insurance company may invest in or
loan upon its own stock, either directly or indirectly.
(5) If the investments of any domestic life insurance company
are at the time of the making thereof or on October 13, 1953,
otherwise than as authorized in this section, such investments
shall not be admitted or accepted as authorized investments for
such company.
(6) Any earnings test provided for in this section shall be
deemed to have been met if the requirements of such earnings test
are met by any company which assumes or guarantees the investment
or which assumes or guarantees the performance of any lease which
is the security for the investment. In applying any such earnings
test, the operations of a company's predecessor companies, if any,
for the stipulated period shall be included.
(7) No domestic life insurance company shall at any time have
invested in or loaned upon the security of the obligations,
property, or securities of a particular corporation, trust,
partnership, or similar business entity a sum exceeding the
greater of two per cent of its admitted assets as of the preceding
thirty-first day of December or twenty-five per cent of that
portion of its capital and surplus, or its surplus in the case of
a mutual company, that exceeds the minimum required capital and
surplus under section 3907.05 of the Revised Code unless the
approval of the superintendent of insurance is first obtained. The
restrictions of division (S)(7) of this section do not apply to
divisions (C), (F), (G), (H), (P)(6), and (R) of this section or
to any valid obligation issued, assumed, or guaranteed by the
United States, or any state thereof, the Commonwealth of Puerto
Rico, the District of Columbia, or Canada or any province of
Canada. For purposes of division (S)(7) of this section, such
company may, at its option, consider either the lessor or the
lessee under division (L) of this section to be the person to whom
any such investment or loan is made.
(8) This section does not affect the propriety or legality of
an investment made by a domestic life insurance company which was
in accordance with the laws in force at the time of the making of
the investment.
Sec. 3921.10. A domestic fraternal benefit society organized
on or after January 1, 1997, shall be formed as follows:
(A) Seven or more citizens of the United States, a majority
of whom are residents of this state, who desire to form a
fraternal benefit society, may make, sign, and acknowledge before
some officer competent to take acknowledgement of deeds, articles
of incorporation stating all of the following:
(1) The proposed corporate name of the society, which name
shall not so closely resemble the name of any society or insurance
company as to be misleading or confusing;
(2) The purposes for which it is being formed and the mode in
which its corporate powers are to be exercised. Such purposes
shall not include more liberal powers than are granted by this
chapter.
(3) The names and residences of the incorporators and the
names, residences, and official titles of all the officers,
trustees, directors, or other persons who are to have and exercise
the general control of the management of the affairs and funds of
the society for the first year or until the ensuing election at
which all such officers shall be elected by the supreme governing
body, which election shall be held not later than one year from
the date of the issuance of the permanent certificate of
authority.
(B) The articles of incorporation, duly certified copies of
the society's bylaws and rules, copies of all proposed forms of
certificates, applications for certificates, and circulars to be
issued by the society, and a bond conditioned upon the return to
applicants of the advanced payments if the organization is not
completed within one year, shall be filed with the superintendent
of insurance, who may require any other information the
superintendent considers necessary. The bond with sureties
approved by the superintendent shall be in such amount, not less
than three hundred thousand dollars nor more than one million five
hundred thousand dollars, as required by the superintendent. All
documents filed shall be in the English language. If the purposes
of the society conform to the requirements of this chapter and all
provisions of the laws of this state have been complied with, the
superintendent shall so certify, retain and file the articles of
incorporation, and furnish the incorporators a preliminary
certificate of authority authorizing the society to solicit
members as provided in this section.
(C) No preliminary certificate of authority granted under
this section shall be valid after one year from its date or after
such additional period, not exceeding one year, as may be
authorized by the superintendent upon cause shown, unless the five
hundred applicants required in division (D) of this section have
been secured and the organization has been completed as provided
in this section. The articles of incorporation and all other
proceedings thereunder shall be void one year after the date of
the preliminary certificate of authority, or at the expiration of
the extended period, unless the society has completed its
organization and has received a certificate of authority to do
business as provided in division (E) of this section.
(D) Upon receipt of a preliminary certificate of authority
from the superintendent, the society may solicit members for the
purpose of completing its organization, shall collect from each
applicant the amount of not less than one regular monthly premium
in accordance with its table of rates, and shall issue to each
applicant a receipt for the amount so collected. No society shall
incur any liability other than for the return of such advance
premium, nor issue any certificate, nor pay, allow, or offer, or
promise to pay or allow, any benefit to any person until all of
the following apply:
(1) Actual bona fide applications for benefits have been
secured aggregating at least two million five hundred thousand
dollars on not less than five hundred applicants, and any
necessary evidence of insurability has been furnished to and
approved by the society.
(2) At least ten subordinate lodges have been established
into which the five hundred applicants have been admitted.
(3) There has been submitted to the superintendent, under
oath of the president or secretary, or corresponding officer of
the society, a list of such applicants, giving their names,
addresses, date each was admitted, name and number of the
subordinate lodge of which each applicant is a member, amount of
benefits to be granted, and premiums for the benefits.
(4) It has been shown to the superintendent, by sworn
statement of the treasurer, or corresponding officer of the
society, that at least five hundred applicants have each paid in
cash at least one regular monthly premium as provided in this
section, which premiums in the aggregate amount to at least one
hundred fifty thousand dollars, all of which is credited to the
fund or funds from which benefits are to be paid and no part of
which may be used for expenses. These advance premiums shall be
held in trust during the period of organization and if the society
has not qualified for a certificate of authority within one year,
as provided in this section, the premiums shall be returned to the
applicants.
(E) The superintendent may make such examination and require
such further information as the superintendent considers
advisable. Upon presentation of satisfactory evidence that the
society has complied with all the provisions of law including the
surplus requirements of section 3921.101 of the Revised Code, the
superintendent shall issue to the society a certificate of
authority to that effect and that the society is authorized to
transact business pursuant to the provisions of this chapter. The
certificate of authority shall be prima facie evidence of the
existence of the society at the date of the certificate. The
superintendent shall cause a record of the certificate of
authority to be made. A certified copy of the record may be given
in evidence with like effect as the original certificate of
authority.
(F) An incorporated society that was organized prior to
January 1, 1997, and that, as of December 31, 1996, is authorized
to transact business in this state shall not be required to
reincorporate, and may exercise all the rights, powers, and
privileges conferred in this chapter and in the society's articles
of incorporation to the extent that the articles are consistent
with this chapter.
Sec. 3921.101. (A)(1) On and after January 1, 2016, a
fraternal benefit society that provides the contractual benefits
listed in division (A)(1) of section 3921.16 of the Revised Code
in this state in a benefit amount of greater than ten thousand
dollars shall have and maintain a surplus of two million five
hundred thousand dollars for all lines written.
(2) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(1)
of section 3921.16 of the Revised Code in this state in a benefit
amount of ten thousand dollars or less shall have and maintain a
surplus of five hundred thousand dollars.
(B)(1) On and after January 1, 2016, a fraternal benefit
society that provides the contractual benefits listed in division
(A)(2) of section 3921.16 of the Revised Code in this state in a
benefit amount of greater than ten thousand dollars shall have and
maintain a surplus of two million five hundred thousand dollars
for all lines written.
(2) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(2)
of section 3921.16 of the Revised Code in this state in a benefit
amount of ten thousand dollars or less shall have and maintain a
surplus of five hundred thousand dollars.
(C)(1) On and after January 1, 2016, a fraternal benefit
society that provides the contractual benefits listed in division
(A)(3) of section 3921.16 of the Revised Code in this state in a
benefit amount of greater than ten thousand dollars shall have and
maintain a surplus in the aggregate of two million five hundred
thousand dollars for all lines written.
(2) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(3)
of section 3921.16 of the Revised Code in this state in a benefit
amount of ten thousand dollars or less shall have and maintain a
surplus of five hundred thousand dollars.
(D) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(4)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of two million five hundred thousand
dollars for all lines written.
(E) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(5)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of two million five hundred thousand
dollars for all lines written.
(F) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(6)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of five hundred thousand dollars.
(G) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(7)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of two million five hundred thousand
dollars for all lines written.
(H) The surplus requirements of this section are not
cumulative. A society with a surplus of at least two million five
hundred thousand dollars on and after January 1, 2016, satisfies
the surplus requirements of this section.
Sec. 3921.13. (A) A domestic fraternal benefit society may,
by a reinsurance agreement, cede any individual risk or risks in
whole or in part to an insurer, other than another fraternal
benefit society, having the power to make such reinsurance and
authorized to do business in this state, or if not so authorized,
one which is approved by the superintendent of insurance; however,
no society may reinsure substantially all of its insurance in
force without the written permission of the superintendent. It may
take credit for the reserves on the ceded risks to the extent
reinsured, but no credit shall be allowed as an admitted asset or
as a deduction from liability, to a ceding society for reinsurance
made, ceded, renewed, or otherwise becoming effective after
January 1, 1997, unless the reinsurance is payable by the assuming
insurer on the basis of the liability of the ceding society under
the contract or contracts reinsured without diminution because of
the insolvency of the ceding society.
(B) Notwithstanding division (A) of this section, a society
may reinsure the risks of another society in a consolidation or
merger approved by the superintendent under section 3921.14 of the
Revised Code.
(C) A society with assets of less than five billion dollars
that provides contract benefits of major medical, medicare
supplemental, or long-term care pursuant to division (A)(5) of
section 3921.16 of the Revised Code shall reinsure not less than
fifty per cent of the risk arising from those contracts if the
society's risk based capital is less than three hundred per cent.
Sec. 3921.19. (A) Each fraternal benefit society authorized
to do business in this state shall issue to each owner of a
benefit contract a certificate specifying the amount of benefits
provided under the contract. The certificate, together with any
riders or endorsements attached to the certificate, the laws of
the society, the application for membership, the application for
insurance and declaration of insurability, if any, signed by the
applicant, and all amendments to each such document, constitute
the benefit contract, as of the date of issuance, between the
society and the owner, and the certificate shall so state. A copy
of the application for insurance and declaration of insurability,
if any, shall be endorsed upon or attached to the certificate.
All statements made on the application are representations
and not warranties. Any waiver of this provision is void.
(B) Any changes, additions, or amendments to the laws of the
society duly made or enacted subsequent to the issuance of the
certificate, shall bind the owner and the beneficiaries, and shall
govern and control the benefit contract in all respects the same
as though such changes, additions, or amendments had been made
prior to and were in force at the time of the application for
insurance, except that no change, addition, or amendment shall
destroy or diminish benefits that the society contracted to give
the owner as of the date of issuance.
