                                 CODE OF VIRGINIA

CONVERSION OF A HEALTH MAINTENANCE ORGANIZATION TO AN ACCIDENT AND SICKNESS
INSURER (§ 38.2-1016.1)

A. Any health maintenance organization domiciled in the Commonwealth and subject
to the provisions of Chapter 43 (&#xA7; 38.2-4300 et seq.) may, at its option
and without reincorporation, convert to an insurer licensed to write accident
and sickness insurance, hereinafter referred to as the &#8220;converted
insurer,&#8221; by following the procedures set forth in this section. A health
maintenance organization that becomes a converted insurer under this section
shall have all of the rights to and titles and interests in the assets of the
original health maintenance organization, as well as all of its liabilities and
obligations.

B. A health maintenance organization eligible to become a converted insurer
under subsection A may effect such conversion by (i) complying with the
requirements for formation of a domestic insurer under Article 1 (&#xA7;
38.2-1000 et seq.); (ii) promptly filing with the Commission any necessary
amendments to its articles of incorporation, bylaws, and other corporate
documents pursuant to the provisions of Chapter 9 (&#xA7; 13.1-601 et seq.) of
Title 13.1; and (iii) filing with the Commission such other information as the
Commission may require to meet all of the requirements of an insurer in
Virginia. When those requirements have been met, the Commission shall issue a
license in accordance with the provisions of Article 5 (&#xA7; 38.2-1024 et
seq.) to permit the converted insurer to conduct the business of accident and
sickness insurance in the Commonwealth. Upon the issuance of the converted
insurer&#8217;s license, and except as provided in this section, the converted
insurer shall be subject to all of the provisions of this title that pertain to
insurers licensed pursuant to Article 5 (&#xA7; 38.2-1024 et seq.) of this
chapter and the business of accident and sickness insurance.

C. After the effective date of the health maintenance organization&#8217;s
conversion to and licensure as an insurer, all of the converted insurer&#8217;s
individual and group health care plans, contracts, and evidences of coverage
shall remain valid and in force in accordance with their terms until the earlier
of (i) the expiration or termination of the plans, contracts, or evidences of
coverage; or (ii) the last day of the eighteenth month after the effective date
of conversion. For the period during which the converted insurer continues to
provide or arrange for health care services under such health care plan or
plans, the insurer&#8217;s obligation to pay license taxes under Chapter 25
(&#xA7; 58.1-2500 et seq.) of Title 58.1 and fees for maintaining the Bureau of
Insurance under Chapter 4 (&#xA7; 38.2-400 et seq.), which are, in all cases,
attributable to such health care plan or plans, shall be the same as the license
taxes and fees required of health maintenance organizations generally.

D. Except as provided herein, a converted insurer shall not, after the effective
date of its conversion, use in its accident and sickness insurance policies,
contracts or other literature (i) the words &#8220;health maintenance
organization&#8221; or &#8220;HMO&#8221; or (ii) any other words descriptive of
a health maintenance organization or deceptively similar to the name or
description of any health maintenance organization then doing business in the
Commonwealth in any manner that misrepresents the benefits, advantages,
conditions, or terms of the converted insurer&#8217;s insurance policies,
contracts, or other literature.

E. For the purposes of handling the rehabilitation, liquidation, or conservation
of a converted insurer, the provisions of Chapter 15 (&#xA7; 38.2-1500 et seq.)
shall apply. Whenever an order has been entered pursuant to Chapter 15
authorizing the Commission or other receiver to proceed with the rehabilitation,
liquidation, or conservation of a converted insurer, the Commission may utilize
the provisions of &#xA7; 38.2-4310, to protect the interests of enrollees in the
converted insurer&#8217;s health care plans. If a receivership occurs in a
converted insurer that continues to provide or arrange for health care services
under such health care plan or plans, contracts, or policies, the receiver shall
consider these plans, contracts, or policies as existing in the converted
insurer. The Commission or other receiver appointed pursuant to Chapter 15 shall
allocate the assets, liabilities, and obligations of the insolvent converted
insurer in the manner that the Commission or other receiver determines is fair
and equitable to the insurer&#8217;s accident and sickness insurance
policyholders, health care plan enrollees, and other creditors. The accident and
sickness insurance contracts and policies issued by the converted insurer shall
be governed by the provisions applicable to the Virginia Life, Accident and
Sickness Insurance Guaranty Association pursuant to Chapter 17 (&#xA7; 38.2-1700
et seq.). The health care plans, contracts, or policies of the converted
insurer, associated with the business written as a health maintenance
organization, shall be governed by the provisions of &#xA7; 38.2-4310.

HISTORY: 2007, c. 579; 2018, c. 706.