US Laws, Codes, Statutes & Cases

                                  TITLE  41
                                  INSURANCE
                                  CHAPTER 28
                    ORGANIZATION AND CORPORATE PROCEDURES
                         OF STOCK AND MUTUAL INSURERS
    41-2854A.  MUTUALIZATION OF SERVICE CORPORATIONS. (1) Every corporation
organized or existing under chapter 34, title 41, Idaho Code, as a hospital
service corporation, a combined professional service and hospital service
corporation, or a professional service corporation whose articles of
incorporation specify participant licensee services are to be provided by
physicians or surgeons, of either medicine and surgery or of osteopathic
medicine and surgery, shall file with the director of the department of
insurance a plan of mutualization on or before January 1, 1995. Any other
corporation organized under chapter 34, title 41, Idaho Code, may at any time
file a plan of mutualization. Any corporation organized under chapter 34,
title 41, Idaho Code, may hereafter be referred to in this section as a
"service corporation." The director of the department of insurance shall
approve any plan of mutualization so filed, and forthwith issue a certificate
of authority to the filing corporation to transact insurance in this state
pursuant thereto, if:
    (a)  Except as herein provided and except as consistent with or implicit
    in the conversion of the service corporation to a mutual insurer, the plan
    does not deprive existing corporate members of statutory rights expressly
    set forth in chapter 34, title 41, Idaho Code;
    (b)  The plan has been approved by the corporation's board of directors;
    (c)  The corporation satisfies the minimum surplus or deposit requirements
    of this title for the type or types of mutual insurer to which it will
    convert, as specified by the corporation in its plan; and
    (d)  The plan requires the corporation to honor subscribers' existing
    contractual rights in their subscriber agreements as if the corporation
    had not been converted to a mutual insurer. Approval by the service
    corporation's board of directors of the plan of mutualization shall be
    sufficient and effective without the approval or vote of the service
    corporation's members, notwithstanding any other provision of law to the
    contrary or of the service corporation's bylaws or articles of
    incorporation. The filing of such a board-approved plan, together with the
    issuance by the director of the department of insurance of a certificate
    of authority, shall constitute legal authority, effective from and after
    the effective date of the plan, specified in the plan, for the corporation
    to transact insurance in Idaho as a nonprofit mutual insurer pursuant to
    such plan.
    (2)  A plan of mutualization shall provide that, from and after its
effective date, the corporation's reserves shall not be used for any purpose
or distributed in any manner contrary to this title. A plan of mutualization
shall also provide for a "transition period" commencing with the plan's
effective date and ending with a date identified as the "transition period
termination date," which shall be a date not later than the first anniversary
of the effective date of such plan. Prior to the expiration of the transition
period, the corporation's reserves shall not be used for any purpose or
distributed in any manner contrary to section 41-3421, Idaho Code. Following
conversion, the corporation shall continue to be a nonprofit corporation;
provided however, the board of directors of a mutualized service corporation
may from time to time declare, apportion, and pay or credit to the
corporation's members dividends pursuant to this title if the corporation's
articles of incorporation (as amended, if applicable, in conjunction with the
filing or after the effective date of its plan of mutualization) expressly so
provide. Notwithstanding any other provision of law to the contrary, no
corporation (including by way of illustration and not limitation, any direct
or indirect successor corporation or entity, by merger or acquisition of
substantially all its assets) mutualizing under this section shall, in the
event of its dissolution, distribute any of its assets except as provided by
its articles of incorporation in effect immediately before the effective date
of its plan of mutualization; nor shall any such corporation take or fail to
take any action that would prevent it from making such distributions at the
time of its dissolution.
    (3)  From and after the transition period termination date, the
obligations of participant hospitals, participant physicians, and other
licensees under sections 41-3415, 41-3415A, 41-3416 and 41-3431, Idaho Code,
and all voting rights held by participant hospitals, participant physicians,
and any other participant licensees by virtue of participant status under
chapter 34, title 41, Idaho Code, shall be extinguished, but until such
transition period termination date, they shall retain such voting rights and
obligations as they held and for which they were accountable prior to
mutualization hereunder, including duties and responsibilities to the
corporation and its subscribers. Each policyholder of a policy issued on or
after such plan's effective date shall have all the rights and liabilities of
a member of a mutual insurer under the policy, under the corporation's
articles of incorporation and bylaws, and as provided by law. Before such
transition period termination date, the corporation shall replace, convert by
agreement with subscribers, or allow to lapse pursuant to their express terms
all subscriber agreements, so that from and after such transition period
termination date the corporation shall have no subscriber agreements in force.
From and after the effective date of its plan of mutualization, the
corporation shall issue no subscriber agreements, but shall be authorized to
accept applications for and to issue insurance policies of the kind or kinds
specified by the plan and the corporation is qualified to issue pursuant to
law.