(C) Any person upon whose life a benefit contract is issued
prior to attaining the age of majority shall be bound by the terms
of the application and certificate and by all of the laws and
rules of the society to the same extent as though the age of
majority had been attained at the time of application.
(D) A society shall provide in its laws that if its reserves
as to all or any class of certificates become impaired its board
of directors or corresponding body may require that there shall be
paid by the owner to the society the amount of the owner's
equitable proportion of such deficiency as ascertained by its
board, and that if the payment is not made, either of the
following applies:
(1) It shall stand as an indebtedness against the certificate
and draw interest not to exceed the rate specified for certificate
loans under the certificates;
(2) In lieu of or in combination with division (D)(1) of this
section, the owner may accept a proportionate reduction in
benefits under the certificate.
The society may specify the manner of the election and which
alternative is to be presumed if no election is made.
(E) At least thirty days prior to imposing any indebtedness
upon any owner as provided in division (D) of this section, the
board of directors or corresponding body shall notify the
superintendent of insurance in writing of the board's intent to
require the payment and a statement of the reason that request is
necessary. The notice shall be confidential and not a public
record under section 149.43 of the Revised Code.
(F)(1) Certificates that are delivered or issued for delivery
in this state on or after January 1, 1997, but prior to January 1,
1998, shall comply with the requirements that would have applied
under the laws in effect on December 31, 1996.
(2) No certificate shall be delivered or issued for delivery
in this state on or after January 1, 1998, unless a copy of the
form is filed with and approved by the superintendent of insurance
in accordance with the provisions of law applicable to like
policies issued by life or sickness and accident insurers in this
state.
(3) Each life, sickness and accident, or disability insurance
certificate, and each annuity certificate, that is delivered or
issued for delivery in this state on or after January 1, 1998,
shall comply with the standard contract provision requirements
applicable to like policies issued by life or sickness and
accident insurers in this state, if those requirements are not
inconsistent with this chapter. However, a society may provide in
its certificates for a grace period of one full month for payment
of premiums. A certificate shall also contain a provision that
states the amount of premiums that is payable under the
certificate and that sets forth the substance of any sections of
the society's laws or rules in force at the time of issuance of
the certificate which, if violated, will result in the termination
or reduction of benefits payable under the certificate. If the
laws of the society provide for the expulsion or suspension of a
member, the certificate shall also contain a provision stating
that any member expelled or suspended, except a member expelled or
suspended because of nonpayment of a premium, may maintain, other
than during the contestable period for material misrepresentation
in the application for membership or insurance, the certificate in
force by continuing payment of the required premium.
(F)(G) Benefit contracts issued on the lives of persons under
the society's minimum age for adult membership may provide for
transfer of control of ownership to the insured at an age
specified in the certificate. A society may require approval of an
application for membership in order to effect this transfer, and
may provide in all other respects for the regulation, government,
and control of such certificates and all rights, obligations, and
liabilities incident to and connected with such certificates.
Ownership rights prior to such a transfer shall be specified in
the certificate.
(G)(H) A society may specify the terms and conditions on
which benefit contracts may be assigned.
(H)(I) A copy of any of the documents described in this
section, if certified by the secretary or corresponding officer of
the society, is prima facie evidence of the terms and conditions
of the documents.
Sec. 3921.191. (A) A fraternal benefit society shall provide
an applicant for contractual benefits a disclosure statement at
the time of sale substantially as follows:
".......... (Name of the fraternal benefit society) IS
LICENSED TO DO BUSINESS IN THE STATE OF OHIO. AS A ........
(not-for-profit, tax-exempt, self-governing, or membership
organization), FRATERNAL BENEFIT SOCIETIES ARE NOT INCLUDED IN THE
OHIO GUARANTY ASSOCIATION. THIS MEANS THAT FRATERNAL BENEFIT
SOCIETIES CANNOT BE ASSESSED FOR THE INSOLVENCY OF OTHER LIFE
INSURERS OR OTHER FRATERNAL BENEFIT SOCIETIES. BY LAW, A FRATERNAL
BENEFIT SOCIETY IS RESPONSIBLE FOR ITS OWN SOLVENCY. IF THERE IS
AN IMPAIRMENT OF RESERVES, A CERTIFICATE HOLDER MAY BE ASSESSED A
PROPORTIONATE SHARE OF THE IMPAIRMENT. THIS PROCESS IS DESCRIBED
IN THE CERTIFICATE ISSUED BY THE SOCIETY."
(B) The statement must be signed by the applicant and
maintained in the certificate or contract file by the fraternal
benefit society. The statement may be part of the society's
membership application or certificate or policy application.
(C) This section is applicable only to new business written
by a fraternal benefit society after the effective date of this
section.
Sec. 3921.22. (A) A fraternal benefit society shall hold,
invest, and disburse all assets for the use and benefit of the
society. No member or beneficiary shall have or acquire individual
rights to the assets, or be entitled to any apportionment on the
surrender of any part of the assets, except as provided in the
benefit contract.
(B) A society may create, maintain, invest, disburse, and
apply any special fund or funds necessary to carry out any purpose
permitted by the laws of the society. No society shall, directly
or indirectly, pay or use, or offer, consent, or agree to pay or
use, any of its funds, money, or property for or in aid of any
political party, campaign committee, political action committee,
continuing association, or any other political organization.
(C) A society may, pursuant to resolution of its supreme
governing body, establish and operate one or more separate
accounts and issue contracts on a variable basis, subject to the
provisions of law regulating life insurers that establish such
accounts and issue such contracts including those described in
section 3911.011 of the Revised Code. To the extent the society
considers it necessary in order to comply with any applicable
federal or state law, or any rule issued under that law, the
society may do any of the following:
(1) Adopt special procedures for the conduct of the business
and affairs of a separate account;
(2) For persons having beneficial interests in the account,
provide special voting and other rights, including special rights
and procedures relating to investment policy, investment advisory
services, selection of certified public accountants, and selection
of a committee to manage the business and affairs of the account;
(3) Issue contracts on a variable basis to which divisions
(B) and (D) of section 3921.19 of the Revised Code do not apply.
Sec. 3921.28. (A)(1) Each domestic fraternal benefit society
and each applicant for a certificate of incorporation as a
domestic fraternal benefit society shall be subject to examination
by the superintendent of insurance in accordance with section
3901.07 of the Revised Code. Section 3901.07 of the Revised Code
shall govern every aspect of the examination, including the
circumstances under and frequency with which it is conducted, and
the authority of the superintendent and any examiner or other
person appointed by the superintendent.
(2)(a) A domestic fraternal benefit society shall be liable
for the payment of any additional expense of an examination
resulting from unreasonable delays by the society in fulfilling a
request for documents or information by the examiner conducting
the examination. A delay is deemed unreasonable if the examiner
has made two separate unfulfilled requests for the same documents
or information. A request for records or information from an
examiner shall allow the fraternal benefit society a minimum of
ten business days to fulfill the request.
(b) In the event of an unreasonable delay, the examiner shall
notify the superintendent, who shall set a hearing, under Chapter
119. of the Revised Code, to determine if there has been an
unreasonable delay because of the fraternal benefit society's
response to a request for documents or information and to
calculate the additional expense incurred by the superintendent as
a result of the unreasonable delay.
(3) A summary of the examination of the superintendent and
any recommendations or statements of the superintendent that
accompany the report, shall be read at the first meeting of the
board of directors or corresponding body of the society following
the receipt thereof, and if directed so to do by the
superintendent, shall also be read at the first meeting of the
supreme legislative or governing body of the society following the
receipt thereof. A copy of the report, recommendations, and
statements of the superintendent shall be furnished by the society
to each member of the board of directors or other governing body.
(B) Each foreign or alien fraternal benefit society
transacting or applying for admission to transact business in this
state shall be subject to examination by the superintendent in
accordance with section 3901.07 of the Revised Code. Section
3901.07 of the Revised Code shall govern every aspect of the
examination, including the circumstances under and frequency with
which it is conducted, the authority of the superintendent and any
examiner or other person appointed by the superintendent, the
liability for the assessment of expenses incurred in conducting
the examination, and the remittance of the assessment to the
superintendent's examination fund.
Sec. 3921.29. No foreign or alien fraternal benefit society
shall transact business in this state without a license issued by
the superintendent of insurance. Any such society may be licensed
to transact business in this state upon filing all of the
following with the superintendent:
(A) A duly certified copy of its articles of incorporation;
(B) A copy of its bylaws certified by its secretary or
corresponding officer;
(C) A power of attorney to the superintendent written
appointment of an agent as prescribed in section 3921.35 of the
Revised Code;
(D) A statement of its business made under oath of its
president and secretary or corresponding officers in a form
prescribed by the superintendent and duly verified by an
examination made by the supervising insurance official of its
state of domicile or of any other state, district, territory,
province, or country, which examination is satisfactory to the
superintendent;
(E) Certification from the proper official of its state,
district, territory, province, or country of domicile that the
society is legally incorporated and licensed to transact business
in that state, district, territory, province, or country;
(F) Copies of its certificate forms;
(G) A description of its investments that shows that its
assets are invested in accordance with this chapter;
(H) Any other information the superintendent considers
necessary.
Sec. 3921.30. (A) If the superintendent of insurance finds,
upon investigation, that a domestic fraternal benefit society has
exceeded its powers, has failed to comply with any provision of
this chapter, is not fulfilling its contracts in good faith, has a
membership of less than four hundred after an existence of one
year or more, or is conducting business fraudulently or in a
manner hazardous to its members, creditors, the public, or the
business, the superintendent shall issue a written notice to the
society that sets forth the deficiency and the reasons for the
superintendent's dissatisfaction, and that requires the society to
correct the deficiency within thirty days after receipt of the
notice. If the society fails to correct the deficiency within that
thirty-day period, the superintendent shall notify the society of
its failure to correct the deficiency and shall require the
society to show cause on a date named why it should not be
enjoined from carrying on any business until the violation
complained of has been corrected, or why an action in quo warranto
should not be commenced against the society.
If on that date the society does not present good and
sufficient reasons why it should not be enjoined or why such
action should not be commenced, the superintendent may present the
facts relating thereto to the attorney general. If the attorney
general determines that the circumstances warrant, the attorney
general shall commence an action to enjoin the society from
transacting business or in quo warranto.
The court shall thereupon notify the officers of the society
of a hearing. If after a full hearing it appears that the society
should be enjoined or liquidated or a receiver appointed, the
court shall enter the necessary order.
