Chapter 272
AN ACT
HB 2221
Relating to discount medical plans; creating
new provisions; repealing ORS 689.565; and declaring an emergency.
Be It Enacted by the People of
the State of
SECTION 1. Sections 2 to 12 of this 2007 Act are added
to and made a part of the Insurance Code.
SECTION 2. As used in sections 2 to 12 of this 2007
Act:
(1) “Discount medical
plan” means a contract, agreement or other business arrangement between a
discount medical plan organization and a plan member in which the organization,
in exchange for fees, service or subscription charges, dues or other
consideration, offers or purports to offer the plan member access to providers
and the right to receive medical and ancillary services at a discount from
providers.
(2) “Discount medical
plan organization” means a person that contracts on behalf of plan members with
a provider, a provider network or another discount medical plan organization
for access to medical and ancillary services at a discounted rate and
determines what plan members will pay as a fee, service or subscription charge,
dues or other consideration for a discount medical plan.
(3) “Licensee” means a
discount medical plan organization that has obtained a license from the
Director of the Department of Consumer and Business Services in accordance with
section 5 of this 2007 Act.
(4) “Medical and
ancillary services” means, except when administered by or under contract with
the State of Oregon, any care, service, treatment or product provided for any
dysfunction, injury or illness of the human body including, but not limited to,
physician care, inpatient care, hospital and surgical services, emergency and
ambulance services, audiology services, dental care services, vision care
services, mental health services, substance abuse counseling or treatment,
chiropractic services, podiatric care services, laboratory services, home
health care services, medical equipment and supplies or prescription drugs.
(5) “Plan member” means
an individual who pays fees, service or subscription charges, dues or other
consideration in exchange for the right to participate in a discount medical
plan.
(6)(a) “Provider” means
a person that has contracted or otherwise agreed with a discount medical plan
organization to provide medical and ancillary services to plan members at a
discount from the person’s ordinary or customary fees or charges.
(b) “Provider” does not
include:
(A) A person that, apart
from any agreement or contract with a discount medical plan organization,
provides medical and ancillary services at a discount or at fixed or scheduled
prices to patients or customers the person serves regularly; or
(B) A person that does
not charge fees, service or subscription charges, dues or other consideration
in exchange for providing medical and ancillary services at a discount or at fixed or scheduled prices.
(7) “Provider network”
means a person that negotiates directly or indirectly with a discount medical
plan organization on behalf of more than one provider that provides medical or
ancillary services to plan members.
SECTION 3. (1) A person may not conduct business as or
purport to conduct business as a discount medical plan organization unless the
person first obtains a license to operate as a discount medical plan
organization from the Director of the Department of Consumer and Business
Services in accordance with section 5 of this 2007 Act.
(2) The license
requirement set forth in subsection (1) of this section does not apply to an
insurer that offers a discount medical plan.
SECTION 4. (1) A discount medical plan organization
shall have a written contract or other written agreement with all providers or
provider networks that the organization includes or purports to include in a
discount medical plan, or with an entity that contracts with or enters into an
agreement with a provider network on the organization’s behalf.
(2) The contract or
other agreement between a discount medical plan organization and a provider
must include:
(a) A list of the
medical and ancillary services included in the discount medical plan;
(b) The provider’s
discount rate or rates or a schedule that reflects the provider’s fixed or
discounted prices for the medical and ancillary services subject to the
discount medical plan; and
(c) A provision in which
the provider agrees not to charge plan members more for medical and ancillary
services than the amount listed in the provider’s price schedule or an amount
that reflects the application of the provider’s discount rate.
(3) The contract or
other agreement between a discount medical plan organization and a provider
network, or between an entity and a provider network when the entity contracts
with or enters into an agreement with a provider network on the organization’s
behalf, shall require the provider network to have written agreements with
providers that, in addition to meeting the requirements of subsection (2) of
this section:
(a) Authorize the
provider network to contract with or enter into an agreement with the discount
medical plan organization or the entity on behalf of the provider; and
(b) Require the provider
network to maintain an up-to-date list of the providers that are part of the
provider network and to provide the updated list each month to the discount
medical plan organization.
(4) A discount medical
plan organization shall retain copies of the contracts or agreements and other
documents described in this section at all times during which the organization
operates in this state.
SECTION 5. (1) Each applicant for a license to operate
as a discount medical plan organization shall apply to the Director of the
Department of Consumer and Business Services in a form and manner that the
director prescribes by rule. An application for a license under this section must
contain all of the following:
(a) The applicant’s
name, fictitious name, assumed business name and any other identity the
applicant uses in conducting business.
(b) The applicant’s
business address, mailing address, electronic mail address and the Internet
address of any website the applicant maintains for public access.
(c) The applicant’s
federal employer identification number or Internal Revenue Service taxpayer
identification number.
(d) The applicant’s
principal place of business inside or outside this state.
(e) The name of and
contact information for a person that the applicant has designated to provide
information to consumers or answer consumer questions.
(f) The name and address
of the applicant’s agent for the service of process, notice or demand, or a
power of attorney that the applicant has executed and by which the applicant
appoints the director as the applicant’s agent for the service of process,
notice or demand.
(g) A list of individual
providers or providers included in the provider network that provide services
in this state and a list of the medical and ancillary services the applicant
offers or intends to offer to plan members as part of a discount medical plan
or the Internet address of a website that lists the providers and services
offered.
(h) A list of the
persons that the applicant has authorized or intends to authorize to market a
discount medical plan in this state under a name that is different from the
applicant’s name.
(i) The name, trade
name, service mark or other means by which a consumer can identify the discount
medical plan the applicant offers or intends to offer and any different name,
trade name, service mark or other means the applicant uses to identify the same
discount medical plan to persons other than consumers.
(j) A statement that
discloses:
(A) Any criminal
conviction in the five-year period before the date of application involving the
applicant, a member of the board of directors or an officer of the applicant
and any person owning or having the right to acquire 10 percent or more of the
voting securities of the applicant; and
(B) Any pending
investigation into the applicant’s business activities brought by a licensing,
regulatory or law enforcement authority in any jurisdiction.
(k) A statement in which
the applicant agrees to submit to the personal jurisdiction of the courts of
this state.
(L) A statement that
discloses any instance in which another jurisdiction has denied the applicant a
license or other authority to operate as a discount medical plan organization
or has suspended or revoked any such license or other authority after issuance.
(m) Other information
the director may require that enables the director, after reviewing all of the
information submitted under this subsection, to determine whether the
applicant:
(A) Is
financially responsible;
(B) Has adequate
experience and expertise to operate a discount medical plan organization; and
(C) Is of good
character.
(2) Upon receipt of a
completed application for a license to operate as a discount medical plan
organization, the director may investigate the applicant as necessary to verify
the information contained in the application. Except as provided in subsection
(3) of this section, if the director is satisfied that the information contained
in the application is accurate and complete, the director shall issue a license
to the applicant.
(3) The director may
deny a license to any applicant if the director finds in writing that:
(a) The applicant has
provided false, misleading, incomplete or inaccurate information in the
application; or
(b) The applicant is not
qualified to operate as a discount medical plan organization because the
applicant is not financially responsible, does not have adequate experience or
expertise, or has engaged in dishonest, fraudulent or illegal practices or
conduct in any business or profession.
(4) If the director
denies a license under this section, the applicant may request a hearing under
ORS 183.435. Upon receiving the applicant’s request, the director shall grant
the applicant a hearing under ORS 183.413 to 183.470.
SECTION 6. A licensee shall:
(1) Notify the Director
of the Department of Consumer and Business Services immediately whenever the
licensee’s license or other form of authority to operate as a discount medical
plan organization in another jurisdiction is suspended, revoked or not renewed
in that jurisdiction.
(2) Describe in a notice
to the director any change in the name, address or contact information of the
discount medical plan organization provided in the application under section 5
of this 2007 Act within 30 days after making the change.
SECTION 7. A license obtained under section 5 of this
2007 Act is effective for one year, or for a longer period if the Director of
the Department of Consumer and Business Services so prescribes by rule. The
director shall prescribe by rule conditions and procedures under which a
licensee may renew a license that has expired.
