Chapter 1739: MULTIPLE EMPLOYER WELFARE ARRANGEMENTS

1739.01 Multiple employer welfare arrangement definitions.

As used in sections 1739.01 to 1739.22 of the Revised Code:

(A) "Agreement" means a written agreement executed by members of a multiple employer welfare arrangement that establishes an arrangement, provides for its operation, and through which each member agrees to assume and discharge all liability under sections 1739.01 to 1739.22 of the Revised Code relating to or arising out of the operation of the arrangement in proportion to the ratio of the total number of covered employees employed by the member at the time the liability arose to the total number of covered employees employed by all members of the arrangement at the time the liability arose.

(B) "Excess insurance" or "stop-loss insurance" means an insurance policy purchased by a multiple employer welfare arrangement under which it receives reimbursement for benefits it pays in excess of a preset deductible or limit.

(C) "Fully insured program" means a program by which benefits are provided to members, employees of members, or the dependents of such members or employees, through the purchase of sickness and accident insurance from an insurance company licensed to do business in this state or health services purchased from a health insuring corporation authorized to do business in this state.

(D) "Group self-insurance program" means a program by which benefits are provided to members, employees of members, or the dependents of such members or employees, other than through sickness and accident insurance purchased from an insurance company licensed to do business in this state or health care services purchased from a health insuring corporation authorized to do business in this state.

(E) "Member" means an individual or an employer that is a member of an organization sponsoring a multiple employer welfare arrangement.

(F) "Multiple employer welfare arrangement" means an employee welfare benefit plan, trust, or any other arrangement, whether such plan, trust, or arrangement is subject to the "Employee Retirement Income Security Act of 1974," 88 Stat. 829, 29 U.S.C.A. 1001 , as amended, that is established or maintained for the purpose of offering or providing, through group insurance or group self-insurance programs, medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, or death, to the employees, and their dependents, of two or more employers, or to two or more self-employed individuals and their dependents.

(G) "Premium" means any type of consideration paid to a multiple employer welfare arrangement by a member for coverage under the arrangement.

(H) "Surplus" means the total assets of the multiple employer welfare arrangement less its liabilities and reserves as determined in accordance with the requirements of sections 1739.01 to 1739.21 of the Revised Code.

(I) "Third-party administrator" has the same meaning as "administrator" in section 3959.01 of the Revised Code.

Effective Date: 03-22-1999

1739.011 [Repealed].

Effective Date: 10-01-1987

1739.02 Group self-insurance program under multiple employer welfare arrangement.

(A) A trade association, industry association, or professional association that has been organized and maintained in good faith for a continuous period of one year or more for purposes other than obtaining insurance may establish, maintain, or operate a group self-insurance program under a multiple employer welfare arrangement that is chartered and created in this state under sections 1739.01 to 1739.22 of the Revised Code.

(B) Except as provided in section 9.833 and sections 1739.01 to 1739.22 of the Revised Code, no multiple employer welfare arrangement or other entity by which two or more employers jointly participate in a common employee welfare benefit plan shall operate a group self-insurance program in this state after four months after the effective date of this section.

(C) Sections 1739.01 to 1739.22 of the Revised Code do not apply to any entity that establishes, maintains, or operates a fully-insured program.

(D) No person shall establish, operate, or maintain a multiple employer welfare arrangement providing benefits through a group self-insurance program in this state unless the multiple employer welfare arrangement has a valid certificate of authority from the superintendent of insurance.

Effective Date: 07-02-2004

1739.03 Certificate of authority issued by superintendent of insurance.

(A) No employer shall enter into an agreement to participate in a group self-insurance program unless the multiple employer welfare arrangement has been issued a certificate of authority by the superintendent of insurance. Employers or other organizers that propose to create an arrangement or arrangements and provide benefits through a group self-insurance program or group self-insurance programs shall apply to the superintendent for a certificate of authority.

If a trade association, industry association, or professional association establishes, maintains, or operates more than one multiple employer welfare arrangement subject to sections 1739.01 to 1739.22 of the Revised Code, the trade association, industry association, or professional association shall apply to the superintendent for only one certificate of authority which shall cover all such arrangements.

(B) When applying for a certificate of authority, a proposed multiple employer welfare arrangement or arrangements shall file with the superintendent a nonrefundable filing fee of one thousand dollars and an application setting forth all of the following:

(1) The name of each arrangement;

(2) The address of each arrangement's principal place of business;

(3) The name and address of a resident of this state designated and appointed as the registered agent of each proposed arrangement for service of process in this state in accordance with division (B) of section 1739.15 of the Revised Code. The person so designated and appointed shall be an officer of the arrangement.