(B) A society enjoined pursuant to division (A) of this
section shall not have the authority to do business until all of
the following occur:
(1) The superintendent finds that the violation complained of
has been corrected.
(2) The costs of the action have been paid by the society if
the court finds that the society was in default as charged.
(3) The court has dissolved its injunction.
(4) The superintendent has reinstated the certificate of
authority.
(C) If the court orders the society liquidated, the society
shall be enjoined from carrying on any further business, whereupon
the receiver of the society shall proceed at once to take
possession of the books, papers, money, and other assets of the
society and, under the direction of the court, shall close the
affairs of the society and distribute its funds to those entitled
to them.
(D) No action under this section shall be recognized in any
court of this state unless brought by the attorney general upon
request of the superintendent. Whenever a receiver is to be
appointed for a domestic society, the court shall appoint the
superintendent as the receiver.
(E) The provisions of this section relating to a hearing by
the superintendent, action by the attorney general at the request
of the superintendent, hearing by the court, injunction, and
receivership shall apply to any society that voluntarily
determines to discontinue business.
(F) Nothing in this section shall be construed as preventing
the lodges and members of a society from commencing a civil action
against a society for the enforcement of a contract provision or
for the resolution of a dispute concerning an interpretation of
the society's laws, which action is not based on the
superintendent's exercise of authority under this section. A
society shall not prohibit a lodge or member from commencing such
commence an action against it the society under sections 3903.01
to 3903.59 of the Revised Code.
Sec. 3921.31. (A) If the superintendent of insurance finds,
upon investigation, that a foreign or alien fraternal benefit
society transacting or applying to transact business in this state
has exceeded its powers, has failed to comply with any provision
of this chapter, is not fulfilling its contracts in good faith, or
is conducting its business fraudulently or in a manner hazardous
to its members or creditors or the public, the superintendent
shall issue a written notice to the society that sets forth the
deficiency and the reasons for the superintendent's
dissatisfaction, and that requires the society to correct the
deficiency within thirty days after receipt of the notice. If the
society fails to correct the deficiency within that thirty-day
period, the superintendent shall notify the society of its failure
to correct the deficiency and shall require the society to show
cause on a date named why its license should not be suspended,
revoked, or refused.
If on that date the society does not present good and
sufficient reason why its authority to do business in this state
should not be suspended, revoked, or refused, the superintendent
may suspend or refuse the license of the society to do business in
this state until satisfactory evidence is furnished to the
superintendent that the suspension or refusal should be withdrawn,
or the superintendent may revoke the authority of the society to
do business in this state.
(B) Nothing in this section shall be construed as preventing
any foreign or alien society from continuing in good faith all
contracts made in this state during the time the society was
legally authorized to transact business in this state commence an
action against the society under section 3903.71 of the Revised
Code.
Sec. 3921.33. (A) Agents of fraternal benefit societies
shall be licensed in the manner provided for agents of insurance
companies in Chapter 3905. of the Revised Code, and shall be
required to complete continuing education as set forth in section
3905.481 of the Revised Code starting with the twenty-four-month
period commencing on the first day of January of 1999. However, no
written or other examination shall be required of any person whose
application for the original issuance of a license to represent a
fraternal benefit society as its agent was filed with the
superintendent of insurance prior to January 1, 1997.
(B) The following persons shall not be required to be
licensed in accordance with division (A) of this section:
(1) Any regularly salaried officer, employee, or member of a
licensed society who devotes substantially all of the person's
services to activities other than the solicitation of fraternal
insurance contracts from the public, and who receives for the
solicitation of any such contracts no commission or other
compensation directly dependent upon the amount of business
obtained.
The officers, employees, and members described in division
(B)(1) of this section also are not subject to examination by the
superintendent under Chapter 3905. of the Revised Code.
(2) Any agent or representative of a society who devotes, or
intends to devote, less than fifty per cent of the person's time
to the solicitation and procurement of insurance contracts for the
society. For purposes of division (B)(2) of this section, any
person who, in the preceding calendar year, has received a
commission or other compensation for soliciting and procuring any
of the following contracts on behalf of an individual society is
presumed to have devoted, or to have intended to devote, fifty per
cent of the person's time to the solicitation and procurement of
insurance contracts:
(a) Life insurance contracts that, in the aggregate, exceeded
two hundred thousand dollars of coverage for all lives insured for
the preceding calendar year;
(b) A permanent life insurance contract offering more than
ten thousand dollars of coverage on an individual life;
(c) A term life insurance contract offering more than fifty
thousand dollars of coverage on an individual life;
(d) Any insurance contracts other than life that the society
may write and that insure the individual lives of more than
twenty-five individuals;
(e) Any contract issued on a variable basis, as authorized by
division (C) of section 3921.22 of the Revised Code.
(C) Notwithstanding division (B) of this section, any person
selling an annuity contract under the authority of division (A)(3)
of section 3921.16 of the Revised Code shall be licensed pursuant
to Chapter 3905. of the Revised Code.
Sec. 3921.35. (A) Any fraternal benefit society authorized
to transact business in this state shall have and maintain an
agent upon whom may be served any process, notice, or demand
required or permitted by law to be served upon a society.
The agent required under this section may be a natural person
residing in this state or a corporation holding a license under
the laws of this state that is authorized by its articles of
incorporation to act as an agent and that maintains a business
address in this state. A statutory agent is not required to be a
licensed insurance agent.
(B) The written appointment of an agent shall be in the form
the superintendent of insurance prescribes and may include a
consent to service of process.
The appointment shall set forth the name and complete address
of the agent. The agent shall reside or maintain a business
address within this state.
(C) The superintendent shall keep a record of the fraternal
benefit societies transacting business in this state and the name
and address of their respective agents.
(D)(1) If any agent dies, moves out of the state, or resigns,
the society immediately shall appoint another agent and file with
the superintendent a written appointment as described in division
(B) of this section.
(2) If an agent changes the agent's address, the society or
agent immediately shall notify the superintendent of the change,
and shall set forth the agent's new address, on a form prescribed
by the superintendent.
(E) An agent may resign by filing with the superintendent a
written notice signed by the agent. The agent shall send a copy of
the notice to the society at the current or last known address of
the society's principal office prior to the date the notice is
filed with the superintendent.
The notice required under this division shall set forth the
society's name, the current or last known address of the society,
the name and address of the agent, the resignation of the agent,
and a statement that a copy of the notice has been sent to the
society and the date the copy was sent.
The agent's authority to represent the fraternal benefit
society shall terminate thirty days after the notice is filed with
the superintendent under this division.
(F) A society may revoke the appointment of an agent by
filing with the superintendent a written appointment of another
agent and a statement that the appointment of the former agent is
revoked. The authority of the agent whose appointment has been
revoked shall terminate thirty days after the notice required
under this division is filed with the superintendent.
(G) Any process, notice, or demand required or permitted by
law to be served upon a society may be served by delivering a copy
of the process, notice, or demand to the agent of record at the
address appearing in the superintendent's records.
If the agent cannot be found, the agent no longer has that
address, or the society has failed to maintain an agent as
required by this section, the party desiring that the process,
notice, or demand be served, or its agent, may file with the
superintendent an affidavit stating that one of the foregoing
conditions exists and stating the most recent address of the
society that the party, after diligent search, has been able to
ascertain.
Upon the filing of the affidavit, service of process, notice,
or demand may be initiated upon the superintendent as the
society's agent by delivering two copies of the process, notice,
or demand to the superintendent. The superintendent shall give
notice to the society at its principal office as shown in the
superintendent's records or at the address set forth in the
affidavit. The superintendent shall give notice by regular mail
with a copy of the process, notice, or demand enclosed. After the
superintendent has mailed the appropriate documents, service upon
the society is deemed complete.
(H) The superintendent shall keep a record of each process,
notice, and demand delivered to the superintendent under division
(G) of this section or any other law of this state that authorizes
service upon the superintendent.
(I) This section does not limit or affect the right to serve
any process, notice, or demand upon a society in any other manner
permitted by law.
(J) A society shall include a fee of five dollars with any
change of agent appointment or change of address. This division
does not apply to an agent appointment filed with an original
application for a certificate of authority.
(K) If a society fails to appoint or maintain an agent or to
notify the superintendent of an agent's change of address, the
superintendent shall provide notice of that failure to the society
by certified mail. If the society does not remedy the society's
failure within thirty days after the date of the mailing of the
notice or within any additional time the superintendent allows,
the superintendent shall fine the society not less than
twenty-five dollars nor more than two hundred dollars per
violation. The superintendent also may charge a society a
fifty-dollar fee for each time the superintendent is required to
give notice to the society in accordance with division (G) of this
section.
(L) The superintendent shall pay all moneys collected by the
superintendent in accordance with this section into the state
treasury to the credit of the department of insurance operating
fund.
Sec. 3922.01. As used in this chapter:
(A) "Adverse benefit determination" means a decision by a
health plan issuer:
(1) To deny, reduce, or terminate a requested health care
service or payment in whole or in part, including all of the
following:
(a) A determination that the health care service does not
meet the health plan issuer's requirements for medical necessity,
appropriateness, health care setting, level of care, or
effectiveness, including experimental or investigational
treatments;
(b) A determination of an individual's eligibility for
individual health insurance coverage, including coverage offered
to individuals through a nonemployer group, to participate in a
plan or health insurance coverage;
(c) A determination that a health care service is not a
covered benefit;
(d) The imposition of an exclusion, including exclusions for
pre-existing conditions, source of injury, network, or any other
limitation on benefits that would otherwise be covered.
(2) Not to issue individual health insurance coverage to an
applicant, including coverage offered to individuals through a
nonemployer group;
(3) To rescind coverage on a health benefit plan.
(B) "Ambulatory review" has the same meaning as in section
1751.77 of the Revised Code.
(C) "Authorized representative" means an individual who
represents a covered person in an internal appeal or external
review process of an adverse benefit determination who is any of
the following:
(1) A person to whom a covered individual has given express,
written consent to represent that individual in an internal
appeals process or external review process of an adverse benefit
determination;
(2) A person authorized by law to provide substituted consent
for a covered individual;
(3) A family member or a treating health care professional,
but only when the covered person is unable to provide consent.
(D) "Best evidence" means evidence based on all of the
following sources, listed according to priority, as they are
available:
(1) Randomized clinical trials;
(2) Cohort studies or case-control studies;
(E) "Covered person" means a policyholder, subscriber,
enrollee, member, or individual covered by a health benefit plan.
"Covered person" does include the covered person's authorized
representative with regard to an internal appeal or external
review in accordance with division (C) of this section. "Covered
person" does not include the covered person's representative in
any other context.