SECTION 8. A discount medical plan organization shall
establish or provide, in connection with every discount medical plan:
(1) A 30-day period in
which new plan members may review the discount medical plan and decide whether
to continue or to cancel the plan for any reason. The discount medical plan
organization shall provide to a member who cancels a discount medical plan
within the 30-day period a full and unconditional refund for any fees, service
or subscription charges, dues or other consideration the member paid, except
that the discount medical plan organization may retain the amount of any
one-time processing fee that is less than an amount established by the Director
of the Department of Consumer and Business Services by rule. The 30-day period
begins on the day following the date on which the member completed any application
for the plan or the day following the date on which the member paid any fees,
service or subscription charges, dues or other consideration, whichever is
later.
(2) A standard set of
procedures by which a new plan member may obtain a refund under subsection (1)
of this section.
(3) A toll-free
telephone line and an Internet website. The toll-free telephone line must
enable plan members to contact the discount medical plan organization with
questions and requests for assistance. The website must list all providers in
the organization’s provider network, and the organization must provide the same
information to plan members in writing upon request.
(4) Disclosures, in
writing in a font not less than 12 points in size and on the first content page
of advertisements, marketing materials or brochures made available to the
public and relating to a discount medical plan, that:
(a) The discount medical
plan is not insurance; and
(b) Plan members must
pay for all medical and ancillary services, but will receive a discount from
providers.
SECTION 9. (1) A person may not use or disseminate in
marketing, advertising, promotional, sales or plan documents or other
informational materials for discount medical plans or in communications with
plan members or prospective plan members:
(a) Misleading,
deceptive or false statements; or
(b) The terms “health
plan,” “coverage,” “copay,” “copayments,” “deductible,” “preexisting condition,”
“guaranteed issue,” “premium,” “preferred provider organization” or other terms
in a manner that could reasonably mislead an individual into believing that the
discount medical plan is insurance.
(2) For the purposes of subsection (1) of this section, “misleading, deceptive
or false statements” includes, but is not limited to, statements that:
(a) Are misleading in
fact or implication, including statements that, while containing truthful
elements, conceal or omit information necessary or relevant for a consumer to
make informed decisions concerning discount medical plans; or
(b) Have a capacity or
tendency to mislead or deceive based on the overall impression a reasonable
consumer may form after seeing or hearing the statements.
(3) A person may not
represent in any marketing, advertising, promotional, sales or plan documents
or other informational materials for a discount medical plan or in
communications with plan members or prospective plan members that the State of
(4) Before a person uses
an advertisement, a brochure, a discount card or promotional or marketing
material for marketing, promoting, selling or distributing a discount medical
plan, the discount medical plan organization shall approve the material in
writing.
(5) At the request of
the Director of the Department of Consumer and Business Services, a discount
medical plan organization shall submit to the director an advertisement, a
brochure, a discount card or promotional or marketing material used for
marketing, promoting, selling or distributing a discount medical plan.
SECTION 10. The Director of the Department of Consumer
and Business Services may investigate a person operating or purporting to
operate as a discount medical plan organization and may require the person at
any time to produce marketing, promotional and advertising materials, records,
books, files or other information the person uses in conducting business as a
discount medical plan organization. During an investigation, the person shall
respond to the director’s inquiries promptly and truthfully and in the manner
or form the director requires. The person subject to an investigation under
this section shall pay the expenses incurred in conducting the investigation.
SECTION 11. (1) The Director of the Department of
Consumer and Business Services by order may suspend, revoke or refuse to renew
a license issued under section 5 of this 2007 Act if the director finds in
writing that:
(a) Any fact or
condition exists that, if the fact or condition had existed at the time the
licensee applied for a license to operate as a discount medical plan
organization, would have been grounds for the director to deny a license to the
licensee;
(b) The licensee has not
complied or is not complying with the licensee’s obligations under section 4,
5, 6, 8 or 10 of this 2007 Act or any rule adopted thereunder or the licensee
has violated or is violating a prohibition under section 9 of this 2007 Act; or
(c) The licensee’s
license or other authority to operate as a discount medical plan organization
in another state has been suspended or revoked or has not been renewed.
