HB 669 - Health care corporations; delete nonprofit references
Georgia House of Representatives - 1995/1996 Sessions
HB 669 - Health care corporations; delete nonprofit references
Page Numbers - 1/ 2/ 3/ 4/ 5/ 6/ 7/ 8/ 9/ 10/ 11
1. Chambless 163rd 2. Culbreth 132nd 3. Williams 114th
4. Bostick 165th
House Comm: Judy / Senate Comm: Judy /
House Vote: Yeas 102 Nays 0 Senate Vote: Yeas 47 Nays 2
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House Action Senate
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2/9/95 Read 1st Time 3/1/95
2/10/95 Read 2nd Time 3/13/95
2/22/95 Favorably Reported 3/13/95
Sub Committee Amend/Sub Sub
2/28/95 Read 3rd Time 3/14/95
2/28/95 Passed/Adopted 3/14/95
CS Comm/Floor Amend/Sub CS
3/15/95 Amend/Sub Agreed To
4/4/95 Sent to Governor
4/18/95 Signed by Governor
365 Act/Veto Number
7/1/95 Effective Date
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Code Sections amended: 33-20-3, 33-20-4, 33-20-5, 33-20-8, 33-20-13, 33-20-20,
33-20-21, 33-20-25, 33-20-31, 33-20-32, 33-20-33, 33-20-34, 31-7-280, 33-8-1,
33-21-1, 33-21-25, 33-24-20, 33-24-21, 33-29-3, 33-30-6
HB 669 HB 669/AP
H. B. No. 669 (AS PASSED HOUSE AND SENATE)
By: Representatives Chambless of the 163rd, Culbreth of the
132nd, Williams of the 114th and Bostick of the 165th
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Chapter 20 of Title 33 of the Official Code of
1- 2 Georgia Annotated, relating to health care plans, so as to
1- 3 revise extensively provisions relative to health care
1- 4 corporations; to permit health care plans to be operated by
1- 5 surviving corporations organized under Chapter 2 of Title
1- 6 14, the "Georgia Business Corporation Code"; to revise and
1- 7 provide definitions; to revise provisions relative to the
1- 8 formation of health care corporations; to provide for the
1- 9 applicability of Chapter 3 of Title 14, the "Georgia
1-10 Nonprofit Corporation Code," or Chapter 2 of Title 14, the
1-11 "Georgia Business Corporation Code"; to except surviving
1-12 corporations from requirements relative to the approval by
1-13 the Commissioner of contracts, plans of operation, and
1-14 rates; to delete the tax exemption relative to health care
1-15 corporations; to prohibit the payment or distribution of
1-16 certain funds or fees as part of a plan of conversion of a
1-17 nonprofit health care corporation to a for profit health
1-18 care corporation; to provide requirements with respect to a
1-19 health care corporation issuing shares in an initial public
1-20 offering; to provide for the payment of fees, taxes, and
1-21 assessments; to provide for the applicability of Title 33 to
1-22 health care corporations; to provide requirements relative
1-23 to the distribution of surplus funds of health care
1-24 corporations; to provide for the conversion of a nonprofit
1-25 health care corporation to a for profit health care
1-26 corporation by merger or amendment of articles and
1-27 procedures and requirements relative thereto; to provide for
1-28 the authority of the Commissioner of Insurance and the
1-29 Attorney General; to eliminate references to the nonprofit
1-30 status of health care corporations; to provide for editorial
1-31 revision; to provide for other matters relative to the
1-32 foregoing; to repeal conflicting laws; and for other
1-33 purposes.
1-34 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
H. B. No. 669
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HB 669/AP
Part 1
SECTION 1.1.