(F) "Covered benefits" or "benefits" means those health care
services to which a covered person is entitled under the terms of
a health benefit plan.
(G) "Emergency medical condition" has the same meaning as in
section 1753.28 of the Revised Code.
(H) "Emergency services" has the same meaning as in section
1753.28 of the Revised Code.
(I) "Evidence-based standard" means the conscientious,
explicit, and judicious use of the current best evidence, based on
a systematic review of the relevant research, in making decisions
about the care of individuals.
(J) "Facility" means an institution providing health care
services, or a health care setting, including hospitals and other
licensed inpatient centers, ambulatory, surgical, treatment,
skilled nursing, residential treatment, diagnostic, laboratory,
and imaging centers, and rehabilitation and other therapeutic
health settings.
(K) "Final adverse benefit determination" means an adverse
benefit determination that is upheld at the completion of a health
plan issuer's internal appeals process.
(L) "Health benefit plan" means a policy, contract,
certificate, or agreement offered by a health plan issuer to
provide, deliver, arrange for, pay for, or reimburse any of the
costs of health care services, including benefit plans marketed in
the individual or group market by all associations, whether bona
fide or non-bona fide. "Health benefit plan" also means a limited
benefit plan, except as follows. "Health benefit plan" does not
mean any of the following types of coverage: a policy, contract,
certificate, or agreement that covers only a specified accident,
accident only, credit, dental, disability income, long-term care,
hospital indemnity, medicare supplement supplemental coverage, as
described in section 3923.37 of the Revised Code, medicare,
tricare, specified disease, or vision care; coverage issued as a
supplement to liability insurance; insurance arising out of
workers' compensation or similar law; automobile medical payment
insurance; or insurance under which benefits are payable with or
without regard to fault and which is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance; a medicare supplement policy of insurance, as
defined by the superintendent of insurance by rule, coverage under
a plan through medicare, medicaid, or the federal employees
benefit program; any coverage issued under Chapter 55 of Title 10
of the United States Code and any coverage issued as a supplement
to that coverage.
(M) "Health care professional" means a physician,
psychologist, nurse practitioner, or other health care
practitioner licensed, accredited, or certified to perform health
care services consistent with state law.
(N) "Health care provider" or "provider" means a health care
professional or facility.
(O) "Health care services" means services for the diagnosis,
prevention, treatment, cure, or relief of a health condition,
illness, injury, or disease.
(P) "Health plan issuer" means an entity subject to the
insurance laws and rules of this state, or subject to the
jurisdiction of the superintendent of insurance, that contracts,
or offers to contract to provide, deliver, arrange for, pay for,
or reimburse any of the costs of health care services under a
health benefit plan, including a sickness and accident insurance
company, a health insuring corporation, a fraternal benefit
society, a self-funded multiple employer welfare arrangement, or a
nonfederal, government health plan. "Health plan issuer" includes
a third party administrator licensed under Chapter 3959. of the
Revised Code to the extent that the benefits that such an entity
is contracted to administer under a health benefit plan are
subject to the insurance laws and rules of this state or subject
to the jurisdiction of the superintendent.
(Q) "Health information" means information or data, whether
oral or recorded in any form or medium, and personal facts or
information about events or relationships that relates to all of
the following:
(1) The past, present, or future physical, mental, or
behavioral health or condition of a covered person or a member of
the covered person's family;
(2) The provision of health care services or health-related
benefits to a covered person;
(3) Payment for the provision of health care services to or
for a covered person.
(R) "Independent review organization" means an entity that is
accredited by a nationally recognized private accrediting
organization to conduct independent external reviews of adverse
benefit determinations and is accredited pursuant to section
3922.13 of the Revised Code.
(S) "Medical or scientific evidence" means evidence found in
any of the following sources:
(1) Peer-reviewed scientific studies published in, or
accepted for publication by, medical journals that meet nationally
recognized requirements for scientific manuscripts and that submit
most of their published articles for review by experts who are not
part of the editorial staff;
(2) Peer-reviewed medical literature, including literature
relating to therapies reviewed and approved by a qualified
institutional review board, biomedical compendia and other medical
literature that meet the criteria of the national institutes of
health's library of medicine for indexing in index medicus and
elsevier science ltd. for indexing in excerpta medicus;
(3) Medical journals recognized by the secretary of health
and human services under section 1861(t)(2) of the federal social
security act;
(4) The following standard reference compendia:
(a) The American hospital formulary service drug information;
(b) Drug facts and comparisons;
(c) The American dental association accepted dental
therapeutics;
(d) The United States pharmacopoeia drug information.
(5) Findings, studies or research conducted by or under the
auspices of a federal government agency or nationally recognized
federal research institute, including any of the following:
(a) The federal agency for health care research and quality;
(b) The national institutes of health;
(c) The national cancer institute;
(d) The national academy of sciences;
(e) The centers for medicare and medicaid services;
(f) The federal food and drug administration;
(g) Any national board recognized by the national institutes
of health for the purpose of evaluating the medical value of
health care services.
(6) Any other medical or scientific evidence that is
comparable.
(T) "Person" has the same meaning as in section 3901.19 of
the Revised Code.
(U) "Protected health information" means health information
related to the identity of an individual, or information that
could reasonably be used to determine the identity of an
individual.
(V) "Rescission" "Rescind" means a cancellation or
discontinuance of coverage that has a retroactive effect to
retroactively cancel or discontinue coverage.
"Rescission"
"Rescind" does not include a cancellation or discontinuance of
canceling or discontinuing coverage that only has only a
prospective effect or a cancellation or discontinuance of
canceling or discontinuing coverage that is effective
retroactively to the extent it is attributable to a failure to
timely pay required premiums or contributions towards the cost of
coverage.
(W) "Retrospective review" means a review conducted after
services have been provided to a covered person.
(X) "Superintendent" means the superintendent of insurance.
(Y) "Utilization review" has the same meaning as in section
1751.77 of the Revised Code.
(Z) "Utilization review organization" has the same meaning as
in section 1751.77 of the Revised Code.
Sec. 3922.02. (A) A covered person may make a request for an
external review of an adverse benefit determination.
(B) All requests for external review shall be made in
writing, except when making a request for an expedited review
under section 3922.09 of the Revised Code including by electronic
means, by the covered person to the health plan issuer within one
hundred eighty days of the date of the final adverse benefit
determination in a form prescribed by the superintendent. Requests
for an expedited. However, in the case of an expedited external
review under section 3922.09 of the Revised Code, the review may
be requested orally or by electronic means. When an oral or
electronic request for review is made, written confirmation of the
request must be submitted to the health plan issuer no later than
five days after the initial request was made.
(C) An adverse benefit determination shall be eligible for
internal appeal or external review, regardless of how small the
cost of the requested health care service related to the adverse
benefit determination is.
Sec. 3922.03. (A) All health plan issuers shall implement an
internal appeal process under which a covered person may appeal an
adverse benefit determination. This process must be in compliance
with the "Patient Protection and Affordable Care Act of 2010,"
Pub. L. 111-148, 124 Stat. 119, as amended, and the associated
regulations, as well as any other applicable state laws or rules
or federal regulations.
(B) Review of a final adverse benefit determination shall be
through an external review under section 3922.08, 3922.09, or
3922.10 of the Revised Code.
(C) All health plan issuers shall provide notice to covered
persons, pursuant to and in accordance with federal regulations,
of all internal appeal processes, external review processes, the
availability of any applicable office of health insurance
assistance, ombudsman program, or other similar program in this
state to assist consumers.
Sec. 3922.04. (A) Except as provided in division (E) of this
section, a health plan issuer is not required to grant a request
for a standard external review made under section 3922.08 or
3922.10 of the Revised Code until the covered person has exhausted
the health plan issuer's internal appeal process.
(B) An internal appeal process shall be considered exhausted
if a covered person has requested an internal appeal and has not
received a written decision from the health plan issuer within the
time frame required by 23 29 C.F.R. 2560.503-1 or the health plan
issuer fails to adhere to all requirements of the internal appeals
process.
(C) Notwithstanding division (B) of this section, the
internal appeals process will not be deemed exhausted based on de
minimis violations that do not cause, and are not likely to cause,
prejudice or harm to the covered person so long as the health plan
issuer demonstrates that the violation was for good cause or due
to matters beyond the control of the health plan issuer and that
the violation occurred in the context of an ongoing, good faith
exchange of information between the health plan issuer and the
covered person, and is not reflective of a pattern or practice of
noncompliance, except that:
(1) If the health plan issuer denies a request for external
review under this division, the covered person may request written
explanation from the health plan issuer, and the health plan
issuer shall provide the explanation within ten days, including a
specific description of its bases basis, if any, for asserting
that the delay should not cause the internal appeals process to be
considered exhausted;
(2) The covered person may request review by the
superintendent of the health plan issuer's explanation provided
under division (C)(1) of this section and if the superintendent
affirms the health plan issuer's explanation, the covered person
may, within ten days of the superintendent's notice of decision,
resubmit and pursue the internal appeal process. Time periods for
refiling the internal appeal shall begin to run upon receipt of
such notice by the covered person.
(D) Notwithstanding division (B) of this section, a covered
person shall not make a request for an external review of an
adverse benefit determination involving a retrospective review
determination made pursuant to a utilization review until the
covered person has exhausted the health plan issuer's internal
appeals process.
(E) A request for an external review of an adverse benefit
determination may be made before the covered person has exhausted
the health plan issuer's internal appeals procedures whenever the
health plan issuer agrees to waive the exhaustion requirement. If
the internal appeal process is waived, the covered person may file
a request in writing for a standard external review under section
3922.08 or 3922.10 of the Revised Code.
(F) Notwithstanding any other section in this chapter, health
plan issuers offering individual health insurance coverage,
including coverage offered to individuals through nonemployer
groups shall not require more than one level of internal appeal
before the individual may request an external review.
Sec. 3922.05. (A) A health plan issuer shall afford the
opportunity for an external review by an independent review
organization for an adverse benefit determination if the
determination involved a medical judgment or if the decision was
based on any medical information, pursuant to the following
sections:
(1) Section 3922.08 of the Revised Code for a standard
review;
(2) Section 3922.09 of the Revised Code for an expedited
review;
(3) Section 3922.10 of the Revised Code for reviews involving
experimental procedures.
(B) A health plan issuer shall afford the opportunity for an
external review by the superintendent of insurance for an adverse
benefit determination by the health plan issuer based on a
contractual issue that did not involve a medical judgment or any
medical information, pursuant to section 3922.11 of the Revised
Code.
