74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
Enrolled
House Bill 2221
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
CHAPTER ................
AN ACT
Relating to discount medical plans; creating new provisions;
repealing ORS 689.565; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 to 12 of this 2007 Act are added to
and made a part of the Insurance Code. + }
SECTION 2. { + As used in sections 2 to 12 of this 2007 Act:
(1) 'Discount medical plan' means a contract, agreement or
other business arrangement between a discount medical plan
organization and a plan member in which the organization, in
exchange for fees, service or subscription charges, dues or other
consideration, offers or purports to offer the plan member access
to providers and the right to receive medical and ancillary
services at a discount from providers.
(2) 'Discount medical plan organization' means a person that
contracts on behalf of plan members with a provider, a provider
network or another discount medical plan organization for access
to medical and ancillary services at a discounted rate and
determines what plan members will pay as a fee, service or
subscription charge, dues or other consideration for a discount
medical plan.
(3) 'Licensee' means a discount medical plan organization that
has obtained a license from the Director of the Department of
Consumer and Business Services in accordance with section 5 of
this 2007 Act.
(4) 'Medical and ancillary services' means, except when
administered by or under contract with the State of Oregon, any
care, service, treatment or product provided for any dysfunction,
injury or illness of the human body including, but not limited
to, physician care, inpatient care, hospital and surgical
services, emergency and ambulance services, audiology services,
dental care services, vision care services, mental health
services, substance abuse counseling or treatment, chiropractic
services, podiatric care services, laboratory services, home
health care services, medical equipment and supplies or
prescription drugs.
(5) 'Plan member' means an individual who pays fees, service or
subscription charges, dues or other consideration in exchange for
the right to participate in a discount medical plan.
(6)(a) 'Provider' means a person that has contracted or
otherwise agreed with a discount medical plan organization to
Enrolled House Bill 2221 (HB 2221-A) Page 1
provide medical and ancillary services to plan members at a
discount from the person's ordinary or customary fees or charges.
(b) 'Provider' does not include:
(A) A person that, apart from any agreement or contract with a
discount medical plan organization, provides medical and
ancillary services at a discount or at fixed or scheduled prices
to patients or customers the person serves regularly; or
(B) A person that does not charge fees, service or subscription
charges, dues or other consideration in exchange for providing
medical and ancillary services at a discount or at fixed or
scheduled prices.
(7) 'Provider network' means a person that negotiates directly
or indirectly with a discount medical plan organization on behalf
of more than one provider that provides medical or ancillary
services to plan members. + }
SECTION 3. { + (1) A person may not conduct business as or
purport to conduct business as a discount medical plan
organization unless the person first obtains a license to operate
as a discount medical plan organization from the Director of the
Department of Consumer and Business Services in accordance with
section 5 of this 2007 Act.
(2) The license requirement set forth in subsection (1) of this
section does not apply to an insurer that offers a discount
medical plan. + }
SECTION 4. { + (1) A discount medical plan organization shall
have a written contract or other written agreement with all
providers or provider networks that the organization includes or
purports to include in a discount medical plan, or with an entity
that contracts with or enters into an agreement with a provider
network on the organization's behalf.
(2) The contract or other agreement between a discount medical
plan organization and a provider must include:
(a) A list of the medical and ancillary services included in
the discount medical plan;
(b) The provider's discount rate or rates or a schedule that
reflects the provider's fixed or discounted prices for the
medical and ancillary services subject to the discount medical
plan; and
(c) A provision in which the provider agrees not to charge plan
members more for medical and ancillary services than the amount
listed in the provider's price schedule or an amount that
reflects the application of the provider's discount rate.
(3) The contract or other agreement between a discount medical
plan organization and a provider network, or between an entity
and a provider network when the entity contracts with or enters
into an agreement with a provider network on the organization's
behalf, shall require the provider network to have written
agreements with providers that, in addition to meeting the
requirements of subsection (2) of this section:
(a) Authorize the provider network to contract with or enter
into an agreement with the discount medical plan organization or
the entity on behalf of the provider; and
(b) Require the provider network to maintain an up-to-date list
of the providers that are part of the provider network and to
provide the updated list each month to the discount medical plan
organization.
