ASSEMBLY, No. 2455

STATE OF NEW JERSEY

INTRODUCED NOVEMBER 7, 1996

By Assemblyman CARABALLO

An Act concerning the conversion of a health service corporation to a domestic insurer and amending P.L.1995, c.196.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. Section 3 of P.L.1995, c.196, s.3 (C.17:48E-47) is amended to read as follows:

    3. a. Upon the affirmative vote of the board of directors, the plan for conversion to domestic mutual insurer shall be filed with the commissioner for approval. The plan shall provide that the health service corporation shall transfer an amount equal to its total current asset value to a domestic non-profit corporation engaged in public service activities devoted to advancing access to health care and disease prevention, or to a receiver to be held for the benefit of the public pending the transfer of the assets to the non-profit corporation. A public hearing thereon shall be held within 30 days after the filing, with notice provided by publication in a manner satisfactory to the commissioner. At the expiration of 30 days after the public hearing, the commissioner shall approve the plan for filing or disapprove the plan. The commissioner shall approve the plan unless he finds the plan:

    (1) is contrary to law

    (2) would be detrimental to the safety or soundness of the proposed domestic mutual insurer; or

    (3) prejudices the interests of the subscribers of the health service corporation or treats them inequitably.

    The commissioner shall set forth his decision in writing and shall state the reasons therefor. A disapproval shall be subject to judicial review.

    b. Upon approval of such a plan by the commissioner , the transfer of an amount equal to the total current asset value of the health service corporation required pursuant to subsection a. of this section, and the issuance of a certificate of authority to transact the business of health insurance as a domestic mutual insurer, the health service corporation shall be deemed to be a domestic mutual insurer subject to the provisions of Title 17B of the New Jersey Statutes. All the rights, franchises and interests of the health service corporation in and to every species of property, real, personal and mixed, and choses in action thereunto belonging, shall be deemed transferred to and vested in the domestic mutual insurer, without another deed or transfer and simultaneously therewith the domestic mutual insurer shall be deemed to have assumed all of the obligations and liabilities of the health service corporation and shall hold and enjoy the same to the same extent as if the health service corporation had continued to retain title and transact business.

    c. No action or proceedings pending at the time of the conversion of the health service corporation to a domestic mutual insurer to which the health service corporation may be a party shall be abated or discontinued by reason of such conversion, but the same may be prosecuted to final judgment in the same manner as if the conversion had not taken place, or the domestic mutual insurer may be substituted in place of such health service corporation by order of the court in which the action or proceedings may be pending.

    d. The contracts of the health service corporation shall be converted to the policies of the domestic mutual insurer without any further action on the part of the domestic mutual insurer. The conversion to a domestic mutual insurer shall not cause any individual health benefits plan issued prior to November 30, 1992 and still in effect to be subject to the provisions of sections 3 through 8 of P.L.1992, c.161 (C.17B:27A-4 through 17B:27A-9), except as specified in those sections, or any small employer health benefits plan issued prior to November 30, 1992 and still in effect to be subject to the provisions of section 3 of P.L.1992, c.162 (C.17B:27A-19).

    e. A domestic mutual insurer that has converted from a health service corporation may apply to the commissioner for a temporary waiver of the capital and surplus requirements pursuant to sections 2 through 6 of P.L.1993, c.235 (C.17B:18-68 through 17B:18-72). The commissioner may grant such a waiver for a period not to extend beyond December 31, 1999.

(cf: P.L.1995, c.196, s.3)

    2. This act shall take effect immediately.

STATEMENT

    This bill requires that, upon approval by the Commissioner of Banking and Insurance of the conversion of Blue Cross/Blue Shield of New Jersey from a non-profit health service corporation to a domestic mutual insurer, an amount equal to the total current asset value shall be transferred to a non-profit corporation engaged in public service activities devoted to advancing access to health care and disease prevention, or to a receiver to be held for the benefit of the public pending the transfer of the assets to the non-profit corporation.

Requires divestiture of certain assets in conversion of health service corporation to mutual insurer.