Arkansas Code OF 1987 Annotated SUPPLEMENT 2011 VOLUME 24A Place in pocket of bound volume Prepared by the Editorial Staffofthe Publisher Under the Direction and Supervision ofthe ARKANSAS CODE REVISION COMMISSION Senator David Johnson, Chair Senator Sue Madison Representative John Vines Representative Darrin Williams Honorable Bettina E. Brownstein Honorable Don Schnipper Honorable David R. Matthews Honorable Stacy Leeds, Dean, University ofArkansas at Fayetteville, School ofLaw Honorable John DiPippa, Dean, University ofArkansas at Little Rock, School ofLaw Honorable Warren T. Readnour, SeniorAssistant Attorney General Honorable Marty Garrity, Assistant Director for Legal Services of the Bureau ofLegislative Research LexisNexis@ © Copyright 2005, 2007, 2009, 2011 BY The State ofArkansas All Rights Reserved LexisNexis and the Knowledge Burst logo are registered trademarks, Michie is a trademark of Reed Elsevier Properties Inc. used under license. Matthew Bender is a registered trademark of Matthew BenderProperties Inc. For information about this Supplement, see the Supplementpamphletfor Volume 1 5051519 ISBN 978-0-327-10031-7 (Code set) ISBN 978-0-8205-8504-8 (Volume 24A) LexisNexis* Matthew Bender & Company, Inc. 701 East Water Street, Charlottesville, VA 22902 www.lexisnexis.com (Pub.40604) TITLE 23 PUBLIC UTILITIES AND REGULATED INDUSTRIES (CHAPTERS 1-29 IN VOLUME 22; CHAPTERS 30-59 IN VOLUME 23A; CHAPTERS 60-73 IN VOLUME 23B; CHAPTERS 88-115 IN VOLUME 24B) SUBTITLE INSURANCE 3. CHAPTER. 74. FRATERNAL BENEFIT SOCIETIES. 75. HOSPITALAND MEDICAL SERVICE CORPORATIONS. HEALTH MAINTENANCE ORGANIZATIONS. 76. 77. AUTOMOBILE CLUBS ORASSOCIATIONS. 78. BURIALASSOCIATIONS. 79. INSURANCE POLICIES GENERALLY. 81. LIFE INSURANCE POLICIESANDANNUITIES. 83. GROUP LIFE INSURANCEANDANNUITIES. 84. STANDARD VALUATION LAW FOR LIFE INSURANCE ANDANNUITIES. 85. ACCIDENT AND HEALTH INSURANCE. 86. GROUP AND BLANKETACCIDENT AND HEALTH INSURANCE. SUBTITLE INSURANCE 3. CHAPTER 74 FRATERNAL BENEFIT SOCIETIES subchapter. 5. Financial. 7. Miscellaneous. — Subchapter 1 Structure and Purpose 23-74-101. Fraternal benefit society defined. RESEARCH REFERENCES Ark. L. Notes. Sampson, Nonprofit Risk; Nonprofit Insurance, 2008 Ark. L. Notes 83. — Subchapter 5 Financial SECTION. 23-74-502. Funds. 23-74-502 PUBLIC UTILITIES AND REGULATED INDUSTRIES 2 23-74-502. Funds. (a) All assets shall be held, invested, and disbursed for the use and benefit of the society, and no member or beneficiary shall have or acquire individual rights therein or become entitled to any apportion- ment on the surrender of any part thereof, except as provided in the benefit contract. (b) A society may create, maintain, invest, disburse, and apply any special fund or funds necessary to carry out any purpose permitted by the laws ofthe society. (c)(1) Pursuant to resolution ofits supreme governingbody, a society may establish and operate one (1) or more separate accounts and issue contracts on avariable basis, subject to the provisions oflaw regulating life insurers establishing such accounts and issuing such contracts as provided in § 23-81-401 et seq. (2) To the extent the society deems it necessary in order to comply with any applicable federal or state laws, or any rules issued thereun- der, the society may: (A) Adopt special procedures for the conduct of the business and affairs of a separate account; (B) For persons havingbeneficial interests therein, provide special voting and other rights, including, without limitation, special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee to manage the business and affairs ofthe account; and (C) Issue contracts on avariable basis towhich § 23-74-404(b) and (d) shall not apply. History. Acts 1989, No. 881, § 1. ing set out to reflect a correction in the Publisher's Notes. This section is be- subdivision (c)(2)(C) designation. — Subchapter 7 Miscellaneous SECTION. 23-74-703. Penalties. 