38.2-1016.1 - Conversion of a health maintenance organization to an accident and sickness insurer.
§ 38.2-1016.1. Conversion of a health maintenance organization to an accidentand sickness insurer.
A. Any health maintenance organization domiciled in the Commonwealth andsubject to the provisions of Chapter 43 (§ 38.2-4300 et seq.) may, at itsoption and without reincorporation, convert to an insurer licensed to writeaccident and sickness insurance, hereinafter referred to as the "convertedinsurer," by following the procedures set forth in this section. A healthmaintenance organization that becomes a converted insurer under this sectionshall have all of the rights to and titles and interests in the assets of theoriginal health maintenance organization, as well as all of its liabilitiesand obligations.
B. A health maintenance organization eligible to become a converted insurerunder subsection A may effect such conversion by (i) complying with therequirements for formation of a domestic insurer under Article 1 (§ 38.2-1000et seq.); (ii) promptly filing with the Commission any necessary amendmentsto its articles of incorporation, bylaws, and other corporate documentspursuant to the provisions of Chapter 9 (§ 13.1-601 et seq.) of Title 13.1;and (iii) filing with the Commission such other information as the Commissionmay require to meet all of the requirements of an insurer in Virginia. Whenthose requirements have been met, the Commission shall issue a license inaccordance with the provisions of Article 5 (§ 38.2-1024 et seq.) to permitthe converted insurer to conduct the business of accident and sicknessinsurance in the Commonwealth. Upon the issuance of the converted insurer'slicense, and except as provided in this section, the converted insurer shallbe subject to all of the provisions of this title that pertain to insurerslicensed pursuant to Article 5 (§ 38.2-1024 et seq.) of this chapter and thebusiness of accident and sickness insurance.
C. After the effective date of the health maintenance organization'sconversion to and licensure as an insurer, all of the converted insurer'sindividual and group health care plans, contracts, and evidences of coverageshall remain valid and in force in accordance with their terms until theearlier of (i) the expiration or termination of the plans, contracts, orevidences of coverage; or (ii) the last day of the eighteenth month after theeffective date of conversion. For the period during which the convertedinsurer continues to provide or arrange for health care services under suchhealth care plan or plans, the insurer's obligation to pay license taxesunder Chapter 25 (§ 58.1-2500 et seq.) of Title 58.1 and fees for maintainingthe Bureau of Insurance under Chapter 4 (§ 38.2-400 et seq.), which are, inall cases, attributable to such health care plan or plans, shall be the sameas the license taxes and fees required of health maintenance organizationsgenerally.
D. Except as provided herein, a converted insurer shall not, after theeffective date of its conversion, use in its accident and sickness insurancepolicies, contracts or other literature (i) the words "health maintenanceorganization" or "HMO" or (ii) any other words descriptive of a healthmaintenance organization or deceptively similar to the name or description ofany health maintenance organization then doing business in the Commonwealthin any manner that misrepresents the benefits, advantages, conditions, orterms of the converted insurer's insurance policies, contracts, or otherliterature.
E. For the purposes of handling the rehabilitation, liquidation, orconservation of a converted insurer, the provisions of Chapter 15 (§38.2-1500 et seq.) shall apply. Whenever an order has been entered pursuantto Chapter 15 authorizing the Commission or other receiver to proceed withthe rehabilitation, liquidation, or conservation of a converted insurer, theCommission may utilize the provisions of §§ 38.2-4310, 38.2-4317, and38.2-4317.1 to protect the interests of enrollees in the converted insurer'shealth care plans. If a receivership occurs in a converted insurer thatcontinues to provide or arrange for health care services under such healthcare plan or plans, contracts, or policies, the receiver shall consider theseplans, contracts, or policies as existing in the converted insurer. TheCommission or other receiver appointed pursuant to Chapter 15 shall allocatethe assets, liabilities, and obligations of the insolvent converted insurerin the manner that the Commission or other receiver determines is fair andequitable to the insurer's accident and sickness insurance policyholders,health care plan enrollees, and other creditors. The accident and sicknessinsurance contracts and policies issued by the converted insurer shall begoverned by the provisions applicable to the Virginia Life, Accident andSickness Insurance Guaranty Association pursuant to Chapter 17 (§ 38.2-1700et seq.). The health care plans, contracts, or policies of the convertedinsurer, associated with the business written as a health maintenanceorganization, shall be governed by the provisions of §§ 38.2-4310, 38.2-4317,and 38.2-4317.1.
(2007, c. 579.)