New Jersey 2020-2021 Regular Session Status: Introduced

A5119 —

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  1. 1
    Introduced
  2. 2
    In Committee
  3. 3
    Passed General Assembly
  4. 4
    Passed Senate
  5. 5
    To Executive
  6. 6
    Enacted

This bill died with 2020-2021 Regular Session. It reached “Introduced” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there is no live prognosis. It would have to be reintroduced in the current session to move again.

Identical bill: S3218 (1R) (not yet in our corpus)

Bill Text

What changed in the latest version

522 added · 591 removed

Plain-language change summary

The amended bill includes language that clarifies the intent and expected outcomes of a reorganization of a health service corporation. It states that such a reorganization will leverage modern technologies to enhance the state's healthcare infrastructure and increase readiness for future health crises, like COVID-19. Additionally, it emphasizes the goals of promoting investment in health services and ensuring the accessibility and affordability of health insurance for members.

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2020, c.145 (A5119 1R) §§1-16, 19 - C.17:48E-46.1 to 17:48E-46.17   P.L.
2020, c.145 (A5119 1R CC CC) CHAPTER 145 (CORRECTED COPY OF CORRECTED COPY)   An Act permitting reorganization of a health service corporation, supplementing P.L.1985, c.286 (C.17:48E-1 et seq.), and amending P.L.2001, c.131 and P.L.1970, c.22.
2020, CHAPTER 145, approved December 23, 2020 Assembly, No.
5119 (First Reprint)     An Act permitting reorganization of a health service corporation, supplementing P.L.1985, c.286 (C.17:48E-1 et seq.), and amending P.L.2001, c.131 and P.L.1970, c.22.
       1.    (New section)  The Legislature finds and declares that:
  C.17:48E-46.1  Findings, declarations relative to the reorganization of a health service corporation.
     a.     It is in the interest of the subscribers of the health service corporation and the State of New Jersey that the health service corporation be afforded the ability to modernize its corporate structure, subject to appropriate standards, oversight, and approval, in order to meet the evolving health care needs of its subscribers, while continuing its statutory mission, and maintaining its status as a charitable and benevolent institution as declared in section 41 of P.L.1985, c.236 (C.17:48E-41).        b.    Ensuring that the health service corporation statutes provide the opportunity for the health service corporation to reorganize itself efficiently and effectively in the form and manner authorized by P.L.     , c.   (C.          ) (pending before the Legislature as this bill) will facilitate increased utilization of 21st century technologies and tools to better address current challenges, improving both the State’s healthcare infrastructure and its readiness to address future crises such as those resulting from the ongoing COVID-19 pandemic.  Such a reorganization, if undertaken, approved, and completed consistent with the provisions of P.L.     , c.   (C.          ) (pending before the Legislature as this bill), also will promote vital investments and growth in health services and diversified businesses for the benefit of its members and the State.        c.     Current law governing the health service corporation expressly permits the health service corporation to engage in certain actions that effectuate a corporate reorganization, subject to certain conditions, including potential conversion to a for-profit domestic stock insurer or other actions constituting a material change in its form, subject to the approval of the Commissioner of Banking and Insurance in the Commissioner’s capacity as regulator of the business of insurance and the Attorney General in furtherance of the Attorney General’s statutory and common law responsibilities as protector, supervisor, and enforcer of charitable trusts and charitable corporations.
     1.    The Legislature finds and declares that:
The current statutes do not, however, prescribe a clear path for the health service corporation to update and improve its corporate structure for the benefit of its members and the State while, at the same time, maintaining its non-profit status, continuing to adhere to the statutory mission to provide affordable and accessible health insurance and promote theintegration of the health care system to meet the needs of its members, and fulfilling the health care obligations of a health service corporation as they exist prior to the reorganization.
     a.     It is in the interest of the subscribers of the health service corporation and the State of New Jersey that the health service corporation be afforded the ability to modernize its corporate structure, subject to appropriate standards, oversight, and approval, in order to meet the evolving health care needs of its subscribers, while continuing its statutory mission, and maintaining its status as a charitable and benevolent institution as declared in section 41 of P.L.1985, c.236 (C.17:48E-41).
     b.    Ensuring that the health service corporation statutes provide the opportunity for the health service corporation to reorganize itself efficiently and effectively in the form and manner authorized by P.L.2020, c.145 (C.17:48E-46.1 et al.) will facilitate increased utilization of 21st century technologies and tools to better address current challenges, improving both the State’s healthcare infrastructure and its readiness to address future crises such as those resulting from the ongoing COVID-19 pandemic.  Such a reorganization, if undertaken, approved, and completed consistent with the provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.), also will promote vital investments and growth in health services and diversified businesses for the benefit of its members and the State.        c.     Current law governing the health service corporation expressly permits the health service corporation to engage in certain actions that effectuate a corporate reorganization, subject to certain conditions, including potential conversion to a for-profit domestic stock insurer or other actions constituting a material change in its form, subject to the approval of the Commissioner of Banking and Insurance in the Commissioner’s capacity as regulator of the business of insurance and the Attorney General in furtherance of the Attorney General’s statutory and common law responsibilities as protector, supervisor, and enforcer of charitable trusts and charitable corporations.
The current statutes do not, however, prescribe a clear path for the health service corporation to update and improve its corporate structure for the benefit of its members and the State while, at the same time, maintaining its non-profit status, continuing to adhere to the statutory mission to provide affordable and accessible health insurance and promote the integration of the health care system to meet the needs of its members, and fulfilling the health care obligations of a health service corporation as they exist prior to the reorganization.
     e.     Because a reorganization authorized pursuant to P.L.     , c.   (C.          ) (pending before the Legislature as this bill) does not constitute a conversion or material change in form as defined pursuant to P.L.2001, c.131 (C.17:48E-49 et seq.), the currently existing statutory mission of the health service corporation to provide affordable and accessible health insurance and promote the integration of the health care system to meet the needs of its members shall continue unabated regardless of whether the health service corporation reorganizes in the manner authorized by P.L.     , c.   (C.          ) (pending before the Legislature as this bill) or not.       f.     It is also in the interest of the subscribers of the health service corporation and the State of New Jersey that the important statutory mission of the health service corporation continues to be upheld following any reorganization pursuant to P.L.     , c.   (C.          )(pending before the Legislature as this bill);
     e.     Because a reorganization authorized pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) does not constitute a conversion or material change in form as defined pursuant to P.L.2001, c.131 (C.17:48E-49 et seq.), the currently existing statutory mission of the health service corporation to provide affordable and accessible health insurance and promote the integration of the health care system to meet the needs of its members shall continue unabated regardless of whether the health service corporation reorganizes in the manner authorized by P.L.2020, c.145 (C.17:48E-46.1 et al.) or not.       f.     It is also in the interest of the subscribers of the health service corporation and the State of New Jersey that the important statutory mission of the health service corporation continues to be upheld following any reorganization pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.);
       2.    (New section)  As used in P.L.     , c.   (C.          ) (pending before the Legislature as this bill):
  C.17:48E-46.2  Definitions relative to the reorganization of a health service corporation.