    (4)  The service corporation shall file with the director of the
department of insurance, as part of its plan of mutualization, amended bylaws
and articles of amendment to articles of incorporation, approved by its board
of directors, which articles and bylaws shall conform in all respects with the
requirements of this chapter and any applicable rules duly promulgated
hereunder, and shall become effective on the effective date of such plan.
Approval by the service corporation's board of directors of such amendments to
its articles and bylaws shall be sufficient and effective without the approval
or vote of the corporation's members, notwithstanding any contrary provision
of law or of the service corporation's bylaws or articles of incorporation.
Pursuant to the Idaho nonprofit corporation act, the service corporation shall
also file with the Idaho secretary of state articles of amendment to its
articles of incorporation.
    (5)  For the period ending on the transition period termination date, the
corporation's plan of mutualization and its articles of incorporation and
bylaws may contain provisions the corporation's board of directors, in the
exercise of its discretion and in fulfillment of its duties, deems necessary,
convenient or prudent to implement the plan of mutualization, including, but
not limited to, transition provisions, expressly identified as such, that
allocate voting power among policyholder members, participant licensees and
participant hospitals, as applicable and as the board of directors may deem
reasonably appropriate; provided however, all transition provisions, whether
in the corporation's articles of incorporation, bylaws or plan of
mutualization, shall, without further action or filing, expire upon the
transition period termination date.
    (6)  Within forty-two (42) days of the filing date of a corporation's plan
of mutualization, the director  shall approve the same and issue a certificate
of authority to the corporation unless the director finds such plan does not
comply with subsection (1) of this section, in which case the director shall
within such forty-two (42) day period issue a written order disapproving such
plan and specifying the reasons therefor. The corporation may preserve the
legal effectiveness and effective date of its plan by curing or otherwise
responsibly addressing each asserted deficiency identified by the director and
filing within fourteen (14) days of the effective date of the director's order
an amended plan of mutualization that reflects corrections and responses made.
Within fourteen (14) days of such filing, the director shall issue a
certificate of authority or a final order disapproving such amended plan and
specifying the reasons therefor, which final order may, within forty-two (42)
days after its effective date, be appealed to the district court for Ada
county, state of Idaho. Notwithstanding the director's final order, the
corporation shall be legally authorized to transact business pursuant to its
plan of mutualization until the forty-second day following the latest of:
    (a)  The effective date of the director's final order;
    (b)  The entry of final judgment by the district court in which review of
    the director's final order has been sought; and
    (c)  The director's compliance and the district court's compliance (by
    entry of a final judgment) with the opinion issued by the last appellate
    court to which appeal may be taken that has reviewed the district court's
    judgment concerning the director's final order. If the director has
    prevailed upon final judgment being entered, the corporation's legal
    authority to transact business pursuant to its plan of mutualization shall
    expire at the end of such period; however, if the corporation has
    prevailed or corrected all deficiencies identified in the director's final
    order, the director shall, before or upon the expiration of such period,
    issue a certificate of authority to the corporation. Issuance of a
    certificate of authority under this section shall not preclude the
    director from commencing any proceedings for alleged violations of this
    title. The procedure in this subsection shall apply to corporations
    existing under chapter 34, title 41, Idaho Code, on December 31, 1993.
    (7)  Section 41-2805, Idaho Code, and any other provision of this title
dealing with newly organized mutual insurers as such, shall have no
application to a plan of mutualization under this section or to the
corporation adopting or implementing such plan.
    (8)  If, pursuant to section 41-3406, Idaho Code, a mutualizing service
corporation is also operating as a health maintenance organization immediately
prior to the effective date of its plan of mutualization, it shall be legally
authorized to continue such operations in the manner provided for in said plan
after the effective date thereof as if such service corporation had not become
a mutual insurer under this section.
    (9)  From and after the effective date of a plan of mutualization, a
corporation mutualizing under this section shall be liable for the tax imposed
and provided for in section 41-402, Idaho Code, but only with respect to
insurance policies (as opposed to subscriber agreements) issued by it, and
subject to refunds, reductions and other adjustments applicable to other
domestic mutual insurers. Until all subscriber agreements are terminated,
expire or are otherwise converted to policies of insurance issued by the
corporation as a mutual insurer, the corporation shall continue to be liable
for and pay the tax on subscriber contracts in the manner provided in section
41-3427, Idaho Code, subject to the same exemptions provided in that section,
except for premium taxes paid pursuant to this subsection on policies issued
as a mutual insurer.
    (10) Except as modified in this section and other applicable law, after
the effective date of a service corporation's plan of mutualization, all
contracts, rights, powers, privileges, liabilities and obligations of such
corporation shall continue unchanged and in effect until repealed, terminated,
canceled, amended, waived, satisfied or otherwise legally extinguished.