(C) For an adverse benefit determination in which emergency
medical services have been determined to be not medically
necessary or appropriate after an external review pursuant to
division (A) of this section, the health plan issuer shall afford
the covered person the opportunity for an external review by the
superintendent of insurance, based on the prudent layperson
standard, pursuant to section 3922.11 of the Revised Code.
(D) Upon receipt of a request for an external review from a
covered person, the health plan issuer shall review it for
completeness as prescribed under any associated rules, policies,
or procedures adopted by the superintendent.
(1) If the request is complete, the health plan issuer shall
initiate an external review in accordance with any associated
rules, policies, or procedures adopted by the superintendent of
insurance and shall notify the covered person in writing, in a
form specified by the superintendent of insurance, that the
request is complete. This notification shall include both of the
following:
(a) The name and contact information for the assigned
independent review organization or the superintendent of
insurance, as applicable, for the purpose of submitting additional
information;
(b) Except for when an expedited request is made under
section 3922.09 or 3922.10 of the Revised Code, a statement that
the covered person may, with within ten business days after the
date of receipt of the notice, submit, in writing, additional
information for either the independent review organization or the
superintendent of insurance to consider when conducting the
external review.
(2) If the request for an external review is not complete,
the health plan issuer shall, in accordance with any associated
rules, policies, or procedures adopted by the superintendent of
insurance, inform the covered person in writing, including what
information is needed to make the request complete.
(E)(1) If the health plan issuer denies a request for an
external review on the basis that the adverse benefit
determination is not eligible for an external review, the health
plan issuer shall notify the covered person in writing of both of
the following:
(a) The reason for the denial;
(b) That the denial may be appealed to the superintendent.
(2) If the health plan issuer denies a request for external
review on the basis that the adverse benefit determination is not
eligible for an external review, the covered person may appeal the
denial to the superintendent of insurance.
(3) Regardless of a determination made by a health plan
issuer, the superintendent of insurance may determine that a
request is eligible for external review. The superintendent's
determination shall be made in accordance with the terms of the
covered person's benefit plan and shall be subject to all
applicable provisions of this chapter.
(F)(1) If an external review of an adverse benefit
determination is granted, the superintendent, according to any
rules, policies, or procedures adopted by the superintendent shall
assign an independent review organization from the list of
organizations maintained by the superintendent under section
3922.13 of the Revised Code to conduct the external review and
shall notify the health plan issuer of the name of the assigned
independent review organization.
(2) The assignment of an approved independent review
organization shall be done on a random basis from those
independent review organizations qualified to conduct the review
in question based on the nature of the health care service that is
the subject of the adverse benefit determination.
(3) The superintendent of insurance shall not choose an
independent review organization with a conflict of interest, as
prescribed under section 3922.14 of the Revised Code.
(G) In its review of an adverse benefit determination under
section 3922.08, 3922.09, or 3922.10 of the Revised Code, an
assigned independent review organization is not bound by any
decisions or conclusions reached by the health plan issuer during
its utilization review process or internal appeals process. The
organization is not required to, but may, accept and consider
additional information submitted after the end of the
ten-business-day period described in division (D)(1)(b) of this
section.
(H)(1) An independent review organization assigned to review
an adverse benefit determination shall provide written notice of
its decision to either uphold or reverse the determination within
thirty days of receipt by the health plan issuer of a request for
a standard review or a standard review involving an experimental
or investigational treatment, or within seventy-two hours of
receipt by the health plan issuer of an expedited request.
(2) The written notice shall be sent to all of the following:
(b) The health plan issuer;
(c) The superintendent of insurance.
(3) The written notification shall include all of the
following:
(a) A general description of the reason for the request for
external review;
(b) The date the independent review organization was assigned
by the superintendent of insurance to conduct the external review;
(c) The dates over which the external review was conducted;
(d) The date on which the independent review organization's
decision was made;
(e) The rationale for its decision;
(f) References to the evidence or documentation, including
any evidence-based standards used, that were considered in
reaching its decision.
(I) Upon receipt of a notice by an independent review
organization to reverse the adverse benefit determination, a
health plan issuer shall immediately provide coverage for the
health care service or services in question.
Sec. 3922.06. Except for when an expedited request is made
under section 3922.09 or 3922.10 of the Revised Code, an
independent review organization shall forward upon receipt a copy
of any information received from a covered person pursuant to
division (D)(1) of section 3922.05 of the Revised Code, as well as
any other information received from the covered person, to the
health plan issuer.
Upon receipt of that information or the information described
in division (K) of section 3922.10 of the Revised Code, a health
plan issuer may reconsider its adverse benefit determination and
provide coverage for the health service in question.
Reconsideration of an adverse benefit determination by a
health plan issuer based upon receipt of information under this
section shall not delay or terminate an external review.
If a health plan issuer reverses an adverse benefit
determination under this section, the health plan issuer shall
notify, in writing and within one business day of making such a
decision, the covered person, the assigned independent review
organization, and the superintendent of insurance.
Upon receipt of such a notification, the assigned independent
review organization shall terminate the associated external
review.
Sec. 3922.09. (A) A covered person may make a request for an
expedited external review, except as provided in division (J)(I)
of this section:
(1) After an adverse benefit determination, if both of the
following apply:
(a) The covered person's treating physician certifies that
the adverse benefit determination involves a medical condition
that could seriously jeopardize the life or health of the covered
person, or would jeopardize the covered person's ability to regain
maximum function, if treated after the time frame of an expedited
internal
review appeal;
(b) The covered person has filed a request for an expedited
internal review appeal.
(2) After a final adverse benefit determination, if either of
the following apply:
(a) The covered person's treating physician certifies that
the adverse benefit determination involves a medical condition
that could seriously jeopardize the life or health of the covered
person, or would jeopardize the covered person's ability to regain
maximum function, if treated after the time frame of a standard
external review;
(b) The final adverse benefit determination concerns an
admission, availability of care, continued stay, or health care
service for which the covered person received emergency services,
but has not yet been discharged from a facility.
(B) Immediately upon receipt of a request for an expedited
external review, the health plan issuer shall determine if the
request is complete under any associated rules, policies, or
procedures adopted by the superintendent of insurance and eligible
for expedited external review under division (B)(A) of this
section. The health plan issuer shall immediately notify the
covered person of its determination in accordance with any
associated rules, policies, or procedures adopted by the
superintendent of insurance.
(C) If a request for an expedited review is complete and
eligible, the health plan issuer shall immediately provide or
transmit all necessary documents and information considered in
making the adverse benefit determination in question to the
assigned independent review organization electronically, or by
telephone, facsimile, or other available expeditious method.
(D) In addition to the information transmitted under division
(D)(C) of this section, the assigned independent review
organization shall also consider relevant information as required
under section 3922.07 of the Revised Code.
(E) As expeditiously as the covered person's medical
condition requires, but no more than seventy-two hours after being
assigned receipt by the health plan issuer of a request for an
expedited, external review, the assigned independent review
organization shall uphold or reverse the adverse benefit
determination.
(F) If a health plan issuer fails to provide the documents
and information as required in division (D)(C) of this section,
the independent review organization shall not delay the external
review and may accordingly reverse the adverse benefit
determination.
(G) An independent review organization shall promptly notify
the covered person, health plan issuer, and superintendent of
insurance of any decision made under this section. If such a
notice is not made in writing, the independent review
organization, shall provide, within forty-eight hours of making
the decision, written confirmation, including the information
required under division (H)(3) of section 3922.05 of the Revised
Code, of its decision to the covered person, the health plan
issuer, and the superintendent of insurance.
(H) Upon receipt of a notice by an independent review
organization to reverse the adverse benefit determination, a
health plan issuer shall immediately provide coverage for the
health care service or services in question.
(I) An expedited, external review may not be provided for
retrospective final adverse benefit determinations.
Sec. 3922.10. The provisions of this section apply only to
external reviews that involve an experimental or investigational
treatment.
(A) A covered person may request an external review of an
adverse benefit determination based on the conclusion that a
requested health care service is experimental or investigational,
except when the requested health care service is explicitly listed
as an excluded benefit under the covered person's benefit plan.
(B) To be eligible for an external review under this section,
a covered person's treating physician shall certify that one of
the following situations is applicable:
(1) Standard health care services have not been effective in
improving the condition of the covered person;.
(2) Standard health care services are not medically
appropriate for the covered person;.
(3) There is no available standard health care services
service covered by the health plan issuer that is more beneficial
than the requested health care service.
(C)(1) A covered person may request orally or by electronic
means an expedited review under this section if the person's
treating physician certifies that the requested health care
service in question would be significantly less effective if not
promptly initiated.
(2) Immediately upon receipt of a request for an expedited
external review, the health plan issuer shall determine if the
request is complete under any associated rules, policies, or
procedures adopted by the superintendent of insurance and eligible
for expedited external review under division (B)(C)(1) of this
section. The health plan issuer shall immediately notify the
covered person of its determination in accordance with any
associated rules adopted by the superintendent of insurance.
(D) The health plan issuer shall provide to the assigned
independent review organization all documents and information
considered in making the adverse benefit determination within
whichever of the following applies:
(1) Within five days after the receipt of a request for an a
standard external review;
(2) For an expedited external review, immediately
electronically, or by
telephone, facsimile, or any other
available expeditious method.
(E) An independent review organization assigned by the
superintendent of insurance under division (F) of section 3922.05
of the Revised Code shall do both of the following:
(1) Select at least one clinical reviewer, pursuant to
divisions (F) and (G) of this section to conduct the external
review;
(2) Make a decision to uphold or reverse the adverse benefit
determination based upon the opinion of the clinical reviewer or
reviewers.
(F) In selecting clinical reviewers under division (E) of
this section, the assigned independent review organization shall
select physicians or other health care professionals who meet the
minimum qualifications described in section 3922.15 of the Revised
Code, and through clinical experience in the last three years, are
experts in the treatment of the covered person's condition and
have knowledge of the requested health care service.
(G) Neither the covered person, nor the health plan issuer,
shall choose or have any influence over the choice of the clinical
reviewer or reviewers chosen under division (E) of this section.
(H)(1) Each chosen clinical reviewer shall provide a written
opinion to the assigned independent review organization on whether
the adverse benefit determination should be upheld or reversed.
(2) In reaching such opinions, a clinical reviewer is not
bound by any conclusions reached by the health plan issuer during
a utilization review process or its internal appeals process.