     “Assessment” means an initial and a limited duration assessment made upon the mutual holding company system pursuant to section 13 of P.L.     , c.   (C.          ) (pending before the Legislature as this bill).
     2.    As used in P.L.2020, c.145 (C.17:48E-46.1 et al.):
     “Assessment” means an initial and a limited duration assessment made upon the mutual holding company system pursuant to section 13 of P.L.2020, c.145 (C.17:48E-46.13).
of section 5 of P.L.     , c.   (C.          )(pending before the Legislature as this bill).
of section 5 of P.L.2020, c.145 (C.17:48E-46.5).
     “Mutual holding company” means a non-insurance, nonprofit entity without permanent capital stock organized pursuant to the laws of this State in accordance with the provisions of P.L.     , c.   (C.          )(pending before the Legislature as this bill) for the purpose of holding, directly or indirectly, one hundred percent interest in a reorganized insurer pursuant to a plan of reorganization as provided in P.L.     , c.   (C.          )(pending before the Legislature as this bill).  A mutual holding company is an insurance holding company system pursuant to P.L.1970, c.22 (C.17:27A-1 et seq.), and shall not be qualified as an insurer licensed to issue insurance policies, insurance contracts or health benefit plans.
     “Mutual holding company” means a non-insurance, nonprofit entity without permanent capital stock organized pursuant to the laws of this State in accordance with the provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.) for the purpose of holding, directly or indirectly, one hundred percent interest in a reorganized insurer pursuant to a plan of reorganization as provided in P.L.2020, c.145 (C.17:48E-46.1 et al.).  A mutual holding company is an insurance holding company system pursuant to P.L.1970, c.22 (C.17:27A-1 et seq.), and shall not be qualified as an insurer licensed to issue insurance policies, insurance contracts or health benefit plans.
     “Reorganization” means the simultaneous mutualization of a health service corporation to a domestic mutual insurer and transformation from a domestic mutual insurer to a mutual holding company with a reorganized insurer in accordance with the provisions of P.L.     , c.   (C.          )(pending before the Legislature as this bill).  A reorganization pursuant to P.L.     , c.   (C.          )(pending before the Legislature as this bill) in which the mutual holding company remains a charitable and benevolent institution shall not constitute a material change in form as defined in section 1 of P.L.2001, c.131 (C.17:48E-49).       “Reorganized insurer” means a stock insurer authorized pursuant to Title 17B of the New Jersey Statutes to transact health insurance as defined in N.J.S.17B:17-4 and that, pursuant to a plan of reorganization as provided in P.L.     , c.   (C.          )(pending before the Legislature as this bill), is a subsidiary of the mutual holding company system that holds the business of the health service corporation mutualizing and reorganizing pursuant to P.L.     , c.   (C.          ) (pending before the Legislature as this bill) that is related to policies directly written and issued by the health service corporation.  All health insurance or risk-bearing obligations of the health service corporation shall be undertaken by the reorganized insurer pursuant to subsection c.
     “Reorganization” means the simultaneous mutualization of a health service corporation to a domestic mutual insurer and transformation from a domestic mutual insurer to a mutual holding company with a reorganized insurer in accordance with the provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.).  A reorganization pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) in which the mutual holding company remains a charitable and benevolent institution shall not constitute a material change in form as defined in section 1 of P.L.2001, c.131 (C.17:48E-49).
     “Reorganized insurer” means a stock insurer authorized pursuant to Title 17B of the New Jersey Statutes to transact health insurance as defined in N.J.S.17B:17-4 and that, pursuant to a plan of reorganization as provided in P.L.2020, c.145 (C.17:48E-46.1 et al.), is a subsidiary of the mutual holding company system that holds the business of the health service corporation mutualizing and reorganizing pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) that is related to policies directly written and issued by the health service corporation.  All health insurance or risk-bearing obligations of the health service corporation shall be undertaken by the reorganized insurer pursuant to subsection c.
of section 3 of P.L.     , c.   (C.          ) (pending before the Legislature as this bill).           3.    (New section)  a.  A mutual holding company organized pursuant to P.L.     , c.   (C.          )(pending before the Legislature as this bill) shall not be established as a company organized for pecuniary profit and shall retain the designation as a charitable and benevolent institution pursuant to section 41 of P.L.1985, c.236 (C.17:48E-41).
of section 3 of P.L.2020, c.145 (C.17:48E-46.3).
A mutual holding company established pursuant to the provisions of P.L.     , c.   (C.          )(pending before the Legislature as this bill) shall retain the health service corporation’s mission while supplementing that mission to promote innovation and delivery of diversified services.
  C.17:48E-46.3  Mutual holding company, not for pecuniary profit, mission.
     3.    a.
 A mutual holding company organized pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) shall not be established as a company organized for pecuniary profit and shall retain the designation as a charitable and benevolent institution pursuant to section 41 of P.L.1985, c.236 (C.17:48E-41).
 A mutual holding company established pursuant to the provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.) shall retain the health service corporation’s mission while supplementing that mission to promote innovation and delivery of diversified services.
      b.   Other than as provided pursuant to P.L.     , c.   (C.          ) (pending before the Legislature as this bill), all property, assets, rights, liabilities, interest and relations of whatever kind of the health service corporation, and its subsidiaries, shall be that of the mutual holding company system.  The mutual holding company shall not be considered a health service corporation.  Notwithstanding anything to the contrary, the provisions of section 41 of P.L.1985, c.236 (C.17:48E-41) shall continue to apply to a mutual holding company 1if the mutual holding company continues to participate in the New Jersey Individual Health Coverage Program pursuant to P.L.1992, c.161 (C.17B-27A-2 et seq.) and the New Jersey Small Employer Health Benefits Program pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.).  If the mutual holding company does not participate in the New Jersey Individual Health Coverage Program pursuant to P.L.1992, c.161 (C.17B-27A-2 et seq.) and the New Jersey Small Employer Health Benefits Program pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.) the provisions of section 41 of P.L.1985, c.236 (C.17:48E-41) shall no longer apply1.
     b.    Other than as provided pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.), all property, assets, rights, liabilities, interest and relations of whatever kind of the health service corporation, and its subsidiaries, shall be that of the mutual holding company system.  The mutual holding company shall not be considered a health service corporation.  Notwithstanding anything to the contrary, the provisions of section 41 of P.L.1985, c.236 (C.17:48E-41) shall continue to apply to a mutual holding company if the mutual holding company continues to participate in the New Jersey Individual Health Coverage Program pursuant to P.L.1992, c.161 (C.17B-27A-2 et seq.) and the New Jersey Small Employer Health Benefits Program pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.).  If the mutual holding company does not participate in the New Jersey Individual Health Coverage Program pursuant to P.L.1992, c.161 (C.17B-27A-2 et seq.) and the New Jersey Small Employer Health Benefits Program pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.) the provisions of section 41 of P.L.1985, c.236 (C.17:48E-41) shall no longer apply.