2- 1 Chapter 20 of Title 33 of the Official Code of Georgia
2- 2 Annotated, relating to health care plans, is amended by
2- 3 striking paragraph (2) of Code Section 33-20-3, relating to
2- 4 definitions used in said chapter, and inserting in its place
2- 5 a new paragraph (2) to read as follows:
2- 6 "(2) 'Health care corporation' means a nonprofit
2- 7 corporation established in accordance with the
2- 8 provisions of this chapter to administer one or more
2- 9 health care plans."
SECTION 1.2.
2-10 Said chapter is further amended by adding to said Code
2-11 section a new paragraph to be designated paragraph (12) to
2-12 read as follows:
2-13 "(12) 'Surviving corporation' means a health care
2-14 corporation which is:
2-15 (A) The surviving corporation in a merger which
2-16 includes one or more health care corporations;
2-17 (B) A health care corporation which has amended its
2-18 articles of incorporation to become a corporation
2-19 governed by Chapter 2 of Title 14, the 'Georgia
2-20 Business Corporation Code'; or
2-21 (C) The subsidiary of a corporation described in
2-22 subparagraph (A) or (B) of this paragraph."
SECTION 1.3.
2-23 Said chapter is further amended by striking in its entirety
2-24 Code Section 33-20-4, relating to authorization of formation
2-25 of health care corporations generally, and inserting in its
2-26 place a new Code Section 33-20-4 to read as follows:
2-27 "33-20-4. (Index)
2-28 Health care corporations may be incorporated for the
2-29 purpose of establishing, maintaining, and operating one or
2-30 more nonprofit health care plans, providing administrative
2-31 or other services to employers or others that offer plans
2-32 furnishing or reimbursing for health care services,
2-33 including without limitation establishing, administrating,
2-34 promoting, and developing programs requested, desired, or
H. B. No. 669
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HB 669/AP
3- 1 sponsored by employers or other groups, and for the other
3- 2 purposes authorized by this chapter."
SECTION 1.4.
3- 3 Said chapter is further amended by striking Code Section
3- 4 33-20-5, relating to the procedure for formation of health
3- 5 care corporations and the regulation and supervision of
3- 6 corporations by the Commissioner generally, and inserting a
3- 7 new Code Section 33-20-5 to read as follows:
3- 8 "33-20-5. (Index)
3- 9 (a) Any five or more persons, all of whom shall be
3-10 residents of this state, upon filing a petition with the
3-11 Secretary of State for a corporate charter as provided in
3-12 Chapter 3 of Title 14, the 'Georgia Nonprofit Corporation
3-13 Code,' which or, if the resulting health care corporation
3-14 is to be a surviving corporation, Chapter 2 of Title 14,
3-15 the 'Georgia Business Corporation Code.' Such petition
3-16 shall also contain the information required by Chapter 14
3-17 of this title, may form a health care corporation under
3-18 and in conformity with this chapter for the purpose of
3-19 establishing, maintaining, and operating one or more
3-20 voluntary nonprofit health care plans, whereby health care
3-21 services are or may be provided at the expense of the
3-22 corporation. Other benefits including complete employee
3-23 welfare and employee benefit programs may be added from
3-24 time to time as the corporation may determine with the
3-25 approval of the Commissioner.
3-26 (b) A health care corporation shall be subject to
3-27 regulation and supervision by the Commissioner in the same
3-28 manner as life insurers are subject to such regulation and
3-29 supervision and shall be governed by the nonprofit
3-30 corporation laws of this state."
SECTION 1.5.
3-31 Said chapter is further amended by striking subsection (a)
3-32 of Code Section 33-20-8, relating to certificates of
3-33 authority and their requirements and applications therefor,
3-34 and inserting in its place a new subsection (a) to read as
3-35 follows:
3-36 "(a) Except for corporations becoming subject to this
3-37 chapter by reason of being the which are surviving
3-38 corporation in a merger or consolidation of a hospital
3-39 service corporation organized under Chapter 19 of this
3-40 title and a medical service corporation organized under
H. B. No. 669
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HB 669/AP
4- 1 Chapter 18 of this title corporations, a health care
4- 2 corporation may issue contracts only after the
4- 3 Commissioner has authorized it to do so."
