74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 573
House Bill 2221
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Establishes licensing requirement for persons marketing,
offering for sale or selling, promoting, distributing or
administering discount medical plans. Prohibits operation of
discount medical plan organization without license and without
contract or agreement with service provider or service provider
network. Specifies information and services discount medical plan
organization must provide with discount medical plan. Prohibits
use of misleading, deceptive or false statements in connection
with marketing, advertising, sales, promotional and plan
documents for discount medical plans and in communications with
consumers.
Provides Director of Department of Consumer and Business
Services with power to investigate violations and suspend or
revoke licenses. Permits any person to seek injunction and
statutory damages and three times actual damages against
unlicensed person operating as discount medical plan
organization.
Declares emergency, effective on passage.
A BILL FOR AN ACT
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 Oregon:
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)(a) '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 member access to
service provider personnel or service provider facilities and the
right to receive medical and ancillary services at a discount
from service providers.
(b) 'Discount medical plan' does not include insurance, as that
term is defined in ORS 731.102.
(2) 'Discount medical plan organization' means a person that
markets, offers for sale or sells, promotes, distributes or
administers a discount medical plan in this state.
(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 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, 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 a person that pays fees, service or
subscription charges, dues or other consideration in exchange for
the right to participate in a discount medical plan.
(6)(a) 'Service 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
or that has contracted or agreed to provide medical and ancillary
services to plan members at fixed or scheduled prices.
(b) 'Service 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) 'Service provider network' means:
(a) A list, directory, compilation or other aggregation of
names, contact information, discount rates or fee schedules or
related information about service providers with which a discount
medical plan organization has or purports to have contracts or
agreements to provide medical and ancillary services; or
(b) A formal or informal association of service providers in
which the association members have individually or jointly
contracted or agreed with a discount medical plan organization to
provide medical and ancillary services to plan members. + }
SECTION 3. { + A person may not market, offer to sell or sell,
promote, distribute or administer a discount medical plan 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. + }
SECTION 4. { + (1) A discount medical plan organization shall
have a written contract or other written agreement with all
service providers or service 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 service provider network on the
organization's behalf.
(2) The contract or other agreement between a discount medical
plan organization and a service provider must include:
(a) A list of the medical and ancillary services subject to the
discount medical plan;
(b) The service provider's discount rate or rates or a schedule
that reflects the service 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 service provider agrees not to
charge plan members more for medical and ancillary services than
the amount listed in the service provider's price schedule or an
amount that reflects the application of the service provider's
discount rate.
(3) The contract or other agreement between a discount medical
plan organization and a service provider network, or between a
discount medical plan organization and an entity that contracts
with or enters into an agreement with a service provider network
on the organization's behalf, in addition to meeting the
requirements of subsection (2) of this section, shall:
(a) Authorize the service provider network to contract with or
enter into an agreement with the service provider or authorize
the entity to contract with or enter into an agreement with the
service provider network, as appropriate, on behalf of the
discount medical plan organization; and
(b) Require the service provider network to maintain an
up-to-date list of the service providers that are part of the
service 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) Subsection (2) of this section does not
apply to a person whose exclusive business activity is to
transact insurance, as that term is defined in ORS 731.146.
(2) 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) The name of and contact information for a person that will
administer the applicant's discount medical plan.
(h) A list of individual service providers or service providers
included in the service provider network 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.
(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, for the applicant, the applicant's
employees and any individual who has an ownership interest in or
supervisory responsibility for the applicant or the applicant's
activities, discloses:
(A) Any criminal conviction in the five-year period before the
date of application;
(B) Any pending investigation into the applicant's business
activities brought by a licensing, regulatory or law enforcement
authority in any jurisdiction; and
(C) Any material litigation concerning the applicant or the
applicant's business activities in any jurisdiction in the
five-year period before the date of application.
(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) Any other information the director may require to carry out
the provisions of sections 2 to 12 of this 2007 Act or any rule
adopted thereunder.
(3) 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
(4) 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 and
may make and keep any records concerning the licensee that are
necessary to carry out the provisions of sections 2 to 12 of this
2007 Act and any rule adopted thereunder.
(4) 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;
(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; or
(c) The applicant has been convicted of a crime in any
jurisdiction, an essential element of which is fraud.
(5) 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
information the licensee provided in an 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 the length of time the Director of the
Department of Consumer and Business Services 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. 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, each of
which enables plan members to contact the discount medical plan
organization with questions and requests for assistance. The
website must list all service providers in the organization's
service provider network, and the organization must provide the
same information to plan members in writing upon request.
(4) Notices in bold and prominent type prominently displayed on
all marketing, advertising and promotional materials and all
sales and discount medical plan documents that indicate, in
particular terms the Director of the Department of Consumer and
Business Services shall prescribe by rule, that:
(a) The discount medical plan is not insurance;
(b) The State of Oregon does not review or approve discount
medical plans; and
(c) Plan members must pay for all medical and ancillary
services, but will receive a discount from service providers.
(5) Other notices or information the director by rule may
require the discount medical plan organization to display or
provide in the organization's marketing, advertising or
promotional materials or in sales or discount medical plan
documents. + }
SECTION 9. { + (1) A discount medical plan organization may
not use or disseminate misleading, deceptive or false statements
in marketing, advertising, promotional, sales or plan documents
and other informational materials for discount medical plans or
in communications with plan members or prospective plan members.
(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. + }
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;
(c) Permitting the licensee to continue to operate as a
discount medical plan organization would cause harm to plan
members or to the public interest; or
(d) 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 January 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. + }
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