23-74-703. Penalties. Any person who: (1) Willfully makes a false or fraudulent statement: (A) In or relating to an application for membership or for the purpose of obtaining money from or a benefit in any society upon conviction shall be guilty of a Class A misdemeanor; or (B) In any verified report or declaration under oath required or authorized by this chapter or ofany material fact or thing contained in a sworn statement concerning the death or disability ofa member for that purpose of procuring payment of a benefit named in the certificate shall be guilty of a Class C misdemeanor; (2) Solicits membership for or in any manner assists in procuring membership in anysocietynotlicensed to dobusiness in this state shall 3 HOSPITALAND MEDICAL SERVICE CORPORATIONS 23-75-102 be guilty ofa violation and upon conviction shall be fined not less than fifty dollars ($50.00) nor more than two hundred dollars ($200); or (3) Is guilty of a willful violation of or neglect or refusal to comply with this chapter for which a penalty is not otherwise prescribed shall be guilty ofaviolation and upon conviction shall be subject to a fine not exceeding one thousand dollars ($1,000). History. Acts 1989, No. 881, § 1; 2005, No. 1994, § 356. CHAPTER 75 HOSPITAL AND MEDICAL SERVICE CORPORATIONS SECTION. SECTION. 23-75-102. Applicability o—fother laws. 23-75-111. Subscription contracts. 23-75-106. Incorporation Amendments to articles or bylaws. 23-75-101. Definition. RESEARCH REFERENCES Ark. L. Notes. Sampson, Nonprofit Risk; Nonprofit Insurance, 2008 Ark. L. Notes 83. 23-75-102. Applicability of other laws. The corporations described in § 23-75-101 are subject to the follow- ingchapters andprovisions ofthis code, tothe extent applicable andnot in conflict with the expres—s provisions ofthis chapter: (1) Sections 23-60-101 23-60-108 and 23-60-110, referringto scope ofcode; (2) Section 23-61-101 et seq., § 23-61-201 et seq., and § 23-61-301 et seq., referring to the Insur—ance Commissioner; — (3) Secti—ons 23-63-102 23-63-104, 23-63-201 23-63-216, and 23-63-301 23-63-304, referringtoregistrationofregistered agents for service ofprocess; (4) Section 23-63-901 et seq., referring to administration ofdeposits; (5) Section 23-63-1501 et seq., referring to risk-based capital; (6) Section 23-64-101 et seq., referring to insurance producers, agents, brokers, and adjusters; — (7)—Section 23-66-201 et seq. and §§ 23-66-301 23-66-306, 23-66- 308 23-66-311, 23-66-313, and 23-66-314, referringto trade practices and frauds; — (8) Section 23-63-601 et seq. and §§ 23-84-101 23-84-111, refer- ring to assets and liabilities; (9) Section 23-68-101 et seq., referring to rehabilitation and liquida- tion; (10) Section 23-69-142, referring to mergers and acquisitions; 23-75-106 PUBLIC UTILITIES AND REGULATED INDUSTRIES 4 — (11) Sections 23-85-101 23-85-131, referring to accident and health insurance policies; — (12) Sections 23-86-101 23-86-104, 23-86-106, 23-86-108, and 23-86-109, referring to group and blanket accident and health insur- ance; — — (13—) Sections 23-79-101 23-79—-107, 23-79-109 23-79-128, 23-79- 131 23-79-134, and 23-79-202 23-79-210, referring to insurance contracts; (14) Section 23-69-134, referring to home office and records; penalty for unlawful removal ofrecords; and (15) Section 23-69-156, referring to extinguishment ofunused corpo- rate charters. History. Acts 1959, No. 148, § 690; section head; substituted "described in 1971, No. 127, § 2; 1977, No. 789, § 8; § 23-75-101 are" for "shall also be" in the 1981, No. 809, §§ 18-20; 1983, No. 522, introductory language; inserted present §§ 37, 38; A.S.A. 1947, § 66-4920; Acts (5) and (10) and redesignated the remain- 2001, No. 580, § 21; 2001, No. 1454, § 2; ing subdivisions accordingly; substituted 2001, No. 1604, § 75; 2011, No. 760, § 12. "and §§ 23-66-301" for "23-66-301" in (7); Amendments. The 2011 amendment and substituted "§§ 23-84-101" for "23- substituted "laws" for "provisions" in the 84-101" in (8). — 23-75-106. Incorporation Amendments to articles or bylaws. (a) Any corporation shall hereafter be organized under the laws of this state relating to private corporations not for pecuniary profit, insofar as the laws are not inconsistent with this chapter. (b)(1) Upon adoption ofan amendment to its articles ofincorporation or bylaws, the corporation shall make in duplicate under its corporate seal a certificate settingforth the amendment and the date and manner ofits