SECTION 1.6.
4- 4 Said chapter is further amended by striking subsection (a)
4- 5 of Code Section 33-20-13, relating to management of
4- 6 corporations, their general powers, requirements as to
4- 7 reserves, minimum subscriber's surpluses, and charges, and
4- 8 inserting in its place a new subsection (a) to read as
4- 9 follows:
4-10 "(a) Health care corporations shall be governed and
4-11 conducted as nonprofit organizations corporations and the
4-12 necessary expenses of administering the affairs of the
4-13 corporations shall may be paid from the payments collected
4-14 from subscribers."
SECTION 1.7.
4-15 Said chapter is further amended by striking in its entirety
4-16 Code Section 33-20-20, relating to the submission to the
4-17 Commissioner of operating plans, schedules or rates, and
4-18 amounts of service and their approval by the Commissioner,
4-19 and inserting in its place a new Code Section 33-20-20 to
4-20 read as follows:
4-21 "33-20-20. (Index)
4-22 Except for corporations becoming subject to this chapter
4-23 by reason of being the which are surviving corporation in
4-24 a merger or consolidation of a hospital service
4-25 corporation organized under Chapter 19 of this title and a
4-26 medical service corporation organized under Chapter 18 of
4-27 this title corporations, health care corporations shall
4-28 before accepting applications from subscribers in a
4-29 nonprofit health care plan submit to the Commissioner a
4-30 plan of operating and overhead expenses, operation cost,
4-31 and salaries paid or to be paid during any current year
4-32 together with a schedule of its rates to be charged and
4-33 the amount of health care service contracted to be
4-34 rendered, which plan, rates, and amount of service shall
4-35 be first approved by the Commissioner as fair and
4-36 reasonable before the corporation shall engage in
4-37 business."
H. B. No. 669
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HB 669/AP
SECTION 1.8.
5- 1 Said chapter is further amended by striking in its entirety
5- 2 Code Section 33-20-21, relating to the approval of the
5- 3 Commissioner of rates to be paid to providers of services,
5- 4 and inserting in its place a new Code Section 33-20-21 to
5- 5 read as follows:
5- 6 "33-20-21. (Index)
5- 7 Except for corporations becoming subject to this chapter
5- 8 by reason of being the which are surviving corporation in
5- 9 a merger or consolidation of a hospital service
5-10 corporation organized under Chapter 19 of this title and a
5-11 medical service corporation organized under Chapter 18 of
5-12 this title corporations, the Commissioner shall first
5-13 approve the rates of payment to be made by health care
5-14 corporations to providers of health care services on
5-15 behalf of said corporation, its subscribers,
5-16 beneficiaries, and covered dependents as being fair and
5-17 reasonable before said corporation shall engage in
5-18 business."
SECTION 1.9.
5-19 Said chapter is further amended by striking Code Section
5-20 33-20-25, relating to tax exempt status and payment of
5-21 certain expenses, and inserting in its place a new Code
5-22 Section 33-20-25 to read as follows:
5-23 "33-20-25. (Index)
5-24 (a) Every health care corporation is declared to be a
5-25 charitable and benevolent institution and shall be exempt
5-26 from all taxes other than those provided for under this
5-27 chapter as such charitable and benevolent institutions are
5-28 now or may hereafter be exempt from taxes. (b) Any and all supervision, conservation, rehabilitation,
5-30 liquidation, or examination of the affairs of any
5-31 corporation by the Commissioner shall be at the expense of
5-32 the corporation."
5-33 SECTION 1.10.
5-34 Said chapter is further amended by striking in its entirety
5-35 Code Section 33-20-31, relating to the applicability and
5-36 construction of said chapter, and inserting in its place a
5-37 new Code Section 33-20-31 to read as follows:
H. B. No. 669
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HB 669/AP
6- 1 "33-20-31. (Index)
6- 2 Except for corporations subject to this chapter which are
6- 3 surviving corporations, this This chapter shall not apply
6- 4 to nor govern any corporation which is organized for
6- 5 profit or which contemplates any pecuniary gain to its
6- 6 shareholders or members. This chapter shall not authorize
6- 7 nor be construed to authorize, directly or indirectly, any
6- 8 corporation to operate a health care plan on a profit
6- 9 basis. A corporation subject to this chapter may organize
6-10 subsidiary or affiliated corporations to engage in allied
6-11 business ventures in accordance with Chapters 13 and 14 of
6-12 this title."
6-13 SECTION 1.11.
6-14 Said chapter is further amended by striking in its entirety
6-15 Code Section 33-20-32, relating to the application of other
6-16 provisions of the Code to health care corporations and other
6-17 powers, and inserting in its place a new Code Section
6-18 33-20-32 to read as follows:
6-19 "33-20-32. (Index)
6-20 Except where the context otherwise requires, all the
6-21 applicable provisions of Chapter 3 of Title 14, the
6-22 'Georgia Nonprofit Corporation Code,' shall be applicable
6-23 to any govern a health care corporation. A health care
6-24 corporation shall not be considered to be a corporation
6-25 described in paragraph (2) of subsection (a) of Code
6-26 Section 14-3-1302. All of the provisions of this title
6-27 which are not in conflict with this chapter shall be
6-28 applicable to any health care corporation subject to such
6-29 modifications as the Commissioner may prescribe by order,
6-30 directive, interpretation, guideline, or rule or
6-31 regulation after any notice and hearing as may be required
6-32 by this title."
6-33 SECTION 1.12.
6-34 Said chapter is further amended by adding two new Code
6-35 sections, to be designated Code Section 33-20-33 and
6-36 33-20-34, respectively, to read as follows:
6-37 "33-20-33. (Index)
6-38 (a) No reserved funds as defined in subsection (b) of this
6-39 Code section or surplus of such nonprofit health care
6-40 corporation as increased pursuant to the charge required
6-41 in subsection (e) of Code Section 33-20-13 shall be
H. B. No. 669
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HB 669/AP
7- 1 distributed or paid to any person as a part of any plan of
7- 2 conversion of a nonprofit health care corporation to a for
7- 3 profit health care corporation.
7- 4 (b) For the purposes of this Code section, 'reserved
7- 5 funds' means those funds as described and defined in
7- 6 subsection (c) of Code Section 33-20-13 and any unassigned
7- 7 funds.
7- 8 (c) A health care corporation which issues shares in
7- 9 connection with an initial public offering shall first
7-10 offer such shares to its subscribers on similar terms as
7-11 such shares are offered to the public consistent with
7-12 applicable federal law and regulations.
7-13 (d) No options, warrants, or fees shall be paid to any
7-14 officer, director, or trustee of a nonprofit health care
7-15 corporation in connection with a conversion from a
7-16 nonprofit to a for profit health care corporation or in
7-17 regard to the initial public offering of a health care
7-18 corporation.
7-19 (e) A health care corporation shall be required to pay any
7-20 and all fees, taxes, including premium taxes, and
7-21 assessments, specifically excluding assessments with
7-22 respect to the Georgia Life and Health Insurance Guaranty
7-23 Association, as are required of other companies which
7-24 provide life and accident and sickness insurance under
7-25 Georgia law.
7-26 (f) A health care corporation, including a surviving
7-27 corporation, subject to this chapter shall be subject to
7-28 all the provisions of this title not otherwise provided
7-29 for in this chapter which are applicable to other insurers
7-30 which provide life or accident and sickness insurance.