(4) A discount medical plan organization shall retain copies of
the contracts or agreements and other documents described in this
section at all times during which the organization operates in
this state. + }
Enrolled House Bill 2221 (HB 2221-A) Page 2
SECTION 5. { + (1) Each applicant for a license to operate as
a discount medical plan organization shall apply to the Director
of the Department of Consumer and Business Services in a form and
manner that the director prescribes by rule. An application for a
license under this section must contain all of the following:
(a) The applicant's name, fictitious name, assumed business
name and any other identity the applicant uses in conducting
business.
(b) The applicant's business address, mailing address,
electronic mail address and the Internet address of any website
the applicant maintains for public access.
(c) The applicant's federal employer identification number or
Internal Revenue Service taxpayer identification number.
(d) The applicant's principal place of business inside or
outside this state.
(e) The name of and contact information for a person that the
applicant has designated to provide information to consumers or
answer consumer questions.
(f) The name and address of the applicant's agent for the
service of process, notice or demand, or a power of attorney that
the applicant has executed and by which the applicant appoints
the director as the applicant's agent for the service of process,
notice or demand.
(g) A list of individual providers or providers included in the
provider network that provide services in this state and a list
of the medical and ancillary services the applicant offers or
intends to offer to plan members as part of a discount medical
plan or the Internet address of a website that lists the
providers and services offered.
(h) A list of the persons that the applicant has authorized or
intends to authorize to market a discount medical plan in this
state under a name that is different from the applicant's name.
(i) The name, trade name, service mark or other means by which
a consumer can identify the discount medical plan the applicant
offers or intends to offer and any different name, trade name,
service mark or other means the applicant uses to identify the
same discount medical plan to persons other than consumers.
(j) A statement that discloses:
(A) Any criminal conviction in the five-year period before the
date of application involving the applicant, a member of the
board of directors or an officer of the applicant and any person
owning or having the right to acquire 10 percent or more of the
voting securities of the applicant; and
(B) Any pending investigation into the applicant's business
activities brought by a licensing, regulatory or law enforcement
authority in any jurisdiction.
(k) A statement in which the applicant agrees to submit to the
personal jurisdiction of the courts of this state.
(L) A statement that discloses any instance in which another
jurisdiction has denied the applicant a license or other
authority to operate as a discount medical plan organization or
has suspended or revoked any such license or other authority
after issuance.
(m) Other information the director may require that enables the
director, after reviewing all of the information submitted under
this subsection, to determine whether the applicant:
(A) Is financially responsible;
(B) Has adequate experience and expertise to operate a discount
medical plan organization; and
(C) Is of good character.
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(2) Upon receipt of a completed application for a license to
operate as a discount medical plan organization, the director may
investigate the applicant as necessary to verify the information
contained in the application. Except as provided in subsection
(3) of this section, if the director is satisfied that the
information contained in the application is accurate and
complete, the director shall issue a license to the applicant.
(3) The director may deny a license to any applicant if the
director finds in writing that:
(a) The applicant has provided false, misleading, incomplete or
inaccurate information in the application; or
(b) The applicant is not qualified to operate as a discount
medical plan organization because the applicant is not
financially responsible, does not have adequate experience or
expertise, or has engaged in dishonest, fraudulent or illegal
practices or conduct in any business or profession.
(4) If the director denies a license under this section, the
applicant may request a hearing under ORS 183.435. Upon receiving
the applicant's request, the director shall grant the applicant a
hearing under ORS 183.413 to 183.470. + }
SECTION 6. { + A licensee shall:
(1) Notify the Director of the Department of Consumer and
Business Services immediately whenever the licensee's license or
other form of authority to operate as a discount medical plan
organization in another jurisdiction is suspended, revoked or not
renewed in that jurisdiction.
(2) Describe in a notice to the director any change in the
name, address or contact information of the discount medical plan
organization provided in the application under section 5 of this
2007 Act within 30 days after making the change. + }
SECTION 7. { + A license obtained under section 5 of this 2007
Act is effective for one year, or for a longer period if the
Director of the Department of Consumer and Business Services so
prescribes by rule. The director shall prescribe by rule
conditions and procedures under which a licensee may renew a
license that has expired. + }
SECTION 8. { + A discount medical plan organization shall
establish or provide, in connection with every discount medical
plan:
(1) A 30-day period in which new plan members may review the
discount medical plan and decide whether to continue or to cancel
the plan for any reason. The discount medical plan organization
shall provide to a member who cancels a discount medical plan
within the 30-day period a full and unconditional refund for any
fees, service or subscription charges, dues or other
consideration the member paid, except that the discount medical
plan organization may retain the amount of any one-time
processing fee that is less than an amount established by the
Director of the Department of Consumer and Business Services by
rule. The 30-day period begins on the day following the date on
which the member completed any application for the plan or the
day following the date on which the member paid any fees, service
or subscription charges, dues or other consideration, whichever
is later.