adoption. (2) The certificate shall be: (A) Executed by the corporation's president or vice president and secretary or assistant secretary; and (B) Acknowledged before an officer authorized by law to take acknowledgments ofdeeds. (3) The corporation shall deliver to the Insurance Commissioner: (A) A duplicate original ofthe certificate; and (B)(i) The filing fee that is: (a) Specified in § 23-61-401; or (b) Established by rule ofthe commissioner, (ii) The filing fee is not refundable. (4) Ifthe commissioner finds that the certificate and the amendment comply with the law, the commissioner shall: (A) Endorse his or her approval upon each of the duplicate origi- nals; (B) Place one (1) set on file in his or her office; and (C) Return the remaining set to the corporation for its corporate records. 5 HOSPITALAND MEDICAL SERVICE CORPORATIONS 23-75-111 (5) The amendment shall be effective when the commissioner has endorsed his or her approval on the certificate. (6) If the commissioner finds that the proposed amendment or certificate does not comply with the law, the commissioner shall: (A) Not approve the certificate; (B) Return the duplicate certificate to the corporation with his or her written statement of reasons for not approving the certificate; and (C) Retain the filing fee. History. Acts 1959, No. 148, § 673; added (b), redesignated the remaining A.S.A. 1947, § 66-4903; Acts 2009, No. text accordingly, and made aminor stylis- 726, § 36. tic change. Amendments. The 2009 amendment 23-75-111. Subscription contracts. (a)(1) All rates charged bythe corporation to subscri—bers or classes of subscribers havingcontracts coveredby §§ 23-85-101 23-85-131, and the form and content of all contracts between the corporation and its subscribers, classes of subscribers, or groups of subscribers, and the certificates issued by the corporation representing their subscribers' agreements shall be subject at all times to the prior approval of the Insurance Commissioner. (2) Application for approval shall be made to the commissioner in such form and shall set forth such information as the commissioner may require. (3) Rates shall not be excessive, inadequate, or unfairly discrimina- tory in relation to the services offered. (4)(A) Upon the commissioner's review ofan application at any time, if the applicant requests a hearing, the commissioner shall hold a hearingbefore issuing an order ofdisapproval. The applicant shall be given not less than ten (10) days' written notice ofthe hearing. The notice shall specify the matters to be considered at the hearing. (B) If after the hearing provided by subdivision (a)(4)(A) of this section the commissioner finds that the application or a part thereof does not meet the requirements ofthis code, the commissioner shall issue an order specifyinginwhat respects he or she finds that it fails. Notice thereof shall immediately be served on the applicant, either personally or by mail. Within thirty (30) days after the date ofsuch a notice, the applicant may apply to the Pulaski County Circuit Court to show cause why the action ofthe commissioner should be set aside and the application approved. (b)(1) In any hospital service corporation contract, any medical service corporation contract, or any hospital and medical service corporation contract, whether group or individual, that contains a provision whereby coverage of a dependent in a family group termi- nates at a specified age, there shall also be a provision that coverage of an unmarried dependentwho is incapable ofsustainingemployment by reason of mental retardation or physical disability, who became so 23-75-111 PUBLIC UTILITIES AND REGULATED INDUSTRIES 6 incapacitated prior to the attainment ofnineteen (19) years ofage and who is chiefly dependent upon the contract holder or certificate holder for support and maintenance, shall not terminate, but coverage shall continue so long as the contract or certificate remains in force and so long as the dependent remains in such a condition. (2) At the request and expense of the corporation, proof of the incapacity and dependency must be furnished to the corporation by the contract or certificate holder at least thirty-one (31) days before the child's attainment of the limiting age, and, subsequently, as may be required bythe corporation, but notmore frequentlythan annually, after the two-year period following the child's attainment ofthe limiting age. (c)(1) Each contract shall plainly state the services to which the subscriber is entitled and those to which the subscriber is not entitled under the plan. (2) As to benefits provided on a service, instead of cash indemnity basis, the contract shall constitute a direct obligation of the hospitals and physicians with which or with whom the corporation has con- tracted for hospital or medical services. A (3) copy ofthe contract shall be delivered to the subscriber. (d)(1) The commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements ofthis chapter. (2) Each filing shall be on file for a waiting period ofthirty (30) days before it becomes effective. The period may be extended by the commis- sioner for an additional period not to exceed thirty (30) days if the commissioner gives written notice within the waiting period to the insurer which made the filing that the commissioner needs such additional time for the consideration ofthe filing. (3) Upon written application by the insurer, the commissioner may authorize a filingwhichthe commissionerhas reviewed to become effective before the expiration ofthe waiting period or any extension thereof. (4) Afiling shall be deemed to meet the requirements ofthis chapter unless disapproved by the commissioner within the waiting period or any extension thereof. History. Acts 1959, No. 148, § 678 1983, No. 522, § 49; A.S.A. 1947, § 66- 1969, No. 263, § 5; 1971, No. 127, § 1 4908; Acts 1997, No. 208, § 25; 2005, No. 1975, No. 404, § 4; 1975, No. 642, § 2 1962, § 108. 1975, No. 649, § 4, 8; 1979, No. 906, § 1 CHAPTER 76 HEALTH MAINTENANCE ORGANIZATIONS SECTION. SECTION. — 23-76-102. Definitions. 23-76-105. Penalties Enforcement. 23-76-104. Arkansas Insurance Code sec- 23-76-110. Advisory board. tions applicable to health maintenance organiza- tions. HEALTH MAINTENANCE ORGANIZATIONS 23-76-102 Effective Dates. Acts 2005, No. 506, health plans to base their operations in § 54: Mar. 2, 2005. Emergencyclausepro- Arkansas, to promote economic growth, vided: "It is found and determined by the and to enhance consumer choices for General Assembly ofthe State ofArkan- health care coverage; that many states sas that the laws ofthis state as to insur- apply their insurance holding company ance regulation and the Governmental laws to a foreign health maintenance or- Bonding Board, among others, are inad- ganization doing business in the state if equatefortheprotectionofthepublic, and the health maintenance organization's the immediate passage ofthis act is nec- state of domicile does not have substan- tially similar laws, thus potentially sub- essaryinordertoprovidefortheadequate jectingahealthmaintenanceorganization protection of the public. Therefore, an domiciled in Arkansas and licensed in emergencyisdeclaredtoexistandthisact other states to multiple holding company beingimmediatelynecessaryforthe pres- filings and inconsistent approval pro- ervation ofthe public peace, health, and cesses; and that this act is immediately safety shall become effective on: (1) The necessary to attract insurers to the state date ofits approvalbythe Governor; (2) If by permitting the waiver of admission the bill is neither approved nor vetoed by requirements when appropriate and the the Governor, the expiration ofthe period allowance of health maintenance organi- of time during which the Governor may zations to elect to be subject to the Insur- veto the bill; or (3) Ifthe bill is vetoed by ance Holding Company Regulatory Act the Governor and the veto is overridden, andthusavoidduplicativeandpotentially thedatethelasthouseoverridestheveto." inconsistent regulation in other states. Acts 2007, No. 429, § 3: Mar. 22, 2007. Therefore, an emergency is declared to Emergency clause provided: "It is found exist and this act being immediately nec- and determined by the GeneralAssembly essary for the preservation of the public ofthe StateofArkansasthatthefailureof peace, health, and safety shall become state