      c.    The health insurance duties and obligations pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.) shall continue and remain in the succeeding reorganized insurer reorganizing pursuant to P.L.     , c.   (C.          )(pending before the Legislature as this bill), in each case, except as provided pursuant to P.L.     , c.   (C.          )(pending before the Legislature as this bill).  Except as listed below in subsection e.
     c.     The health insurance duties and obligations pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.) shall continue and remain in the succeeding reorganized insurer reorganizing pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.), in each case, except as provided pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.).  Except as listed below in subsection e.
of this section, all references to a “health service corporation” in P.L.1985, c.236 (C.17:48E-1 et seq.), shall refer to a “reorganized insurer” established pursuant to P.L.     , c.   (C.          )(pending before the Legislature as this bill) and shall not refer to the mutual holding company.
of this section, all references to a “health service corporation” in P.L.1985, c.236 (C.17:48E-1 et seq.), shall refer to a “reorganized insurer” established pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) and shall not refer to the mutual holding company.
     d.    In addition to the mutual holding company’s qualification pursuant to section 2 of P.L.     , c.   (C.          )(pending before the Legislature as this bill), and for avoidance of doubt, the mutual holding company shall be expressly excluded from insurance operations and reporting, investment limits, and risk-bearing provisions of P.L.1985, c.236 (C.17:48E-1 et seq.), including the following provisions because a mutual holding company is not a risk-bearer:
     d.    In addition to the mutual holding company’s qualification pursuant to section 2 of P.L.2020, c.145 (C.17:48E-46.2), and for avoidance of doubt, the mutual holding company shall be expressly excluded from insurance operations and reporting, investment limits, and risk-bearing provisions of P.L.1985, c.236 (C.17:48E-1 et seq.), including the following provisions because a mutual holding company is not a risk-bearer:
      f.    The insurance premium rate tax cap law provided by subsection a.
     f.     The insurance premium rate tax cap law provided by subsection a.
     h.    The continuation of the rights, duties and obligations of a health service corporation pursuant to this section following completion of an approved reorganization pursuant to P.L.     , c.   (C.          ) (pending before the Legislature as this bill) shall be limited to such rights, duties and obligations pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.) as of the effective date of P.L.     , c.   (C.          ) (pending before the Legislature as this bill);
     h.    The continuation of the rights, duties and obligations of a health service corporation pursuant to this section following completion of an approved reorganization pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) shall be limited to such rights, duties and obligations pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.) as of the effective date of P.L.2020, c.145 (C.17:48E-46.1 et al.);
amendments to P.L.1985, c.236 (C.17:48E-1 et seq.) enacted after the effective date of P.L.     , c.   (C.          ) (pending before the Legislature as this bill) shall not apply.  Notwithstanding the above, the reorganized insurer shall be subject to the laws applicable to domestic health insurance companies contained in Title 17B of the New Jersey Statutes 1and P.L.1970, c.22 (C.17:27A-1 et seq.)1.
amendments to P.L.1985, c.236 (C.17:48E-1 et seq.) enacted after the effective date of P.L.2020, c.145 (C.17:48E-46.1 et al.) shall not apply.  Notwithstanding the above, the reorganized insurer shall be subject to the laws applicable to domestic health insurance companies contained in Title 17B of the New Jersey Statutes and P.L.1970, c.22 (C.17:27A-1 et seq.).
       4.    (New section)  a.  A health service corporation organized pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.) may reorganize to create a mutual holding company system pursuant to a plan of reorganization at the same time it applies to transition to a mutual insurer pursuant to P.L.1995, c.196 (C.17:48E-45 et seq.).  Thereafter, the succeeding mutual holding company system shall be operated in a manner consistent with sections 1 and 3 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).       b.    The mutual holding company system shall consist of a mutual holding company and one or more controlled nonprofit or for-profit subsidiaries, including the reorganized insurer, and shall be operated for the benefit of its members.
  C.17:48E-46.4  Health service corporation to reorganize into mutual holding company system.
     4.
 a.
 A health service corporation organized pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.) may reorganize to create a mutual holding company system pursuant to a plan of reorganization at the same time it applies to transition to a mutual insurer pursuant to P.L.1995, c.196 (C.17:48E-45 et seq.).  Thereafter, the succeeding mutual holding company system shall be operated in a manner consistent with sections 1 and 3 of P.L.2020, c.145 (C.17:48E-46.1 and C.17:48E-46.3).
     b.    The mutual holding company system shall consist of a mutual holding company and one or more controlled nonprofit or for-profit subsidiaries, including the reorganized insurer, and shall be operated for the benefit of its members.
of section 3 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).
of section 3 of P.L.2020, c.145 (C.17:48E-46.3).
     d.    A mutual holding company shall be a nonprofit entity incorporated under, and shall conduct its business pursuant to, the provisions of Title 15A of the New Jersey Statutes, except that in situations in which the provisions of that title are inconsistent with the provisions of P.L.     , c.   (C.          ) (pending before the Legislature as this bill), the provisions of P.L.     , c.   (C.          )(pending before the Legislature as this bill) shall govern.
     d.    A mutual holding company shall be a nonprofit entity incorporated under, and shall conduct its business pursuant to, the provisions of Title 15A of the New Jersey Statutes, except that in situations in which the provisions of that title are inconsistent with the provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.), the provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.) shall govern.
     g.    The subsidiaries of a mutual holding company system may be formed by any of the following means:
      g.   The subsidiaries of a mutual holding company system may be formed by any of the following means:
1[or]1      (4)   issuance, acquisition or transfer of capital stock of one or more companies 1;
     (4)   issuance, acquisition or transfer of capital stock of one or more companies;
      h.    The mutual holding company shall ensure that any ownership interest in a subsidiary shall be held by the mutual holding company, and that any profits generated by that interest are returned to the mutual holding company1.
      h.   The mutual holding company shall ensure that any ownership interest in a subsidiary shall be held by the mutual holding company, and that any profits generated by that interest are returned to the mutual holding company.
       5.    (New section)  a.  A health service corporation may submit an application to the commissioner to form a mutual holding company system.  1Upon submission of an application to the commissioner, a health service corporation shall immediately thereafter provide a copy of the application to the Attorney General.1 Prior to submission of the application, the board of directors of the health service corporation shall adopt a resolution proposing to transition to a mutual insurer and form a mutual holding company system, at a meeting of the board by a two-thirds affirmative vote of the total number of directors of the health service corporation.  A copy of the minutes of the meeting at which that resolution is adopted shall be filed with the commissioner.  The resolution shall include a plan to transition to a mutual insurer and form a mutual holding company system, including proposed articles of incorporation and bylaws for the mutual holding company and proposed articles of incorporation, certificates of formation, restatements of, or amendments to, existing articles of incorporation or bylaws, and plans of merger or consolidation, with respect to each entity to be formed, converted or otherwise subject or party to the transition transactions pursuant to the plan of mutualization and reorganization.
  C.17:48E-46.5  Health service corporation applicationto form mutual holding company system.
     5.    a.
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 A health service corporation may submit an application to the commissioner to form a mutual holding company system.  Upon submission of an application to the commissioner, a health service corporation shall immediately thereafter provide a copy of the application to the Attorney General.
Prior to submission of the application, the board of directors of the health service corporation shall adopt a resolution proposing to transition to a mutual insurer and form a mutual holding company system, at a meeting of the board by a two-thirds affirmative vote of the total number of directors of the health service corporation.  A copy of the minutes of the meeting at which that resolution is adopted shall be filed with the commissioner.  The resolution shall include a plan to transition to a mutual insurer and form a mutual holding company system, including proposed articles of incorporation and bylaws for the mutual holding company and proposed articles of incorporation, certificates of formation, restatements of, or amendments to, existing articles of incorporation or bylaws, and plans of merger or consolidation, with respect to each entity to be formed, converted or otherwise subject or party to the transition transactions pursuant to the plan of mutualization and reorganization.
     (1)   A description of the structure of the mutual holding company system consistent with the requirements set forth in P.L.     , c.   (C.          )(pending before the Legislature as this bill);
     (1)   A description of the structure of the mutual holding company system consistent with the requirements set forth in P.L.2020, c.145 (C.17:48E-46.1 et al.);
     (2)   A description of the qualifications for members’ membership in, and the rights of members of, the mutual holding company consistent with the requirements set forth in P.L.     , c.   (C.          ) (pending before the Legislature as this bill);
     (2)   A description of the qualifications for members’ membership in, and the rights of members of, the mutual holding company consistent with the requirements set forth in P.L.2020, c.145 (C.17:48E-46.1 et al.);
The plan shall specify the members of the board of directors of the health service corporation who shall serve as initial directors of the mutual holding company, as provided in section 15 of P.L.     , c.   (C.          )(pending before the Legislature as this bill);
The plan shall specify the members of the board of directors of the health service corporation who shall serve as initial directors of the mutual holding company, as provided in section 15 of P.L.2020, c.145 (C.17:48E-46.15);
     (6)   A 1[representation] certification1 that, following the mutualization and reorganization, the material terms and conditions of insurance coverage of:
     (6)   A certification that, following the mutualization and reorganization, the material terms and conditions of insurance coverage of:
     (7)   A 1[representation] certification1 that, following the mutualization and reorganization, the material terms and conditions of subordinated surplus notes and other contractual obligations, other than those arising pursuant to policies described in paragraph (6) of this subsection, of the health service corporation and its subsidiaries shall, subject to the rights of the health service corporation and its subsidiaries pursuant to applicable law, and to the extent those obligations are not otherwise satisfied or terminated in accordance with their terms, remain in effect upon the transfer of those obligations to, and assumption of those obligations by, the  reorganized insurer or one or more other subsidiaries of the mutual holding company;
     (7)   A certification that, following the mutualization and reorganization, the material terms and conditions of subordinated surplus notes and other contractual obligations, other than those arising pursuant to policies described in paragraph (6) of this subsection, of the health service corporation and its subsidiaries shall, subject to the rights of the health service corporation and its subsidiaries pursuant to applicable law, and to the extent those obligations are not otherwise satisfied or terminated in accordance with their terms, remain in effect upon the transfer of those obligations to, and assumption of those obligations by, the  reorganized insurer or one or more other subsidiaries of the mutual holding company;
and      (8)   A 1[representation] certification1 that, following the mutualization and reorganization, the mutual holding company shall comply with the employment requirements as provided in section 16 of P.L.     , c.   (C.          ) (pending before the Legislature as this bill).
and      (8)   A certification that, following the mutualization and reorganization, the mutual holding company shall comply with the employment requirements as provided in section 16 of P.L.2020, c.145 (C.17:48E-46.16).
     b.    Upon the affirmative vote of the board of directors complying with subsection a.
      b.   Upon the affirmative vote of the board of directors complying with subsection a.
of this section, the plan to form a mutual holding company system pursuant to P.L.    , c.   (C.         ) (pending before the Legislature as this bill) shall be filed with the commissioner for approval.  Upon filing the plan to form a mutual holding company system, the obligations pursuant to section 4 of P.L.2017, c.100 (C.17:48E-17.3) shall be suspended during the pendency of the commissioner’s review process pursuant to this subsection;
of this section, the plan to form a mutual holding company system pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) shall be filed with the commissioner for approval.  Upon filing the plan to form a mutual holding company system, the obligations pursuant to section 4 of P.L.2017, c.100 (C.17:48E-17.3) shall be suspended during the pendency of the commissioner’s review process pursuant to this subsection;
of section 13 of P.L.     , c.   (C.          ) (pending before the Legislature as this bill).  The commissioner shall review the plan to mutualize and reorganize in accordance with the requirements of subsection a.
of section 13 of P.L.2020, c.145 (C.17:48E-46.13).  The commissioner shall review the plan to mutualize and reorganize in accordance with the requirements of subsection a.
of section 3 of P.L.1995, c.196 (C.17:48E-47).  1[The public hearing conducted pursuant to subsection a.
of section of P.L.1995, c.196 (C.17:48E-47).  The commissioner shall hold three public hearings on the plan to form a mutual holding company within 90 days after the commissioner determines that the filing is complete, with notice provided by publication in a manner satisfactory to the commissioner.  The public hearings shall also address the plan of reorganization to the mutual holding company system required by P.L.2020, c.145 (C.17:48E-46.1 et al.).  Consistent with subsection a.
of section 3 of P.L.1995, c.196 (C.17:48E-47)]  The commissioner shall hold three public hearings on the plan to form a mutual holding company within 90 days after the commissioner determines that the filing is complete, with notice provided by publication in a manner satisfactory to the commissioner.  The public hearings1 shall also address the plan of reorganization to the mutual holding company system required by P.L.     , c.   (C.          )(pending before the Legislature as this bill).  Consistent with subsection a.
     (2)   would be detrimental to the safety or soundness of the proposed  reorganized  insurer and insurance company subsidiaries of the proposed mutual holding company;
     (2)   would be detrimental to the safety or soundness of the proposed reorganized insurer and insurance company subsidiaries of the proposed mutual holding company;
or      (3)   1[prejudices] does not benefit1 the interests of the policyholders of the health service corporation or treats them inequitably.       The commissioner may engage the services of experts and consultants to advise on any matters related to the application 1, and if a written study or other expert report is prepared, it shall be made available to the applicant within a reasonable period of time prior to the initial public hearing.  The commissioner may also engage the services of a consultant to conduct a health impact study of the effects of the reorganization on the health of the policy holders of the health service corporation, and the general public1.  The engagement shall not be subject to Chapter 32 of Title 52 of the Revised Statutes and all costs related to such engagement for the examination and deliberations of the application shall be paid by the health service corporation that makes the filing, both for services prior to the effective time and for services after the effective time.
or      (3)   does not benefit the interests of the policyholders of the health service corporation or treats them inequitably.       The commissioner may engage the services of experts and consultants to advise on any matters related to the application, and if a written study or other expert report is prepared, it shall be made available to the applicant within a reasonable period of time prior to the initial public hearing.  The commissioner may also engage the services of a consultant to conduct a health impact study of the effects of the reorganization on the health of the policy holders of the health service corporation, and the general public.  The engagement shall not be subject to Chapter 32 of Title 52 of the Revised Statutes and all costs related to such engagement for the examination and deliberations of the application shall be paid by the health service corporation that makes the filing, both for services prior to the effective time and for services after the effective time.
At the expiration of 30 days after the 1final1 public hearing, the commissioner shall approve or disapprove the plan of mutualization and reorganization and shall set forth the decision in writing and shall state the reasons therefor.  The commissioner shall inform the health service corporation of the specific reasons for the disapproval of any plan of mutualization and reorganization and provide a cure period of no shorter than days to cure any deficiencies.  Any disapproval shall be subject to judicial review as a final decision of a State administrative agency.
At the expiration of 30 days after the final public hearing, the commissioner shall approve or disapprove the plan of mutualization and reorganization and shall set forth the decision in writing and shall state the reasons therefor.  The commissioner shall inform the health service corporation of the specific reasons for the disapproval of any plan of mutualization and reorganization and provide a cure period of no shorter than 90 days to cure any deficiencies.  Any disapproval shall be subject to judicial review as a final decision of a State administrative agency.
      c.    A plan of mutualization and reorganization may be amended, terminated, or approved consistent with P.L.     , c.   (C.
      c.    A plan of mutualization and reorganization may be amended, terminated, or approved consistent with P.L.2020, c.145 (C.17:48E-46.1 et al.).  A plan of mutualization and reorganization adopted by the board of directors of the applicant may be:
         ) (pending before the Legislature as this bill).  A plan of mutualization and reorganization adopted by the board of directors of the applicant may be:
     6.    (New section)  A mutual holding company system shall be considered an insurance holding company system and subject to P.L.1970, c.22 (C.17:27A-1 et seq.).  1The commissioner shall possess supervisory powers with respect to the insurance holding company system which shall include the authority to monitor the mutual holding company systems financial health, enterprise risk, and examine its operations pursuant to P.L.1070, c.22 (C.17:27A-1 et seq.).1 Notwithstanding the foregoing, solely with regard to the transactions set forth in the application to form a mutual holding company system filed pursuant to section 5 of P.L.     , c.   (C.          ) (pending before the Legislature as this bill), a mutual holding company system shall not be required to seek separate approval for an acquisition of controlling stock, ownership interest, assets or control, or for a 1merger or consolidation,1 share exchange, organization, or reorganization of insurance companies within the mutual holding company system, or other transactions set forth in the application to form a mutual holding company system.  Thereafter, any future transactions not approved as part of the application to form a mutual holding company system, shall be subject to the applicable requirements of P.L.1970, c.22 (C.17:27A-1 et seq.).  As an insurance holding company system subject to P.L.1970, c.22 (C.17:27A-1 et seq.), the commissioner shall have the power to order production of any records, books, or other information and papers in the possession of a mutual holding company system as are reasonably necessary to ascertain the financial condition of the mutual holding company system or to determine compliance with P.L.     , c.   (C.          )(pending before the Legislature as this bill).
  C.17:48E-46.6  Monitoring mutual holding company’s operations.
       7.    (New section) a.  A mutual holding company or a non-insurance subsidiary may, alone or together, make any lawful investments including directly or indirectly acquiring or otherwise holding the stock or other ownership interests of any nonprofit or for-profit entities.
     6.    A mutual holding company system shall be considered an insurance holding company system and subject to P.L.1970, c.22 (C.17:27A-1 et seq.).  The commissioner shall possess supervisory powers with respect to the insurance holding company system which shall include the authority to monitor the mutual holding company system’s financial health, enterprise risk, and examine its operations pursuant to P.L.1970, c.22 (C.17:27A-1 et seq.).
Notwithstanding the foregoing, solely with regard to the transactions set forth in the application to form a mutual holding company system filed pursuant to section 5 of P.L.2020, c.145 (C.17:48E-46.5), a mutual holding company system shall not be required to seek separate approval for an acquisition of controlling stock, ownership interest, assets or control, or for a merger or consolidation, share exchange, organization, or reorganization of insurance companies within the mutual holding company system, or other transactions set forth in the application to form a mutual holding company system.  Thereafter, any future transactions not approved as part of the application to form a mutual holding company system, shall be subject to the applicable requirements of P.L.1970, c.22 (C.17:27A-1 et seq.).  As an insurance holding company system subject to P.L.1970, c.22 (C.17:27A-1 et seq.), the commissioner shall have the power to order production of any records, books, or other information and papers in the possession of a mutual holding company system as are reasonably necessary to ascertain the financial condition of the mutual holding company system or to determine compliance with P.L.2020, c.145 (C.17:48E-46.1 et al.).
  C.17:48E-46.7  Investments;
supplier program;
mutualization;
reorganization plans.
     7.    a.
 A mutual holding company or a non-insurance subsidiary may, alone or together, make any lawful investments including directly or indirectly acquiring or otherwise holding the stock or other ownership interests of any nonprofit or for-profit entities.
     1c.   The mutual holding company and its non-insurance and insurance company subsidiaries shall continue to operate a diverse supplier program that promotes and invests in the utilization of minority-owned and women-owned businesses in the procurement of goods and services, including professional services.  The mutual holding company shall include in its annual filing pursuant to subsection b.
     c.     The mutual holding company and its non-insurance and insurance company subsidiaries shall continue to operate a diverse supplier program that promotes and invests in the utilization of minority-owned and women-owned businesses in the procurement of goods and services, including professional services.  The mutual holding company shall include in its annual filing pursuant to subsection b.
of section of P.L.     , c.    (C.         ) (pending before the Legislature as this bill) information on this subsection.1      8.    (New section)  Neither the adoption nor the implementation of a plan of mutualization and reorganization shall be deemed to give rise to any obligation by or on behalf of any entity in the mutual holding company system or any predecessor entity to make any distribution or payment to any member or policyholder, or to any other person, fund, or entity of any nature whatsoever, in connection with the ownership, control, benefits, policies, purpose, or nature of any entity in the mutual holding company system, any predecessor entity or otherwise.
of section 11 of P.L.2020, c.145 (C.17:48E-46.11) information on this subsection.
       9.    (New section)  a.  Membership in a mutual holding company shall be determined in accordance with the mutual holding company’s articles of incorporation and bylaws and may be based upon:
  C.17:48E-46.8  Non-obligation of distribution payment to members, policyholders.
     8.    Neither the adoption nor the implementation of a plan of mutualization and reorganization shall be deemed to give rise to any obligation by or on behalf of any entity in the mutual holding company system or any predecessor entity to make any distribution or payment to any member or policyholder, or to any other person, fund, or entity of any nature whatsoever, in connection with the ownership, control, benefits, policies, purpose, or nature of any entity in the mutual holding company system, any predecessor entity or otherwise.
  C.17:48E-46.9  Membership in mutual holding company.
     9.    a.
 Membership in a mutual holding company shall be determined in accordance with the mutual holding company’s articles of incorporation and bylaws and may be based upon:
or        (3)   other reasonable factors.
or      (3)   other reasonable factors.
     b.    Members of a mutual holding company shall be entitled to vote for the election of directors of the mutual holding company in accordance with the mutual holding company’s bylaws.  Directors of the mutual holding company shall be elected from nominees selected by the nominating and governance committee of the board of directors of the mutual holding company, or a comparably authorized committee, except for public directors serving in accordance with section 15 of P.L.     , c.   (C.          )(pending before the Legislature as this bill).
     b.    Members of a mutual holding company shall be entitled to vote for the election of directors of the mutual holding company in accordance with the mutual holding company’s bylaws.  Directors of the mutual holding company shall be elected from nominees selected by the nominating and governance committee of the board of directors of the mutual holding company, or a comparably authorized committee, except for public directors serving in accordance with section 15 of P.L.2020, c.145 (C.17:48E-46.15).
     e.     A member of a mutual holding company is not personally liable for the acts, debts, liabilities or obligations of the mutual holding company solely because of the member’s membership status.
      e.    A member of a mutual holding company is not personally liable for the acts, debts, liabilities or obligations of the mutual holding company solely because of the member’s membership status.
       10.  (New section) Upon any voluntary dissolution of a mutual holding company in accordance with N.J.S.15A:12-2, 15A:12-3, 15A:12-4, 15A:12-5, 15A:12-6, 15A:12-7, or section 19 of P.L.1992, c.65 (C.17B:32-49), the mutual holding company shall adopt a plan of dissolution in accordance with N.J.S.15A:12-8.  The plan shall provide that any assets of the mutual holding company remaining after the discharge of all liabilities and obligations, if any, shall be distributed in accordance with N.J.S.15A:12-8.
  C.17:48E-46.10  Plan of dissolution.
       11.  (New section)  a.
     10.  Upon any voluntary dissolution of a mutual holding company in accordance with N.J.S.15A:12-2, 15A:12-3, 15A:12-4, 15A:12-5, 15A:12-6, 15A:12-7, or section 19 of P.L.1992, c.65 (C.17B:32-49), the mutual holding company shall adopt a plan of dissolution in accordance with N.J.S.15A:12-8.  The plan shall provide that any assets of the mutual holding company remaining after the discharge of all liabilities and obligations, if any, shall be distributed in accordance with N.J.S.15A:12-8.
  C.17:48E-46.11  Annual statements;
report to the Governor.
     11.  a.
     c.     The commissioner shall report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), on the compliance of the mutual holding company with the provisions of P.L.    , c.    (C.            ) (pending before the Legislature as this bill).
     c.     The commissioner shall report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), on the compliance of the mutual holding company with the provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.).
       1[12.   (New section) All information, documents and copies of information and documents obtained by or disclosed to the commissioner, the Department of Banking and Insurance, or any other person in the course of preparing, filing or processing an application to reorganize pursuant to P.L.     , c.   (C.          ) (pending before the Legislature as this bill), including the annual statement required pursuant to section 11 of P.L.     , c.   (C.          ) (pending before the Legislature as this bill), other than information or documents distributed to policyholders in connection with the plan of reorganization or election of directors, shall be subject to the confidentiality requirements set forth in section 6 of P.L.1970, c.22 (C.17:27A-6).]1        112.  (New section)  a.  The application submitted pursuant to section 5 of P.L.    , c.
  C.17:48E-46.12  Public records.
   (C.        )(pending before the Legislature as this bill) shall be a public record, except for the following documents, which shall be confidential and not public records:
     12.  a.
 The application submitted pursuant to section of P.L.2020, c.145 (C.17:48E-46.5) shall be a public record, except for the following documents, which shall be confidential and not public records:
      b.   The commissioner shall provide the public with prompt and reasonable access to public records relating to the proposed reorganization of the health service corporation.  The commissioner shall make the public records received pursuant to P.L.    , c.    (C.        ) (pending before the Legislature as this bill) available for inspection at no cost to the public.  These public records shall be made available to the public in connection with the public hearing to be held pursuant to P.L.    , c.    (C.        )(pending before the Legislature as this bill).1        13.  (New section)  a.  Following regulatory approval pursuant to section 5 of P.L.     , c.   (C.          )(pending before the Legislature as this bill) and the establishment of a mutual holding company, the mutual holding company, 1[through itself or any of its affiliates] or any affiliates benefiting from the establishment of a mutual holding company1, shall pay an initial assessment to the State Treasury in the amount of $600,000,000 by June 1, 2022 if the effective time precedes June 1, 2022.  If the effective time is later than June 1, 2022, the initial assessment shall be due by June 1 of the calendar year following the effective time.  The initial assessment shall be a one-time, nonrecurring State business tax on the 1[reorganized insurer] mutual holding company and its affiliates1.
      b.   The commissioner shall provide the public with prompt and reasonable access to public records relating to the proposed reorganization of the health service corporation.  The commissioner shall make the public records received pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) available for inspection at no cost to the public.  These public records shall be made available to the public in connection with the public hearing to be held pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.).
  C.17:48E-46.13  Initial and annual assessments.
     13.  a.
 Following regulatory approval pursuant to section 5 of P.L.2020, c.145 (C.17:48E-46.5) and the establishment of a mutual holding company, the mutual holding company, or any affiliates benefiting from the establishment of a mutual holding company, shall pay an initial assessment to the State Treasury in the amount of $600,000,000 by June 1, 2022 if the effective time precedes June 1, 2022.  If the effective time is later than June 1, 2022, the initial assessment shall be due by June 1 of the calendar year following the effective time.  The initial assessment shall be a one-time, nonrecurring State business tax on the mutual holding company and its affiliates.
of this section, the mutual holding company, 1[through itself or any of its affiliates] or any affiliates benefiting from the establishment of a mutual holding company1, shall pay a limited duration business tax by June 1 of each calendar year beginning with the calendar year following the initial assessment, and for a period of seventeen years.  The total assessment, including both the initial and annual assessments, shall not exceed $1,250,000,000.  The annual assessments represent a limited duration state business tax on the 1[reorganized insurer’s] mutual holding company and its affiliates’1 business payable by the mutual holding company or any 1[of its]1 affiliates 1benefiting from the establishment of a mutual holding company1, and shall be based on the following schedule with earned premiums defined consistent with 45 C.F,R, 158.130:
of this section, the mutual holding company, or any affiliates benefiting from the establishment of a mutual holding company, shall pay a limited duration business tax by June 1 of each calendar year beginning with the calendar year following the initial assessment, and for a period of seventeen years.  The total assessment, including both the initial and annual assessments, shall not exceed $1,250,000,000.  The annual assessments represent a limited duration state business tax on the mutual holding company and its affiliates’ business payable by the mutual holding company or any affiliates benefiting from the establishment of a mutual holding company, and shall be based on the following schedule with earned premiums defined consistent with 45 C.F.R.
158.130:
     c.     The mutual holding company shall not pay any portion of the annual assessment for a given calendar year if the mutual holding company’s system-wide health risk-based capital authorized control level would fall below 550 percent based on the standards for risk based capital for health organizations as adopted by the National Association of Insurance Commissioners following the payment as applied against the prior calendar year’s risk based capital, or if in the opinion of any nationally recognized statistical rating organization, the group credit rating of the mutual holding company would not be considered investment grade.  1The commissioner shall determine that the mutual holding company’s system-wide health risk-based capital authorized control level would fall below 550 percent before payments shall be deferred pursuant to this subsection and paragraph (1) of subsection d.
     c.     The mutual holding company shall not pay any portion of the annual assessment for a given calendar year if the mutual holding company’s system-wide health risk-based capital authorized control level would fall below 550 percent based on the standards for risk based capital for health organizations as adopted by the National Association of Insurance Commissioners following the payment as applied against the prior calendar year’s risk based capital, or if in the opinion of any nationally recognized statistical rating organization, the group credit rating of the mutual holding company would not be considered investment grade.  The commissioner shall determine that the mutual holding company’s system-wide health risk-based capital authorized control level would fall below 550 percent before payments shall be deferred pursuant to this subsection and paragraph (1) of subsection d.
of this section.
of this section.  Neither the insurance company subsidiaries nor the reorganized insurer shall make dividends or distributions to the mutual holding company or any subsidiaries thereof until such time as the annual assessment deferred pursuant to paragraph (1) of subsection d.
 Neither the insurance company subsidiaries nor the reorganized insurer shall make dividends or distributions to the mutual holding company or any subsidiaries thereof until such time as the annual assessment deferred pursuant to paragraph (1) of subsection d.
of this section is satisfied.
of this section is satisfied.1      d.    (1)  If the mutual holding company does not pay the annual assessment for a given calendar year pursuant to subsection c.
     d.    (1)  If the mutual holding company does not pay the annual assessment for a given calendar year pursuant to subsection c.
of this section shall not be extended beyond, and the payment obligation pursuant to this section shall cease to exist after, the date that is 1[20] 251 years from the effective time.
of this section shall not be extended beyond, and the payment obligation pursuant to this section shall cease to exist after, the date that is 25 years from the effective time.
       14.
  C.17:48E-46.14  Mutual holding company.
 (New section)  A mutual holding company formed pursuant to P.L.     , c.   (C.          ) (pending before the Legislature as this bill) shall not convert to a for-profit stock holding company.  The provisions of P.L.2001, c.131 (C.17:48E-49 et seq.) providing for conversion of  a health service corporation to a domestic stock insurer shall not apply to a mutual holding company formed pursuant to P.L.     , c.   (C.          ) (pending before the Legislature as this bill).         15.  (New section)  a.  The board of the mutual holding company shall be constituted of 22 directors as follows:
     14.  A mutual holding company formed pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.) shall not convert to a for-profit stock holding company.  The provisions of P.L.2001, c.131 (C.17:48E-49 et seq.) providing for conversion of a health service corporation to a domestic stock insurer shall not apply to a mutual holding company formed pursuant to P.L.2020, c.145 (C.17:48E-46.1 et al.).
  C.17:48E-46.15  Board of the mutual holding company;
membership, transitional period, diversity.
     15.  a.
 The board of the mutual holding company shall be constituted of 22 directors as follows:
     b.    Upon the effective time, the term of office of the public directors of the reorganized insurer shall 1not immediately1 expire 1but rather shall be temporarily continued and each such director shall continue in holdover status until such time as the appointing authority reappoints or renames such director or appoints or names another director1.  The initial board of directors of the mutual holding company shall be:
     b.    Upon the effective time, the term of office of the public directors of the reorganized insurer shall not immediately expire but rather shall be temporarily continued and each such director shall continue in holdover status until such time as the appointing authority reappoints or renames such director or appoints or names another director.  The initial board of directors of the mutual holding company shall be:
     (2)   5 public directors appointed by the Governor with the advice and consent of the Senate 1[within 30 days after the effective time]1;
     (2)   5 public directors appointed by the Governor with the advice and consent of the Senate;
     (3)   2 public directors named by the Senate President 1[within 30 days after the effective time]1;
     (3)   2 public directors named by the Senate President;
and      (4)   2 public directors named by the Speaker of the General Assembly 1[within 30 days after the effective time]1.
and      (4)   2 public directors named by the Speaker of the General Assembly.
     c.     Each elected director shall have a term of three years with up to two successive three-year terms following the initial term for up to a total of three successive terms, and as provided for in the bylaws, with such other term and term limits specifically applying to the individual directors.  The chief executive officer or president of the mutual holding company shall be an elected director at all times and shall not be subject to any term limit or election pursuant to section 9 of P.L.     , c.   (C.          )(pending before the Legislature as this bill).  The board of directors 1[or the members]1, as provided by the bylaws, shall elect a chair, who shall be a member of the board elected pursuant to paragraph (1) of subsection a.
      c.    Each elected director shall have a term of three years with up to two successive three-year terms following the initial term for up to a total of three successive terms, and as provided for in the bylaws, with such other term and term limits specifically applying to the individual directors.  The chief executive officer or president of the mutual holding company shall be an elected director at all times and shall not be subject to any term limit or election pursuant to section 9 of P.L.2020, c.145 (C.17:48E-46.9).  The board of directors, as provided by the bylaws, shall elect a chair, who shall be a member of the board elected pursuant to paragraph (1) of subsection a.
of this section shall meet the statutory and regulatory qualifications for the mutual holding company system’s businesses and be free from conflicts of interest that would prohibit the person from materially executing the person’s duties as a director.  Each public director shall 1[serve at the pleasure of the appointing authority] have a term of three years with up to two successive three-year terms following the initial term, for a total of up to three successive terms.  Upon the effective time, the terms of office of the public directors of the reorganized insurer shall continue until their respective successors are appointed and qualified.  No period during which a public director holds over shall be deemed to be an extension of the public director’s term of office for the purpose of determining the date on which a successor’s term expires1.
of this section shall meet the statutory and regulatory qualifications for the mutual holding company system’s businesses and be free from conflicts of interest that would prohibit the person from materially executing the person’s duties as a director.  Each public director shall have a term of three years with up to two successive three-year terms following the initial term, for a total of up to three successive terms.  Upon the effective time, the terms of office of the public directors of the reorganized insurer shall continue until their respective successors are appointed and qualified.  No period during which a public director holds over shall be deemed to be an extension of the public director’s term of office for the purpose of determining the date on which a successor’s term expires.
     d.    There shall be a transitional period of 18 months following the effective time before elected directors of the mutual holding company are subject to election by its members pursuant to section 9 of P.L.     , c.   (C.          )(pending before the Legislature as this bill).
     d.    There shall be a transitional period of 18 months following the effective time before elected directors of the mutual holding company are subject to election by its members pursuant to section 9 of P.L.2020, c.145 (C.17:48E-46.9).
      1e.   To the extent practicable, the mutual holding company shall make best efforts to reflect the racial, ethnic, and gender diversity of the communities that it serves throughout the organization, including the board of directors and executive leadership, to achieve its mission.1      16.  (New section) a.  Upon the formation of a mutual holding company, the total number of full-time employees that were employed within a mutual holding company system shall be maintained for a transition period of 1[24] 361 months following that formation based on the full-time employee count of the health service corporation as of September 30, 2019, except as provided in subsection b.
      e.     To the extent practicable, the mutual holding company shall make best efforts to reflect the racial, ethnic, and gender diversity of the communities that it serves throughout the organization, including the board of directors and executive leadership, to achieve its mission.
of this section.       b.    This section shall not:
C.17:48E-46.16  Full-time employees maintained for 36 months following transition.
     (1)   supersede the terms of any collective bargaining agreement; or      (2)   require a mutual holding company system to replace headcount lost due to voluntary attrition or terminations for cause, including for performance, or replace any loss of headcount attributable to a decline in enrollment, market share, or loss of a major account.
     16.  a.
     c.     This section shall expire following the transition period of 1[24] 361 months following the formation of a mutual holding company.
 Upon the formation of a mutual holding company, the total number of full-time employees that were employed within a mutual holding company system shall be maintained for a transition period of 36 months following that formation based on the full-time employee count of the health service corporation as of September 30, 2019, except as provided in subsection b.
of this section.        b.   This section shall not:
     (1)   supersede the terms of any collective bargaining agreement;
or      (2)   require a mutual holding company system to replace headcount lost due to voluntary attrition or terminations for cause, including for performance, or replace any loss of headcount attributable to a decline in enrollment, market share, or loss of a major account.
      c.    This section shall expire following the transition period of 36 months following the formation of a mutual holding company.
C.17:48E-49  Definitions relative to conversion of health service corporation to domestic stock insurer.
     “Conversion” means the process by which a health service corporation converts to a domestic stock insurer in accordance with the provisions of sections 2 through 14 and section of this act.
     “Conversion” means the process by which a health service corporation converts to a domestic stock insurer in accordance with the provisions of sections 2 through 14 and section 19 of this act.
17-4.       “Effective time” means the date and time at which the conversion of a health service corporation is effective, as provided in section 11 of this act.
17-4.       “Effective time” means the date and time at which the conversion of a health service corporation is effective, as provided in section of this act.
and (3) the aggregate assets of all nonconforming affiliates do not exceed 50 percent of the aggregate assets of the health service corporation and all affiliates.  Notwithstanding the above, a reorganization approved by the commissioner pursuant to section 5 of P.L.     , c.   (C.          ) (pending before the Legislature as this bill), whereby the mutual holding company is a charitable and benevolent institution as provided in section 41 of P.L.1985, c.236 (C.17:48E-41), shall not constitute a material change in form for purposes of P.L.2001, c.131 (C.17:48E-49 et seq.).
and (3) the aggregate assets of all nonconforming affiliates do not exceed 50 percent of the aggregate assets of the health service corporation and all affiliates.  Notwithstanding the above, a reorganization approved by the commissioner pursuant to section 5 of P.L.2020, c.145 (C.17:48E-46.5), whereby the mutual holding company is a charitable and benevolent institution as provided in section 41 of P.L.1985, c.236 (C.17:48E-41), shall not constitute a material change in form for purposes of P.L.2001, c.131 (C.17:48E-49 et seq.).
of section 1 of P.L.1985, c.
of section 1 of P.L.1985, c.236 (C.17:48E-1).
236 (C.17:48E-1).
       18.  Section 1 of P.L.1970, c.
(cf:
P.L.2001, c.131, s.1)        18.  Section 1 of P.L.1970, c.
C.17:27A-1.  Definitions.
22 (C.17:27A3) that control does not exist in fact.
22 (C.17:27A-3) that control does not exist in fact.
A mutual holding company system resulting from a mutualization and reorganization of a health service corporation pursuant to section 5 of P.L.     , c.   (C.          )(pending before the Legislature as this bill), shall be an insurance holding company system pursuant to P.L.1970, c.
A mutual holding company system resulting from a mutualization and reorganization of a health service corporation pursuant to section 5 of P.L.2020, c.145 (C.17:48E-46.5), shall be an insurance holding company system pursuant to P.L.1970, c.
     k.    “Health maintenance organization” means any person operating under a certificate of authority issued pursuant to P.L.1973, c.
     k.    “Health maintenance organization” means any person operating under a certificate of authority issued pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.).
337 (C.26:2J-1 et seq.).
     l.     “Enterprise risk” means any activity, circumstance, event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer's Risk-Based Capital to fall into company action level as set forth in administrative rules adopted by the commissioner which reflect the standards set forth in the Risk-Based Capital For Insurers Model Act adopted by the National Association of Insurance Commissioners or would cause the insurer to be in hazardous financial condition as defined in administrative rules adopted by the commissioner which reflect the standards set forth in the Model Regulation adopted by the National Association of Insurance Commissioners to define standards and the commissioner's authority over companies deemed to be in a hazardous financial condition.
     l.     “Enterprise risk” means any activity, circumstance, event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer's Risk-Based Capital to fall into company action level as set forth in administrative rules adopted by the commissioner which reflect the standards set forth in the Risk-Based Capital For Insurers Model Act adopted by the National Association of Insurance Commissioners or would cause the insurer to be in hazardous financial condition as defined in administrative rules adopted by the commissioner which reflect the standards set forth in the Model Regulation adopted by the National Association of Insurance Commissioners to define standards and the commissioner's authority over companies deemed to be in a hazardous financial condition.  (cf:
  C.17:48E-46.17  Severability.
P.L.2014, c.81, s.1)        19.  (New section)  a.  The provisions of P.L.     , c.   (C.          ) (pending before the Legislature as this bill) shall be severable;
     19.  a.
and if any phrase, clause, sentence, or provision is deemed unenforceable, the remaining provisions of P.L.     , c.   (C.          ) (pending before the Legislature as this bill) shall be enforceable.
 The provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.) shall be severable;
     b.    The provisions of P.L.     , c.   (C.          ) (pending before the Legislature as this bill) shall be liberally construed to effectuate its purposes.
and if any phrase, clause, sentence, or provision is deemed unenforceable, the remaining provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.) shall be enforceable.
     b.    The provisions of P.L.2020, c.145 (C.17:48E-46.1 et al.) shall be liberally construed to effectuate its purposes.
                                            Provides for reorganization of health service corporation.
       Approved December 23, 2020.
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