7-31 (g) Any distribution of surplus funds by a surviving
7-32 corporation shall be subject to regulation by the
7-33 Commissioner pursuant to the provisions of this title
7-34 governing distributions by insurers which provide life or
7-35 accident and sickness insurance and shall in no event
7-36 cause the surplus funds of the surviving corporation to be
7-37 less than that of the predecessor corporation as of the
7-38 date of the conversion, unless the Commissioner finds that
7-39 such distribution is in the public interest.
7-40 33-20-34. (Index)
7-41 (a)(1) Any corporation which is governed by Chapter 3 of
7-42 Title 14, the 'Georgia Nonprofit Corporation Code,' and
H. B. No. 669
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HB 669/AP
8- 1 authorized under this chapter may merge with, or amend
8- 2 its articles of incorporation to become, a corporation
8- 3 governed by Chapter 2 of Title 14, the 'Georgia Business
8- 4 Corporation Code,' provided a detailed, written plan is
8- 5 submitted to the Commissioner for such conversion,
8- 6 written notice of such submission is given to the
8- 7 Attorney General, and, after a public hearing thereon,
8- 8 such plan is approved by the Commissioner after being
8- 9 found to be in the best interest of the company, its
8-10 policyholders, and the general public.
8-11 (2) In any such public hearing, the Attorney General may
8-12 appear before the Commissioner and make such
8-13 presentation as he or she shall deem to be in the
8-14 public's interest. The Attorney General shall provide
8-15 representation to the Commissioner in any other legal
8-16 action relating thereto. Nothing in this Code section
8-17 shall be construed as a limitation upon the Attorney
8-18 General in providing legal representation to the
8-19 Commissioner during the pendency of any decision
8-20 concerning conversion.
8-21 (b) The Commissioner may promulgate rules and regulations
8-22 which are necessary to implement the provisions of this
8-23 Code section."
Part 2
SECTION 2.1.
8-24 Code Section 31-7-280 of the Official Code of Georgia
8-25 Annotated, relating to health care provider annual reports
8-26 and the form of such reports, is amended by striking
8-27 paragraph (3) of subsection (a) and inserting in lieu
8-28 thereof a new paragraph (3) to read as follows:
8-29 "(3) 'Third-party payer' means any entity which provides
8-30 health care insurance or a health care service plan,
8-31 including but not limited to providers of major medical
8-32 or comprehensive accident or health insurance, whether
8-33 or not through a self-insurance plan, Medicaid, hospital
8-34 service nonprofit corporation plans, or nonprofit health
8-35 care plans, or nonprofit medical service corporation
8-36 plans, but does not mean a specified disease or
8-37 supplemental hospital indemnity payer."
SECTION 2.2.
8-38 Code Section 33-8-1 of the Official Code of Georgia
8-39 Annotated, relating to fees and charges assessed by the
H. B. No. 669
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HB 669/AP
9- 1 Commissioner of Insurance, is amended by adding immediately
9- 2 following subparagraph (I) of paragraph (1) a new
9- 3 subparagraph, to be designated subparagraph (I.1), to read
9- 4 as follows:
9- 5 "(I.1) Health care corporations:
9- 6 Original license or certificate............ 600.00
9- 7 Renewal license or certificate............. 500.00"
SECTION 2.3.
9- 8 Said Code section is further amended by striking
9- 9 subparagraph (U) of paragraph (1) and inserting in lieu
9-10 thereof a new subparagraph (U) to read as follows:
9-11 "(U) Nonprofit organizations (medical
9-12 service, or hospital service, or health
9-13 care corporation):
9-14 Original license or certificate............ 600.00
9-15 Renewal license or certificate............. 500.00"
SECTION 2.4.
9-16 Chapter 21 of Title 33 of the Official Code of Georgia
9-17 Annotated, relating to insurance, is amended by striking
9-18 paragraph (7) of Code Section 33-21-1 and inserting in lieu
9-19 thereof a new paragraph (7) to read as follows:
9-20 "(7) 'Insurer' means every insurer authorized under this
9-21 title to issue contracts of accident and sickness
9-22 insurance. Hospital service nonprofit corporations,
9-23 nonprofit medical service corporations, nonprofit health
9-24 care corporations, and health maintenance organizations
9-25 are included within such term."