(2) A standard set of procedures by which a new plan member may
obtain a refund under subsection (1) of this section.
(3) A toll-free telephone line and an Internet website. The
toll-free telephone line must enable plan members to contact the
discount medical plan organization with questions and requests
for assistance. The website must list all providers in the
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organization's provider network, and the organization must
provide the same information to plan members in writing upon
request.
(4) Disclosures, in writing in a font not less than 12 points
in size and on the first content page of advertisements,
marketing materials or brochures made available to the public and
relating to a discount medical plan, that:
(a) The discount medical plan is not insurance; and
(b) Plan members must pay for all medical and ancillary
services, but will receive a discount from providers. + }
SECTION 9. { + (1) A person may not use or disseminate in
marketing, advertising, promotional, sales or plan documents or
other informational materials for discount medical plans or in
communications with plan members or prospective plan members:
(a) Misleading, deceptive or false statements; or
(b) The terms 'health plan,' 'coverage,' 'copay, ' '
copayments,' 'deductible,' 'preexisting condition, ' ' guaranteed
issue,' 'premium,' 'preferred provider organization' or other
terms in a manner that could reasonably mislead an individual
into believing that the discount medical plan is insurance.
(2) For the purposes of subsection (1) of this section, '
misleading, deceptive or false statements' includes, but is not
limited to, statements that:
(a) Are misleading in fact or implication, including statements
that, while containing truthful elements, conceal or omit
information necessary or relevant for a consumer to make informed
decisions concerning discount medical plans; or
(b) Have a capacity or tendency to mislead or deceive based on
the overall impression a reasonable consumer may form after
seeing or hearing the statements.
(3) A person may not represent in any marketing, advertising,
promotional, sales or plan documents or other informational
materials for a discount medical plan or in communications with
plan members or prospective plan members that the State of Oregon
reviews or approves the discount medical plan.
(4) Before a person uses an advertisement, a brochure, a
discount card or promotional or marketing material for marketing,
promoting, selling or distributing a discount medical plan, the
discount medical plan organization shall approve the material in
writing.
(5) At the request of the Director of the Department of
Consumer and Business Services, a discount medical plan
organization shall submit to the director an advertisement, a
brochure, a discount card or promotional or marketing material
used for marketing, promoting, selling or distributing a discount
medical plan. + }
SECTION 10. { + The Director of the Department of Consumer and
Business Services may investigate a person operating or
purporting to operate as a discount medical plan organization and
may require the person at any time to produce marketing,
promotional and advertising materials, records, books, files or
other information the person uses in conducting business as a
discount medical plan organization. During an investigation, the
person shall respond to the director's inquiries promptly and
truthfully and in the manner or form the director requires. The
person subject to an investigation under this section shall pay
the expenses incurred in conducting the investigation. + }
SECTION 11. { + (1) The Director of the Department of Consumer
and Business Services by order may suspend, revoke or refuse to
Enrolled House Bill 2221 (HB 2221-A) Page 5
renew a license issued under section 5 of this 2007 Act if the
director finds in writing that:
(a) Any fact or condition exists that, if the fact or condition
had existed at the time the licensee applied for a license to
operate as a discount medical plan organization, would have been
grounds for the director to deny a license to the licensee;
(b) The licensee has not complied or is not complying with the
licensee's obligations under section 4, 5, 6, 8 or 10 of this
2007 Act or any rule adopted thereunder or the licensee has
violated or is violating a prohibition under section 9 of this
2007 Act; or
(c) The licensee's license or other authority to operate as a
discount medical plan organization in another state has been
suspended or revoked or has not been renewed.
(2) A licensee subject to an order of the director suspending
or revoking a license shall have an opportunity for a hearing
under ORS 183.413 to 183.470.