(3) Any such opinion shall be in writing and shall include
all of the following information:
(a) A description of the covered person's condition;
(b) A description of the indicators relevant to determining
whether there is sufficient evidence to demonstrate that the
recommended or requested therapy is more likely than not to be
more beneficial to the covered person than any available standard
health care service, and that the adverse risks of the requested
health care service would not be substantially greater than those
of available standard health care services;
(c) A description and analysis of any medical or scientific
evidence considered in reaching the opinion;
(d) A description and analysis of any evidence-based standard
considered;
(e) Information on whether the reviewer's rationale for the
opinion is based on division (L)(2)(K)(2)(b) or (L)(3)(c) of this
section.
(I) An external review shall not be delayed due to failure on
the part of the health plan issuer to provide the information
required under division (D) of this section.
(J)(1) An independent review organization may reverse an
adverse benefit determination, if the information required under
division (D) of this section is not provided in the allotted time.
The external independent review committee organization may also
grant a request from the health plan issuer for more time to
provide the required information.
(2) If an adverse benefit determination is reversed under
division (J)(1) of this section, the independent review
organization shall immediately notify the covered person, the
health plan issuer, and the superintendent of insurance.
(K)(1) Each clinical reviewer shall review all of the
information received pursuant to division (D) of this section, as
well as any other information submitted in writing by the covered
person pursuant to division (D) of section 3922.05 of the Revised
Code.
(2) In addition to the documents and information provided
pursuant to division (D) of this section and division (D) of
section 3922.05 of the Revised Code, each clinical reviewer shall
consider the following:
(a) Information required under section 3922.07 of the Revised
Code;
(b) Whether the requested health care service has been
approved by the federal food and drug administration, if
applicable, for the condition;
(c) Whether medical or scientific evidence, or evidence-based
standards, demonstrate that the expected benefits of the requested
health care service is more likely than not to be beneficial to
the covered person than any available standard health care
service, and that the adverse risks of the requested health care
service would not be substantially greater than those of available
standard health care services.
(L) Within one business day after the receipt of any such
information submitted by the covered person in accordance with
division (K)(1) of this section, the independent review
organization shall forward the information to the health plan
issuer. Upon receipt of any such forwarded information in
accordance with division (K)(1) of this section, a health plan
issuer may reconsider its adverse benefit determination under as
described in section 3922.06 of the Revised Code.
(M)(1) Within thirty days after the date of receipt by the
health plan issuer of a request for a standard external review, or
within seventy-two hours of receipt by the health plan issuer of a
request for an expedited external review, the assigned independent
review organization shall provide written notice of its decision
to uphold or reverse the adverse benefit determination to the
covered person, the health plan issuer, and the superintendent of
insurance.
(2)(a) If a majority of the clinical reviewers recommend that
the requested health care service should be covered, the
independent review organization shall make a decision to reverse
the health plan issuer's adverse benefit determination.
(b) If a majority of the clinical reviewers recommend that
the recommended or requested health care service or treatment
should not be covered, the independent review organization shall
make a decision to uphold the health plan issuer's adverse benefit
determination.
(c)(i) If the clinical reviewers are evenly split as to
whether the adverse benefit determination should be reversed or
upheld, the independent review organization shall obtain the
opinion of an additional clinical reviewer in order for the
independent review organization to make a decision based on the
opinions of a majority of the clinical reviewers pursuant to this
division.
(ii) The additional clinical reviewer selected shall use the
same information to reach an opinion as the clinical reviewers who
have already submitted their opinions pursuant to this section.
(iii) The selection of the additional clinical reviewer under
this division shall not extend the time within which the assigned
independent review organization is required to make a decision.
(3) The independent review organization shall include in the
notice provided pursuant to division (M)(1) of this section all of
the following:
(a) A general description of the reason for the request for
external review;
(b) The written opinion of each clinical reviewer, including
the recommendation of each clinical reviewer as to whether the
recommended or requested health care service or treatment should
be covered and the rationale for that recommendation;
(c) The date the independent review organization was assigned
by the superintendent to conduct the external review;
(d) The dates over which the external review was conducted;
(e) The date of its decision;
(f) The principal reason or reasons for its decision;
(g) The rationale for its decision.
(N) Upon receipt of a notice of a decision by an independent
review organization pursuant to division (M)(1) of this section
reversing the adverse benefit determination, a health plan issuer
shall immediately provide coverage of the requested health care
service in question.
Sec. 3922.11. (A) The superintendent of insurance shall
establish and maintain a system for receiving and reviewing
requests for external review for adverse benefit determinations
where the determination by the health plan issuer was based on a
contractual issue and did not involve a medical judgment or a
determination based on any medical information, except for
emergency services, as specified in division (C) of section
3922.05 of the Revised Code.
(B) A health plan issuer shall submit a request for external
review pursuant to division (B) or (C) of section 3922.05 of the
Revised Code to the superintendent, in accordance with any
associated rules, policies, or procedures adopted by the
superintendent of insurance.
(C) On receipt of a request from a health plan issuer, the
superintendent shall consider whether the health care service is a
service covered under the terms of the covered person's policy,
contract, certificate, or agreement, except that the
superintendent shall not conduct a review under this section
unless the covered person has exhausted the health plan issuer's
internal review appeal process, pursuant to sections 3922.03 and
3922.04 of the Revised Code. The health plan issuer and covered
person shall provide the superintendent with any information
required by the superintendent that is in their possession and is
germane to the review.
(D) Unless the superintendent is not able to do so because
making the determination requires a medical judgement or a
determination based on medical information, the superintendent
shall determine whether the health care service at issue is a
service covered under the terms of the covered person's contract,
policy, certificate, or agreement. The superintendent shall notify
the covered person, and the health plan issuer of the
superintendent's determination.
(E) If the superintendent notifies the health plan issuer
that making the determination requires a medical judgement or a
determination based on medical information, the health plan issuer
shall initiate an external review under this chapter.
(F) If the superintendent determines that the health service
is a covered service, the health plan issuer shall cover the
service.
(G) If the superintendent determines that the health care
service is not a covered service, the health plan issuer is not
required to cover the service or afford the enrollee covered
person an external review by an independent review organization.
Sec. 3922.14. (A) To be accredited by the superintendent of
insurance to conduct external reviews under section 3922.13 of the
Revised Code, in addition to the requirements provided in section
3922.13 of the Revised Code and any associated rules adopted by
the superintendent, an independent review organization shall do
all of the following:
(1) Develop and maintain written policies and procedures that
govern all aspects of both the standard external review process
and the expedited external review process set forth in this
chapter, including a quality assurance mechanism that does all of
the following:
(a) Ensures that external reviews are conducted within the
time frames prescribed under this chapter and that the required
notices are provided in a timely manner;
(b) Ensures the selection of qualified and impartial clinical
reviewers to conduct external reviews on behalf of the independent
review organization;
(c) Ensures that chosen clinical reviewers are suitably
matched according to their area of expertise to specific cases and
that the independent review organization employs or contracts with
an adequate number of clinical reviewers to meet this requirement;
(d) Ensures the confidentiality of medical and treatment
records and clinical review criteria;
(e) Ensures that any person employed by, or who is under
contract with, the independent review organization adheres to the
requirements of this chapter.
(2) Maintain a toll-free telephone service to receive
information on a twenty-four-hour-a-day, seven-days-a-week basis
related to external reviews that is capable of accepting,
recording, and providing appropriate instruction to incoming
telephone callers during other than normal business hours;
(3) Agree to maintain and provide to the superintendent, upon
request and in accordance with any associated rules, policies, or
procedures adopted by the superintendent of insurance, the
information prescribed in section 3922.17 of the Revised Code.
(B) An independent review organization may not own or
control, be a subsidiary of or in any way be owned or controlled
by, or exercise control with a benefit health plan issuer, a
national, state or local trade association of benefit plans health
plan issuers, or a national, state, or local trade association of
health care providers.
(C)(1) Neither the independent review organization selected
to conduct the external review nor any clinical reviewer assigned
by the independent organization to conduct the external review may
have a material, professional, familial, or financial affiliation
with any of the following:
(a) The health plan issuer that is the subject of the
external review, or any officer, director, or management employee
of the health plan issuer;
(b) The covered person whose treatment is the subject of the
external review;
(c) The health care provider, or the health care provider's
medical group or independent practice association, recommending
the health care service or treatment that is the subject of the
external review;
(d) The facility at which the recommended health care service
would be provided;
(e) The developer or manufacturer of the principal drug,
device, procedure, or other therapy being recommended for the
covered person whose treatment is the subject of the external
review.
(2) The superintendent may make a determination as to whether
an independent review organization or a clinical reviewer of the
independent review organization has a material professional,
familial, or financial conflict of interest for purposes of
division (C)(1) of this section. In making this determination, the
superintendent may take into consideration situations where an
independent review organization, or a clinical reviewer, may have
an apparent conflict of interest, but that the characteristics of
the relationship or connection in question are such that they do
not fall under the definition of conflict of interest provided
under division (D)(1) of this section. If the superintendent
determines that a conflict of interest exists, the superintendent
shall disallow an independent review organization or a clinical
reviewer from conducting the external review in question. Such
determinations related to conflicts of interest are the sole
discretion of the superintendent of insurance.
(D)(1) An independent review organization that is accredited
by a nationally recognized private accrediting entity that has
independent review accreditation standards that the superintendent
has determined are equivalent to or exceed the minimum
qualifications of this section shall be presumed in compliance
with this section to be eligible for accreditation by the
superintendent under section 3922.14 of the Revised Code.
(2) The superintendent shall initially review and
periodically review the independent review organization
accreditation standards of a nationally recognized private
accrediting entity to determine whether the entity's standards
are, and continue to be, equivalent to or exceed the minimum
qualifications established under this section. The superintendent
may accept a review conducted by the national association of
insurance commissioners for the purpose of the determination under
this division.
(3) Upon request, a nationally recognized, private
accrediting entity shall make its current independent review
organization accreditation standards available to the
superintendent or the national association of insurance
commissioners in order for the superintendent to determine if the
entity's standards are equivalent to or exceed the minimum
qualifications established under this section. The superintendent
may exclude any private accrediting entity that is not reviewed by
the national association of insurance commissioners.
(E) An independent review organization shall be unbiased in
its review of adverse benefit determinations and shall establish
and maintain written procedures to ensure that it is unbiased.
Sec. 3922.15. All clinical reviewers assigned by an
independent review organization to conduct external reviews shall
have the same license as the health care provider of the service
in question, and shall be physicians or other appropriate health
care providers who meet all of the following minimum
qualifications:
(A) Be an expert in the treatment of the medical condition
that is the subject of the external review;
(B) Be knowledgeable about the requested health care service
through clinical experience, within the last three years, treating
patients with the same, or a similar, medical condition, and, in
the case of an external review of an experimental or
investigational health care service, be an expert, through
clinical experience in the last three years, in the treatment of
the covered person's condition and have knowledge of the requested
health care service;
(C) Hold a nonrestricted license in a state of the United
States and, for physicians, a current certification by a
recognized American medical specialty board in the area or areas
appropriate to the subject of the external review;
(D) Have no history of disciplinary actions or sanctions,
including loss of staff privileges or participation restrictions,
that have been taken or are pending by any hospital, governmental
agency or unit, or regulatory body that raise a question as to the
clinical reviewer's physical, mental, or professional competence
or moral character.
Sec. 3922.16. (A) Nothing in this chapter shall be construed
to create a cause of action against any of the following:
(1) An employer that provides health care benefits to
employees through a health plan issuer;
(2) A clinical reviewer, medical expert, or independent
review organization that participates in an external review under
this chapter;
(3) A health plan issuer that provides coverage for benefits
pursuant to this chapter.
(B) An independent review organization and any medical expert
or clinical reviewer an independent review organization uses in
conducting an external review under this chapter is not liable in
damages in a civil action for injury, death, or loss to person or
property and is not subject to professional disciplinary action
for making, in good faith, any finding, conclusion, or
determination required to complete the external review.
(C) This section does not grant immunity from civil liability
or professional disciplinary action to an independent review
organization, medical expert, or clinical peer reviewer for an
action that is outside the scope of authority granted under this
chapter.
Sec. 3922.19. (A) Each health plan issuer shall include a
description of its external review procedures, including the
superintendent's contractual review, in, or attached to, the
policy, certificate, membership booklet, or outline of coverage,
or other evidence of coverage it provides to covered persons. This
disclosure shall be in a form prescribed by the superintendent in
any associated rules, policies, or procedures.
(B) The disclosure required by division (A) of this section
shall include a statement that informs the covered person of the
covered person's right to file a request for an external review of
an adverse benefit determination with the health plan issuer. The
statement shall do all of the following:
(1) Explain that external review is available when the
adverse benefit determination involves an issue of medical
necessity, appropriateness, health care setting, and level of care
or effectiveness;
(2) Include the telephone number and address of the
superintendent;
(3) Inform the covered person that, when filing a request for
an external review, the covered person will be required to
authorize the release of the covered person's medical records as
necessary to conduct the external review.
(C)(1) When a health plan issuer notifies a covered person of
an adverse benefit determination, the health plan issuer shall
also notify the covered person, in writing, of the covered
person's right to request an external review, pursuant to section
3922.08, 3922.09, 3922.10, or 3922.11 of the Revised Code.
(2) As part of the written notice required under division
(C)(1) of this section, a health plan issuer shall include all of
the following:
(a) Information sufficient to identify the claim or health
care service involved, including the health care provider, and the
date of service and claim amount, if applicable;
(b) A description of the reason or reasons for the adverse
benefit determination, including the denial code, such as the
claim adjustment reason code and the remittance advice remark
code, and each code's corresponding meaning;
(c) A description of the health plan issuer's standard, if
any, that was used in making the determination;
(d) A description of the available internal appeals and
external review processes, including information regarding how to
initiate an appeal and an external review;
(e) Disclosure of the availability of assistance from the
superintendent with the internal appeals and external review
processes, including the web site, telephone number, and mailing
address of the superintendent's office of consumer services.
(3) In the case of a notice of a final adverse benefit
determination subsequent to an internal appeal, in addition to the
information required under division (C)(2) of this section, the
notice must also include a discussion of the decision.
(4) Any written notice provided under division (C) of this
section shall be in a form prescribed by the superintendent of
insurance.
(D) For an adverse benefit determination that is not a final
adverse benefit determination, the health plan issuer shall
include with the notice required under division (C) of this
section a statement informing the covered person of all of the
following:
(1) If the covered person's treating physician certifies in
writing that the covered person has a medical condition where the
time frame for completion of an expedited review of an internal
appeal involving an adverse benefit determination would seriously
jeopardize the life or health of the covered person or jeopardize
the covered person's ability to regain maximum function, the
covered person may file a request for an expedited external review
to be conducted simultaneously with the expedited internal appeal,
pursuant to section 3922.09 of the Revised Code.
(2) If the adverse benefit determination involves a denial of
coverage based on a determination that the recommended or
requested health care service or treatment is experimental or
investigational and the covered person's treating physician
certifies in writing that the recommended or requested health care
service or treatment that is the subject of the adverse benefit
determination would be significantly less effective if not
promptly initiated, the covered person may file a request for an
expedited external review to be conducted simultaneously with the
expedited internal appeal, pursuant to section 3922.09 or 3922.10
of the Revised Code.
(3) If the covered person has requested an internal appeal
and the health plan issuer has not issued a written decision to
the covered person within thirty days following the date the
covered person files the request, and the covered person has not
requested or agreed to a delay, the covered person may file a
request for external review pursuant to section 3922.08 of the
Revised Code and may be considered to have exhausted the health
plan issuer's internal appeals process for purposes of section
3922.04 of the Revised Code.
(E) For a final adverse benefit determination, the health
plan issuer shall include with the notice required under division
(C) of this section a statement informing the covered person of
all of the following:
(1) A written request for an external review must be
submitted to the health plan issuer within one hundred eighty days
after the date of the notice of final adverse benefit
determination;.
(2) If the covered person's treating physician certifies in
writing that the covered person has a medical condition for which
the time frame for completion of a standard external review
pursuant to section 3922.08 of the Revised Code would seriously
jeopardize the life or health of the covered person or would
jeopardize the covered person's ability to regain maximum
function, the covered person may file a request for an expedited
external review pursuant to section 3922.09 of the Revised Code.
(3)(a) If the final adverse benefit determination concerns a
health care service for which the covered person received
emergency services, but has not been discharged from a facility,
the covered person may request an expedited external review
pursuant to section 3922.09 of the Revised Code.
(b) If the final adverse benefit determination concerns
denial of coverage based on a determination that the recommended
or requested health care service or treatment is experimental or
investigational, the covered person may file a request for an
external review to be conducted pursuant to section 3922.10 of the
Revised Code, or if the covered person's treating physician
certifies in writing that the recommended or requested health care
service that is the subject of the request would be significantly
less effective if not promptly initiated, the covered person may
request an expedited external review to be conducted under section
3922.10 of the Revised Code.
(F)(1) In addition, to any information required to be
provided under divisions (D) and (E) of this section, the health
plan issuer shall include a description of both the standard and
expedited external review procedures the health plan issuer is
required to produce pursuant to this chapter, highlighting in the
external review procedures the sections of the Revised Code that
give the covered person the opportunity to submit additional
information.
(2) The health plan issuer shall also include any forms used
to process an external review, including an authorization form, or
other document approved by the superintendent that complies with
the requirements of 45 C.F.R. 164.508, by which the covered
person, for purposes of conducting an external review under this
chapter, authorizes the health plan issuer and the covered
person's treating health care provider to disclose protected
health information, including medical records, concerning the
covered person that are related in any manner to the external
review.
Sec. 3925.08. Funds accumulated in the course of business,
or surplus money above the capital stock, of any company organized
under any law of this state, for the purpose provided in section
3925.01 of the Revised Code, shall only be loaned or invested in
the securities listed in sections 3925.05 and 3925.06 of the
Revised Code, or in the following:
(A)(1) Bonds and mortgages on unencumbered real estate within
this or any other state worth twenty-five per cent more than the
sum loaned thereon, exclusive of buildings, unless such buildings
are insured in some company authorized to do business in this
state, and the policy is transferred to the company making the
investment; or, in lieu of transferring such policies, the
mortgagee may purchase a policy or policies of mortgage protection
insurance, payable to the mortgagee or a trustee in its behalf,
insuring the mortgagee against loss resulting from the failure of
the mortgagor to acquire and maintain, from such an authorized
insurance company, insurance in the amount required by this
section;
(2) Bonds or notes secured by mortgages insured by the
federal housing administrator;
(3) Loans to veterans guaranteed in whole or in part by the
United States pursuant to Title III of the "Servicemen's
Readjustment Act of 1944," 58 Stat. 284, 38 U.S.C. 693, as
amended, provided such guaranteed loans are liens upon real
estate.
(B)(1) Legally authorized and executed bonds, notes,
warrants, and securities which are the direct obligation of or are
guaranteed as to both principal and interest by Canada, or which
are the direct obligation of or are guaranteed as to both
principal and interest by any province of Canada, or which are the
direct obligation of or are guaranteed as to both principal and
interest by any municipal corporation of Canada having a
population of one hundred thousand or more by the latest official
census, and which are not in default as to principal or interest;
(2) Obligations issued, assumed, or guaranteed by the
international finance corporation or by the international bank for
reconstruction and development, the Asian development bank, the
inter-American development bank, the African development bank, or
similar development bank in which the president, as authorized by
congress and on behalf of the United States, has accepted
membership.
(C) Bonds or other evidences of indebtedness, not in default
as to principal or interest, which are valid obligations issued,
assumed, or guaranteed by the United States, by any state thereof,
the Commonwealth of Puerto Rico, by any territory or insular
possession of the United States, or by the District of Columbia,
or which are valid obligations issued, assumed, or guaranteed by
any county, municipal corporation, district, or political
subdivision, or by any civil division or public instrumentality of
such governmental units, if by statutory or other legal
requirements such obligations are payable, as to both principal
and interest, from taxes levied upon all taxable property within
the jurisdiction of such governmental unit, or in bonds or other
obligations issued by or for account of any such governmental unit
having a population of five thousand or more by the latest
official federal or state census, which are payable as to both
principal and interest from revenues or earnings from the whole or
any part of a publicly owned utility, provided that by statute or
other applicable legal requirements, rates from the service or
operation of such utility must be fixed, maintained, and collected
at all times so as to produce sufficient revenues or earnings to
pay both principal and interest of such bonds or obligations as
they become due, and in any bonds or obligations issued or
guaranteed by the United States, any state, the District of
Columbia, the Commonwealth of Puerto Rico, any county, municipal
corporation, district, political subdivision, civil division,
commission, board, authority, agency, or other instrumentality of
one or more of them, provided there is a specific pledge of
revenues, earnings, or other adequate security and provided that
no prior or parity obligation of the same issuer, payable from
revenues or earnings from the same source, has been in default as
to principal or interest during the five years next preceding the
date of such investment, but such issuer need not have been in
existence for that period, and obligations acquired under this
section may be newly issued, and further provided that there is
adequate provision for payment of expenses of operation and
maintenance and the principal and interest on all obligations when
due;
(D)(1) Bonds or other evidences of indebtedness, bearing or
accruing interest, issued, assumed, or guaranteed by any solvent
corporation, trust, partnership, or similar business entity
organized and existing under the laws of this or any other state,
or of the United States, the Commonwealth of Puerto Rico, or of
the District of Columbia, or of Canada or any province of Canada,
upon which there is no existing interest or principal default,
provided that either:
(a) The bonds or other evidences of indebtedness are rated 1
or 2 by the securities valuation office of the national
association of insurance commissioners;
(b) The corporation, together with its predecessor
corporation or corporations, or the trust, partnership, or similar
business entity, has been in existence for a period of at least
five years.
(2) Stocks
or, limited liability company membership
interests, limited partnership interests, or limited liability
partnership interests of any insurance, financial, investment, and
or investment management companies, which investment management
companies are registered with the securities and exchange
commission under the "Investment Company Act of 1940," 54 Stat.
789, 15 U.S.C. 80a-1, as amended,
or the stocks, limited
liability company membership interests, limited partnership
interests, or limited liability partnership interests in an entity
wholly owned by a domestic company or by a domestic company and
its affiliates, that is formed and maintained to acquire or hold
specific assets or liabilities for bankruptcy remoteness or
limitation of liability purposes, except its own stock, and stocks
or, limited liability company membership interests, limited
partnership interests, limited liability partnership interests,
bonds, notes, and debentures of any company which is organized
for, and limited in its operations to, the financing of insurance
premiums, upon approval of such investments by the superintendent
of insurance; except that approval shall not be required for the
purchase of the outstanding stocks
or, limited liability company
membership interests, limited partnership interests, or limited
liability partnership interests of any such company, if investment
in each such company does not exceed in the aggregate two and
one-half per cent of the total admitted assets of the company
making the investment as of the preceding thirty-first day of
December. Whenever the superintendent has reason to believe that
the retention, investment, or acquisition of the stock or, limited
liability company membership interest, limited partnership
interest, or limited liability partnership interest of any such
company substantially lessens competition generally in the
business of insurance or creates a monopoly therein the
superintendent shall proceed under section 3901.13 of the Revised
Code to cause such domestic insurance company to divest itself of
such stock
or, limited liability company membership interest,
limited partnership interest, or limited liability partnership
interest.
(3) Other stocks, limited liability company membership
interests, or limited partnership interests, or limited liability
partnership interests of any solvent corporation organized under
the laws of this or any other state, or of the United States, or
of the District of Columbia, or of Canada or any province of
Canada, provided that a dividend or distribution has been paid by
the
corporation business entity in the preceding twelve months
upon the stock, membership interest, or partnership interest to be
purchased or such corporation
business entity, together with its
predecessor
corporation entity or corporations entities, has been
in existence for a period of at least five years.
(4) A domestic company may acquire, hold, and convey tangible
personal property or interests therein for the production of
income, provided no domestic company shall invest in excess of two
per cent of its admitted assets as of the preceding thirty-first
day of December under this division.
(5) In equipment trust obligations or certificates, security
agreements, or other evidences of indebtedness entered into
directly or guaranteed by any company operating wholly or partly
within the United States or Canada, provided that such debt
obligation is secured by a first lien on tangible personal
property which is purchased or secured for payment thereof and
such debt obligation is repayable within twenty years from the
date of issue in annual, semiannual, or more frequent installments
beginning not later than the first year after such date.
(6) An insurer may invest without limitation in investments
of government money market funds. As used in division (D)(6) of
this section, "government money market fund" means a fund that at
all times invests in obligations issued, guaranteed, or insured by
the federal government of the United States or collateralized
repurchase agreements comprised of such obligations, and that
qualifies for investment without a reserve pursuant to the
purposes and procedures of the securities valuation office of the
national association of insurance commissioners.
(E) Negotiable promissory notes maturing in not more than six
months from the date thereof, secured by collateral security
through the transfer of any of the classes of securities described
in this section or in sections 3925.05 and 3925.06 of the Revised
Code, with absolute power of sale within twenty days after default
in payment at maturity;
(F)(1) Repurchase agreements with, and interest-bearing
obligations, including savings accounts and time certificates of
deposit of, a national bank of the United States, a commonwealth
bank of Puerto Rico, a chartered bank of Canada, or a state bank,
provided such bank is either a member of the federal deposit
insurance corporation created pursuant to the "Banking Act of
1933," as amended, or the Canada deposit insurance corporation
created pursuant to the act of parliament known as the "Canada
Deposit Insurance Corporation Act," as amended.
(2) Certificates of deposit, savings share accounts,
investment share accounts, stock deposits, stock certificates, or
other evidences of indebtedness of a savings and loan association,
provided all such evidences of indebtedness are insured pursuant
to the "Financial Institutions Reform, Recovery, and Enforcement
Act of 1989," 103 Stat. 183, 12 U.S.C.A. 1811, as amended;
(3) Bankers' acceptances and bills of exchange of the kinds
and maturities made eligible by law for rediscount with the
federal reserve banks, provided that the same are accepted by a
bank or trust company incorporated under the laws of the United
States or of this state or any other bank or trust company which
is a member of the federal reserve system.
(G) Any securities issued as a result of any reorganization,
or capital or debt adjustment, in whole or in part, in exchange
for securities acquired by it prior to such reorganization, or
capital or debt adjustment;
(H)(1) In bonds, notes, debentures, or other evidences of
indebtedness issued, assumed, or guaranteed by a solvent
corporation, trust, or partnership formed or existing under the
laws of a foreign jurisdiction, provided each such foreign
investment is of the same kind and quality as United States
investments authorized under this section; or in common or
preferred stock or, shares, membership interests, or partnership
interests of any solvent corporation
business entity formed or
existing under the laws of a foreign jurisdiction, provided each
such foreign investment is of the same kind and quality as United
States investments authorized under this section; or in bonds or
other evidences of indebtedness issued, assumed, or guaranteed by
a foreign jurisdiction.
An insurer shall not invest in foreign investments under
division (H) of this section, including investments denominated in
foreign currency, a sum exceeding in the aggregate fifteen per
cent of its admitted assets as of the preceding thirty-first day
of December. The aggregate amount of investments held by an
insurer in a single foreign jurisdiction shall not exceed three
per cent of its admitted assets as of the preceding thirty-first
day of December.
As used in division (H)(1) of this section, "foreign
jurisdiction" means a jurisdiction outside the United States,
Puerto Rico, or Canada whose bonds are rated 1 by the securities
valuation office of the national association of insurance
commissioners.
(2) An insurer may acquire investments denominated in foreign
currency whether or not they are foreign investments.
An insurer shall not invest in investments denominated in
foreign currency a sum exceeding in the aggregate ten fifteen per
cent of its admitted assets as of the preceding thirty-first day
of December. The aggregate amount of investments denominated in a
single foreign currency held by an insurer shall not exceed three
per cent of an insurer's admitted assets as of the preceding
thirty-first day of December.
(3) As used in division (H) of this section, "foreign
currency" means a currency other than that of the United States.
(I)(1) Any securities or other property not permitted under
section 3925.05, 3925.06, 3925.08, or 3925.20 of the Revised Code
to an extent not exceeding in the aggregate six per cent of the
total admitted assets of such company on the preceding
thirty-first day of December, within the limitations prescribed in
division (J) of this section. Any such company may also invest up
to an additional five per cent of the total admitted assets of
such company on the preceding thirty-first day of December, within
the limitations prescribed in division (J) of this section, in
loans or investments in small businesses having more than half of
their assets or employees in this state and in venture capital
firms having an office within this state, provided that, as a
condition of a company making an investment in a venture capital
firm, the firm must agree to use its best efforts to make
investments, in an aggregate amount at least equal to the
investment to be made by the company in that venture capital firm,
in small businesses having their principal offices within this
state and having either more than one-half of their assets within
this state or more than one-half of their employees employed
within this state.
As used in division (I) of this section:
(a) "Small businesses" means any corporation, partnership,
proprietorship, or other entity that either does not have more
than four hundred employees, or would qualify as a small business
for the purpose of receiving financial assistance from small
business investment companies licensed under the "Small Business
Investment Act of 1958," 72 Stat. 689, 15 U.S.C.A. 661, as
amended, and rules of the small business administration.
(b) "Venture capital firms" means any corporation,
partnership, proprietorship, or other entity, the principal
business of which is or will be the making of investments in small
businesses.
(c) "Investments" means any equity investment, including
limited partnership interests and other equity interests in which
liability is limited to the amount of the investment, but does not
include general partnership interests or other interests involving
general liability.
(2) In the event that, subsequent to being made under this
division, a loan or investment is determined to have become
qualified as a loan or investment under any of the divisions (A)
to (F) of this section or under section 3925.05, 3925.06, or
3925.20 of the Revised Code, the company may consider such loan or
investment as held under such other statutory provision and such
loan or investment shall no longer be considered as having been
made under this division.
(J) No domestic insurance company shall at any time have
invested a sum exceeding five per cent of its admitted assets as
of the preceding thirty-first day of December in the bonds, notes,
debentures, other evidences of indebtedness, and stocks of a
particular corporation, trust, partnership, or similar business
entity, except for investments authorized under divisions (A) and
(D)(2) of this section, and no domestic insurance company together
with its subsidiary, if any, shall at any time own directly or
indirectly more than twenty-five per cent of the outstanding
bonds, notes, debentures, other evidences of indebtedness, and
stocks of any corporation, except for investments authorized under
divisions (A) and (D)(2) of this section.
This section does not affect the propriety or legality of an
investment made by such domestic insurance company which was in
accordance with the laws in force at the time of the making of the
investment.
Section 2. That existing sections 3903.81, 3907.14, 3921.10,
3921.13, 3921.19, 3921.22, 3921.28, 3921.29, 3921.30, 3921.31,
3921.33, 3922.01, 3922.02, 3922.03, 3922.04, 3922.05, 3922.06,
3922.09, 3922.10, 3922.11, 3922.14, 3922.15, 3922.16, 3922.19, and
3925.08 and section 3921.35 of the Revised Code are hereby
repealed.
Section 3. That sections 3903.81, 3921.10, 3921.13, 3921.19,
3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 3921.33 of the
Revised Code, as amended by Sections 1 and 2 of this act shall
take effect January 1, 2013.
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