(4) The names and addresses of the officers, directors, and trustees of each proposed arrangement and a statement of whether any of such officers, directors, and trustees have been convicted of any felony or misdemeanor within ten years prior to the date of the application;

(5) The powers of the officers, directors, and trustees;

(6) The term of office of each officer, director, and trustee;

(7) A brief outline of the method by which the administrative obligations of each arrangement will be met;

(8) A business plan describing the arrangement's anticipated method of operations for two years from its commencement of activities.

(9) A copy of the articles and bylaws of each arrangement;

(10) A copy of the agreement;

(11) The name and address of all third-party administrators;

(12) A copy of each agreement between each arrangement and all third-party administrators;

(13) A statement certified by an independent certified public accountant regarding the financial condition of each arrangement listing, on a form as may be prescribed by the superintendent, all of its assets and liabilities for the last month ending forty-five days prior to the application date;

(14) A copy of each contract, certificate, endorsement, and application form each proposed arrangement intends to issue or use;

(15) The names of any co-sponsors, promoters, trustees, or other facilitators involved with the establishment of each arrangement;

(16) Other information, documents, or statements as the superintendent requires.

(C) All fees collected under division (B) of this section shall be paid into the state treasury to the credit of the department of insurance operating fund created under section 3901.021 of the Revised Code.

Effective Date: 04-09-1993

1739.04 Application procedure.

(A) The superintendent of insurance shall examine the application made under section 1739.03 of the Revised Code to determine whether the multiple employer welfare arrangement will be able to comply with sections 1739.01 to 1739.22 of the Revised Code and any rules adopted pursuant to those sections. If the superintendent finds that the arrangement is capable of complying with such sections, he shall issue a certificate of authority authorizing the arrangement to operate in this state.

(B) The superintendent shall approve or disapprove an application for a certificate of authority within ninety days after his receipt of the application and all of the supporting information he has requested.

(C) The superintendent may refuse to issue or renew or may suspend or revoke the certificate of authority of any multiple employer welfare arrangement, if he finds that any of the following apply:

(1) The arrangement or its third-party administrator has failed, or will be unable, to comply with the applicable provisions of sections 1739.01 to 1739.22 of the Revised Code.

(2) The arrangement or its third-party administrator is, or will be, fraudulently operated, including misrepresentation by omission or otherwise.

(3) The arrangement or its third-party administrator is in such condition as to render further operations of the arrangement hazardous to the public interest or to the interest of the members and their employees.

(4) The arrangement is financially unable to meet its obligations and claims as they occur, or its third-party administrator is financially unable to meet its obligations.

(5) The arrangement or its third-party administrator has failed to file any report required under section 1739.09 of the Revised Code.

(D) If the superintendent refuses to issue or renew, or suspends or revokes a certificate of authority, he shall issue an order setting forth the reasons for refusal, suspension, or revocation and forward it to the multiple employer welfare arrangement. Any refusal, suspension, or revocation under this division does not affect the liability of the arrangement or its members for claims incurred prior to the date of the refusal, suspension, or revocation.

(E) Subject to the superintendent's review, any certificate of authority issued by the superintendent under this section shall be renewed annually, effective on the first day of January, upon payment by the multiple employer welfare arrangement of an annual fee of one thousand dollars. All fees collected under this division shall be paid into the state treasury to the credit of the department of insurance operating fund created under section 3901.021 of the Revised Code.

Effective Date: 04-09-1993

1739.05 Minimum enrollment.

(A) A multiple employer welfare arrangement that is created pursuant to sections 1739.01 to 1739.22 of the Revised Code and that operates a group self-insurance program may be established only if any of the following applies:

(1) The arrangement has and maintains a minimum enrollment of three hundred employees of two or more employers.

(2) The arrangement has and maintains a minimum enrollment of three hundred self-employed individuals.

(3) The arrangement has and maintains a minimum enrollment of three hundred employees or self-employed individuals in any combination of divisions (A)(1) and (2) of this section.