(2) A licensee subject
to an order of the director suspending or revoking a license shall have an
opportunity for a hearing under ORS 183.413 to 183.470.
(3) After the director
issues a final order to suspend or revoke a license, the person subject to the
order may not conduct further business as a discount medical plan organization
in this state. Immediately after the director issues a final order suspending
or revoking a license, the person subject to the order shall:
(a) Cease operations as
a discount medical plan organization in this state;
(b) Cancel all pending
transactions with plan members and refund any fees, service or subscription
charges, dues or other consideration collected in exchange for services the
person would have provided to plan members in connection with a discount
medical plan after the effective date of the final order suspending or revoking
the person’s license; and
(c)
Wind up all business conducted in connection with the person’s operations as a
discount medical plan organization in this state, if necessary.
SECTION 12. (1) A person, a municipal or other public
corporation or, at the request of the Director of the Department of Consumer
and Business Services, the Attorney General may bring an action in a circuit
court of this state against a person that operates or purports to operate as a
discount medical plan organization but that has not obtained a license under
section 5 of this 2007 Act, to:
(a) Enjoin the person
from operating or purporting to operate as a discount medical plan organization
or from violating section 8 or 9 of this 2007 Act or any rule adopted
thereunder; or
(b) Recover actual
damages or statutory damages under this section that arise from the person’s
violation of section 8 or 9 of this 2007 Act or any rule adopted thereunder.
(2) A plaintiff may
bring an action under this section in the county where:
(a) The plaintiff
resides or conducts business; or
(b) The defendant
marketed, offered for sale or sold, promoted, distributed or advertised a
discount medical plan.
(3) If the court finds
that the defendant has violated section 3, 8 or 9 of this 2007 Act or any rule
adopted thereunder, the court shall enjoin the defendant from continuing the
violation.
(4) Unless a plaintiff
seeks actual or statutory damages under this section, the plaintiff need not
allege or prove actual damages to bring an action for an injunction under this
section.
(5) In addition to
injunctive relief, the plaintiff who prevails in an action brought under this
section is entitled to recover from the defendant:
(a) $100 for each
discount medical plan membership sold or otherwise distributed within this
state or $10,000, whichever is greater;
(b) Three times the
amount of actual damages, if any, that the plaintiff sustained;
(c) Reasonable attorney
fees;
(d) Costs; and
(e) Any other relief the
court deems proper.
(6) A plaintiff must
commence an action under this section within two years after the date on which
the violation described in subsection (1) of this section occurred or within
two years after the plaintiff bringing the action discovered or in the exercise
of reasonable diligence should have discovered the violation. The plaintiff may
have an additional 180 days after the two-year period provided in this
subsection within which to commence an action if the plaintiff can prove by a
preponderance of the evidence that the plaintiff failed to timely commence the
action because of conduct by the defendant calculated solely to induce the
plaintiff to refrain from or postpone commencement of the action.
(7) The remedies
provided in this section are cumulative and are in addition to any other
applicable criminal, civil or administrative penalties.
SECTION 13. ORS 689.565 is repealed.
SECTION 14. Sections 2 to 12 of this 2007 Act apply to
any person conducting business as a discount medical plan organization, as
defined in section 2 of this 2007 Act, on or after the operative date of this
2007 Act.
SECTION 15. Sections 1 to 12 of this 2007 Act and the
repeal of ORS 689.565 by section 13 of this 2007 Act become operative on July
1, 2008.
SECTION 16. The Director of the Department of Consumer
and Business Services may take any action before the operative date of sections
1 to 12 of this 2007 Act and the repeal of ORS 689.565 by section 13 of this
2007 Act that is necessary to enable the director to exercise, on and after the
operative date of sections 1 to 12 of this 2007 Act and the repeal of ORS
689.565 by section 13 of this 2007 Act, all the duties, functions and powers
conferred on the director by sections 1 to 12 of this 2007 Act.
SECTION 17. This 2007 Act being necessary for the
immediate preservation of the public peace, health and safety, an emergency is
declared to exist, and this 2007 Act takes effect on its passage.
Approved by the Governor June 1, 2007
Filed in the office of Secretary of State June 1, 2007
Effective date June 1, 2007
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