(3) After the director issues a final order to suspend or
revoke a license, the person subject to the order may not conduct
further business as a discount medical plan organization in this
state. Immediately after the director issues a final order
suspending or revoking a license, the person subject to the order
shall:
(a) Cease operations as a discount medical plan organization in
this state;
(b) Cancel all pending transactions with plan members and
refund any fees, service or subscription charges, dues or other
consideration collected in exchange for services the person would
have provided to plan members in connection with a discount
medical plan after the effective date of the final order
suspending or revoking the person's license; and
(c) Wind up all business conducted in connection with the
person's operations as a discount medical plan organization in
this state, if necessary. + }
SECTION 12. { + (1) A person, a municipal or other public
corporation or, at the request of the Director of the Department
of Consumer and Business Services, the Attorney General may bring
an action in a circuit court of this state against a person that
operates or purports to operate as a discount medical plan
organization but that has not obtained a license under section 5
of this 2007 Act, to:
(a) Enjoin the person from operating or purporting to operate
as a discount medical plan organization or from violating section
8 or 9 of this 2007 Act or any rule adopted thereunder; or
(b) Recover actual damages or statutory damages under this
section that arise from the person's violation of section 8 or 9
of this 2007 Act or any rule adopted thereunder.
(2) A plaintiff may bring an action under this section in the
county where:
(a) The plaintiff resides or conducts business; or
(b) The defendant marketed, offered for sale or sold, promoted,
distributed or advertised a discount medical plan.
(3) If the court finds that the defendant has violated section
3, 8 or 9 of this 2007 Act or any rule adopted thereunder, the
court shall enjoin the defendant from continuing the violation.
(4) Unless a plaintiff seeks actual or statutory damages under
this section, the plaintiff need not allege or prove actual
damages to bring an action for an injunction under this section.
Enrolled House Bill 2221 (HB 2221-A) Page 6
(5) In addition to injunctive relief, the plaintiff who
prevails in an action brought under this section is entitled to
recover from the defendant:
(a) $100 for each discount medical plan membership sold or
otherwise distributed within this state or $10,000, whichever is
greater;
(b) Three times the amount of actual damages, if any, that the
plaintiff sustained;
(c) Reasonable attorney fees;
(d) Costs; and
(e) Any other relief the court deems proper.
(6) A plaintiff must commence an action under this section
within two years after the date on which the violation described
in subsection (1) of this section occurred or within two years
after the plaintiff bringing the action discovered or in the
exercise of reasonable diligence should have discovered the
violation. The plaintiff may have an additional 180 days after
the two-year period provided in this subsection within which to
commence an action if the plaintiff can prove by a preponderance
of the evidence that the plaintiff failed to timely commence the
action because of conduct by the defendant calculated solely to
induce the plaintiff to refrain from or postpone commencement of
the action.
(7) The remedies provided in this section are cumulative and
are in addition to any other applicable criminal, civil or
administrative penalties. + }
SECTION 13. { + ORS 689.565 is repealed. + }
SECTION 14. { + Sections 2 to 12 of this 2007 Act apply to any
person conducting business as a discount medical plan
organization, as defined in section 2 of this 2007 Act, on or
after the operative date of this 2007 Act. + }
SECTION 15. { + Sections 1 to 12 of this 2007 Act and the
repeal of ORS 689.565 by section 13 of this 2007 Act become
operative on July 1, 2008. + }
SECTION 16. { + The Director of the Department of Consumer and
Business Services may take any action before the operative date
of sections 1 to 12 of this 2007 Act and the repeal of ORS
689.565 by section 13 of this 2007 Act that is necessary to
enable the director to exercise, on and after the operative date
of sections 1 to 12 of this 2007 Act and the repeal of ORS
689.565 by section 13 of this 2007 Act, all the duties, functions
and powers conferred on the director by sections 1 to 12 of this
2007 Act. + }
SECTION 17. { + This 2007 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2007 Act takes effect on
its passage. + }
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Enrolled House Bill 2221 (HB 2221-A) Page 7
Passed by House April 10, 2007
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate May 15, 2007
...........................................................
President of Senate
Enrolled House Bill 2221 (HB 2221-A) Page 8
Received by Governor:
......M.,............., 2007
Approved:
......M.,............., 2007
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2007
...........................................................
Secretary of State
Enrolled House Bill 2221 (HB 2221-A) Page 9