SECTION 2.5.
9-26 Said chapter is further amended by striking Code Section
9-27 33-21-25, relating to the organization and operation of
9-28 health maintenance organizations by insurers or
9-29 corporations, and inserting in lieu thereof a new Code
9-30 Section 33-21-25 to read as follows:
9-31 "33-21-25. (Index)
9-32 Notwithstanding any other law which may be inconsistent
9-33 with this Code section, an insurer, a hospital service
9-34 nonprofit corporation, a nonprofit medical service
9-35 corporation, or a nonprofit health care corporation
H. B. No. 669
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HB 669/AP
10- 1 licensed in this state may directly or through a
10- 2 subsidiary or affiliate organize and operate a health
10- 3 maintenance organization."
SECTION 2.6.
10- 4 Code Section 33-24-20 of the Official Code of Georgia
10- 5 Annotated, relating to provision in individual accident and
10- 6 sickness policies for termination of coverage of a surviving
10- 7 spouse, is amended by striking subsection (c) and inserting
10- 8 in lieu thereof a new subsection (c) to read as follows:
10- 9 "(c) This Code section shall also apply to blanket
10-10 accident and sickness insurance policies and to policies
10-11 issued by a fraternal benefit society, a hospital service
10-12 nonprofit corporation, a nonprofit medical service
10-13 corporation, a nonprofit health care corporation, a health
10-14 maintenance organization, or any other similar entity."
SECTION 2.7.
10-15 Code Section 33-24-21 of the Official Code of Georgia
10-16 Annotated, relating to provision in group accident and
10-17 sickness policies for termination of coverage of a surviving
10-18 spouse, is amended by striking subsection (c) and inserting
10-19 in lieu thereof a new subsection (c) to read as follows:
10-20 "(c) This Code section shall also relate to blanket
10-21 accident and sickness insurance policies and to policies
10-22 issued by a fraternal benefit society, a hospital service
10-23 nonprofit corporation, a nonprofit medical service
10-24 corporation, a nonprofit health care corporation, a health
10-25 maintenance organization, or any other similar entity."
SECTION 2.8.
10-26 Code Section 33-29-3 of the Official Code of Georgia
10-27 Annotated, relating to required provisions in individual
10-28 accident and sickness policies, is amended by striking
10-29 subsection (d) and inserting in lieu thereof a new
10-30 subsection (d) to read as follows:
10-31 "(d) The provisions of this Code section shall also apply
10-32 to individual accident and sickness insurance policies
10-33 issued by a fraternal benefit society, a hospital service
10-34 nonprofit corporation, a nonprofit medical service
10-35 corporation, a nonprofit health care corporation, a health
10-36 maintenance organization, or any other similar entity."
H. B. No. 669
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HB 669/AP
SECTION 2.9.
11- 1 Code Section 33-30-6 of the Official Code of Georgia
11- 2 Annotated, relating to the authority to issue blanket
11- 3 accident and sickness policies, is amended by striking
11- 4 subsection (c) and inserting in lieu thereof a new
11- 5 subsection (c) to read as follows:
11- 6 "(c) The provisions of this Code section shall also apply
11- 7 to group and blanket accident and sickness insurance
11- 8 policies issued by a fraternal benefit society, a hospital
11- 9 service nonprofit corporation, a nonprofit medical service
11-10 corporation, a nonprofit health care corporation, a health
11-11 maintenance organization, or any other similar entity."
Part 3
SECTION 3.1.
11-12 All laws and parts of laws in conflict with this Act are
11-13 repealed.
H. B. No. 669
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Office of the Clerk of the House
Robert E. Rivers, Jr., Clerk of the House
Last Updated on 01/02/97