law to permit a waiver ofadmission effectiveon: (1)Thedateofits approvalby requirements based upon evidence of a the Governor; (2) If the bill is neither foreign insurer's prior successful opera- approved norvetoed by the Governor, the tions before licensure and failure to per- expiration of the period of time during mit health maintenance organizations to which the Governor may veto the bill; or be governed by the Insurance Holding (3) If the bill is vetoed by the Governor Company Regulatory Act hampers the and the veto is overridden, the date the ability of the state to attract additional last house overrides the veto." 23-76-101. Purpose. RESEARCH REFERENCES Ark. L. Notes. Sampson, Nonprofit Risk; Nonprofit Insurance, 2008 Ark. L. Notes 83. 23-76-102. Definitions. As used in this chapter: (1) "Commissioner" means the Insurance Commissioner; (2) "Domestic corporation" means any corporation organized pursu- ant to the Arkansas Business Corporation Act, § 4-26-101 et seq., and the Arkansas Nonprofit Corporation Act, § 4-28-201 et seq.; (3) "Enrollee" means an individualwho has been enrolled in ahealth care plan; 23-76-104 PUBLIC UTILITIES AND REGULATED INDUSTRIES 8 (4) "Evidence of coverage" means any certificate, agreement, con- tract, identification card, or document issued to an enrollee setting out the coverage to which the enrollee is entitled; (5) "Health care plan" means any arrangement whereby any person undertakes to provide, arrange for, payfor, orreimburse anypart ofthe cost ofanyhealth care services through anindividuallyunderwritten or group master contract, and at least part ofthe arrangement consists of arranging for, or the provision of, health care services as distinguished from mere indemnification against the cost ofthe services on a prepaid basis through insurance or otherwise; (6) "Health care services" means any services included in the fur- nishing to any individual ofmedical or dental care, or hospitalization, or services incident to the furnishing ofcare or hospitalization, as well as the furnishing to any person of all other services or goods for the purpose ofpreventing, alleviating, curing, or healing human illness or injury; (7) "Health maintenance organization" means any person which undertakes to provide or arrange for one (1) or more health care plans; (8) "Health professional" means physicians, dentists, optometrists, nurses, podiatrists, pharmacists, and other individuals engaged in the delivery of health services as are or may be designated under the Health Maintenance Organization Act of 1973 or any amendment thereto or regulation adopted thereunder; (9) "Person" means any natural or artificial person, including, but not limited to, individuals, partnerships, associations, trusts, or corpo- rations; and (10) "Provider" means any person who is licensed in this state to furnish health care services as a health professional. History.Acts 1975, No. 454, § 2;A.S.A. industryaswellaswidespreaddissemina- 1947, § 66-5202;Acts 1987,No.456, § 21; tion ofinformation concerning regulatory 2005, No. 1697, § 20. actions regarding insurance rates and in- A.C.R.C. Notes. Acts 2005, No. 1697, formation helpful to consumers in pur- § 1, provided: "Purpose. The GeneralAs- chasing and utilizing insurance coverage semblyrecognizesthatacompetitivemar- will assist Arkansans in purchasing, ket for insurance products is vital to Ar- maintaining, and utilizing wisely their kansans and that active competition in insurance coverages. Therefore, the pur- the insurance marketplace produces the pose ofthis act is to assist consumers by fairest and lowest rates over any given providing them the information and tools period of time. Furthermore, open and necessarytobe aninformed andeducated transparent regulation of the insurance consumer ofinsurance coverage." 23-76-104. Arkansas Insurance Code sections applicable to health maintenance organizations. (a) Except to the extent that the Insurance Commissioner deter- mines thatthe nature ofhealth maintenance organizations, health care plans, and evidences ofcoverage render such sections clearly inappro- priate, the following sections are applicable to health maintenance organizations: