HOUSE BILL REPORT

HB 1385

As Amended by the Senate

BYRepresentatives Dellwo, Winsley, Chandler, Day, Anderson and Nutley; by request of Insurance Commissioner

Amending merger or change in insurance entity status.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (14)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Baugher, Beck, Crane, Day, Dorn, Inslee, P. King, Nutley, Schmidt, and K. Wilson.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE MARCH 14, 1989

BACKGROUND:

The insurance code provides detailed regulatory procedures for the merger, rehabilitation, or liquidation of an insurance company.  Health care service contractors and health maintenance organizations are not subject to these procedures and no other specific statutory provision governs the merger, rehabilitation, or liquidation of these contractors and organizations.

SUMMARY:

The definition of insurer contained in the insurance code chapter governing mergers, rehabilitation, or liquidation of insurance companies is expanded to include health care service contractors and health maintenance organizations.

EFFECT OF SENATE AMENDMENTS:  Health care service contractors and health maintenance organizations are not subject to insurance code provisions governing merger or consolidation of insurance companies.

Fiscal Note:      Not Requested.

Effective Date:The bill contains an emergency clause and takes effect immediately.

House Committee ‑ Testified For:    Ed Southon, Deputy Chief Insurance Commissioner; and Basil Badley, Washington Dental Service.

House Committee - Testified Against:      Mel Sorensen, Washington Physicians Service.

House Committee - Testimony For:    The Commissioner needs immediate, clear authority to oversee liquidation of health care service contractors (HCSCs) and health maintenance organizations (HMOs). In addition, authority to review mergers between HCSCs or HMOs would be desirable although less critical than authority over liquidations.  Absent authority for Commissioner review of mergers, challenges to proposed mergers must be brought in federal court.

House Committee - Testimony Against:      The Commissioner should have authority over liquidation and rehabilitation of HCSCs and HMOs; but, amending statutory provisions governing insurance companies contradicts past legislative efforts to create separate and distinct statutory provisions governing HCSCs and HMOs. While the Commissioner may need a quick short term solution for authority over liquidations, similar authority governing mergers is not immediately necessary and requires a more careful analysis.

VOTE ON FINAL PASSAGE:

      Yeas 98