§ 58-50-40. Willful failure to pay group insurance premiums; willful termination of a group health plan; notice to persons insured; penalty; restitution; examination of insurance transactions.
§ 58‑50‑40. Willful failure to pay group insurance premiums; willful termination of a grouphealth plan; notice to persons insured; penalty; restitution; examination ofinsurance transactions.
(a)Â Â Â Â Â Â Â As used in thissection and in G.S. 58‑50‑45:
(1)Â Â Â Â Â Â Â "Group healthinsurance" means any policy described in G.S. 58‑51‑75, 58‑51‑80,or 58‑51‑90; any group insurance certificate or group subscribercontract issued by a service corporation pursuant to Articles 65 and 66 of thisChapter; any health care plan provided or arranged by a health maintenanceorganization pursuant to Article 67 of this Chapter; or any multiple employerwelfare arrangement as defined in G.S. 58‑49‑30(a).
(2)       "Group healthplan" means a single employer self‑insured group health plan asdefined in section 607(1) of the Employee Retirement Income Security Act of1974, 29 U.S.C. § 1167(1), as amended.
(3)Â Â Â Â Â Â Â "Insurancefiduciary" means any person, employer, principal, agent, trustee, or third‑partyadministrator who is responsible for the payment of group health or group lifeinsurance premiums or who is responsible for funding a group health plan.
(4)Â Â Â Â Â Â Â "Premiums"includes contributions to a group health plan or to a multiple employer welfarearrangement.
(b)Â Â Â Â Â Â Â No insurancefiduciary shall:
(1)Â Â Â Â Â Â Â Cause the cancellationor nonrenewal of group health or group life insurance and the consequentialloss of the coverages of the persons insured by willfully failing to pay suchpremiums in accordance with the terms of a group health or group life insurancecontract; or, in the case of a group health plan to which there are no premiumscontributed, terminate the plan by willfully failing to fund the plan; and
(2)Â Â Â Â Â Â Â Willfully fail todeliver, at least 45 days before the termination of the group health or grouplife insurance or group health plan, to all persons covered by the group policyor group health plan a written notice of the insurance fiduciary's intention tostop payment of premiums for the group life or health insurance or theinsurance fiduciary's intention to cease funding of a group health plan.
(c)Â Â Â Â Â Â Â Any insurancefiduciary who violates subsection (b) of this section shall be guilty of aClass H felony.
(d)Â Â Â Â Â Â Â Repealed by SessionLaws 1991, c. 644, s. 37.
(e)Â Â Â Â Â Â Â Upon convictionunder subsection (c) of this section the court shall order the insurancefiduciary to make full restitution to persons insured who incurred expensesthat would have been covered by the group health insurance or group health planor full restitution to beneficiaries of the group life insurance for deathbenefits that would have been paid if the coverage had not been terminated.
(f)Â Â Â Â Â Â Â Â Insurancefiduciaries subject to this section shall be subject to the provisions of G.S.58‑2‑200 with respect only to transactions involving group healthor life insurance.
(g)Â Â Â Â Â Â Â In the noticerequired by subsection (b) of this section, the insurance fiduciary shall alsonotify those persons of their rights to health insurance conversion policiesunder Article 53 of this Chapter and their rights to purchase individual policiesunder the federal Health Insurance Portability and Accountability Act of 1996(HIPAA), Public Law 104‑191, as amended, and Article 68 of this Chapter.
(h)Â Â Â Â Â Â Â In the event of theinsolvency of an employer or insurance fiduciary who has violated this section,any person specified in subsection (e) of this section shall have a lien uponthe assets of the employer or insurance fiduciary for the expenses or benefitsspecified in subsection (e) of this section. With respect to personal propertywithin the estate of the insolvent employer or insurance fiduciary, the lienshall have priority over unperfected security interests.
(i)Â Â Â Â Â Â Â Â Upon thetermination of a group health insurance contract by the insurer, the insurershall notify every subscriber and certificate holder under the contract of thetermination of the contract along with the certification required to beprovided under G.S. 58‑68‑30(e). Upon the termination of a grouphealth insurance contract by the insurance fiduciary, the insurance fiduciaryshall notify every subscriber and certificate holder under the contract of thetermination of the contract along with the certification required to beprovided under G.S. 58‑68‑30(e).
(j)Â Â Â Â Â Â Â Â This section shallnot apply to the cessation of individual contributions made by any personcovered by a group health or group life insurance policy or group health plan. (1985, c. 507, s. 1; 1989, c.485, s. 51; 1989 (Reg. Sess., 1990), c. 1055, ss. 2, 3.1; 1991, c. 644, s. 37;1993, c. 539, s. 1274; 1994, Ex. Sess., c. 24, s. 14(c); 2001‑422, s. 1;2006‑105, s. 1.8.)