(B) A multiple employer welfare arrangement that is created pursuant to sections 1739.01 to 1739.22 of the Revised Code and that operates a group self-insurance program shall comply with all laws applicable to self-funded programs in this state, including sections 3901.04 , 3901.041 , 3901.19 to 3901.26 , 3901.38 , 3901.381 to 3901.3814 , 3901.40 , 3901.45 , 3901.46 , 3902.01 to 3902.14 , 3923.24 , 3923.282 , 3923.30 , 3923.301 , 3923.38 , 3923.581 , 3923.63 , 3923.80 , 3924.031 , 3924.032 , and 3924.27 of the Revised Code.

(C) A multiple employer welfare arrangement created pursuant to sections 1739.01 to 1739.22 of the Revised Code shall solicit enrollments only through agents or solicitors licensed pursuant to Chapter 3905. of the Revised Code to sell or solicit sickness and accident insurance.

(D) A multiple employer welfare arrangement created pursuant to sections 1739.01 to 1739.22 of the Revised Code shall provide benefits only to individuals who are members, employees of members, or the dependents of members or employees, or are eligible for continuation of coverage under section 1751.53 or 3923.38 of the Revised Code or under Title X of the "Consolidated Omnibus Budget Reconciliation Act of 1985," 100 Stat. 227, 29 U.S.C.A. 1161 , as amended.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 1/1/2010.

Effective Date: 07-24-2002; 03-30-2007; 2008 SB186 08-05-2008

1739.051 [Repealed].

Effective Date: 10-01-1987

1739.06 Filing information with superintendent.

(A) No certificate shall be furnished by any multiple employer welfare arrangement in connection with, or pursuant to any group self-insurance program, nor shall any endorsement, rider, or application that becomes or is designated to become a part of any certificate be used until all of the following have been filed by the arrangement with the superintendent of insurance:

(1) The form of the certificate, endorsement, rider, or application;

(2) The premium or rates, including the calculations, formulas, and supporting statistics used to establish the premium or rates;

(3) Actuarial certification of the premium or rates, or such other documentation that supports the premium or rates and that is acceptable to the superintendent;

(4) The classification of risks pertaining to the premium or rates.

(B) If the superintendent finds that any form of certificate, endorsement, rider, or application that has been filed with him under division (A) of this section contains any provision that is contrary to the law of this state, contains inconsistent provisions, or contains any question, provision, title, heading, backing, or other indication of its contents, that is ambiguous, misleading, or deceptive, or likely to mislead or deceive the member, certificate holder, or applicant, he shall give written notice of his finding to the multiple employer welfare arrangement that has filed the form, and thereafter no arrangement that has filed the form shall use the form in this state.

(C) After the expiration of thirty days from the filing of any form under division (A) of this section, or at any time after the superintendent has given written approval thereof, the superintendent may, after a hearing of which at least twenty days' written notice has been given to the multiple employer welfare arrangement issuing the form, withdraw approval on any ground stated in division (B) of this section. He shall effect disapproval by his written order, which shall state the ground for disapproval and the date, not less than thirty days after the hearing, when the withdrawal of approval shall become effective. After the date when the withdrawal of approval of any form becomes effective, the form shall not be used in this state.

Effective Date: 04-09-1993

1739.061 Standardized prescription identification information - pharmacy benefits to be included.

(A)

(1) This section applies to both of the following:

(a) A multiple employer welfare arrangement that issues or requires the use of a standardized identification card or an electronic technology for submission and routing of prescription drug claims;

(b) A person or entity that a multiple employer welfare arrangement contracts with to issue a standardized identification card or an electronic technology described in division (A)(1)(a) of this section.

(2) Notwithstanding division (A)(1) of this section, this section does not apply to the issuance or required use of a standardized identification card or an electronic technology for the submission and routing of prescription drug claims in connection with any of the following:

(a) Any program or arrangement covering only accident, credit, dental, disability income, long-term care, hospital indemnity, medicare supplement, medicare, tricare, specified disease, or vision care; coverage under a one-time-limited-duration policy of not longer than six months; coverage issued as a supplement to liability insurance; insurance arising out of workers' compensation or similar law; automobile medical payment insurance; or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

(b) Coverage provided under the medicaid program.

(c) Coverage provided under an employer's self-insurance plan or by any of its administrators, as defined in section 3959.01 of the Revised Code, to the extent that federal law supersedes, preempts, prohibits, or otherwise precludes the application of this section to the plan and its administrators.

(B) A standardized identification card or an electronic technology issued or required to be used as provided in division (A)(1) of this section shall contain uniform prescription drug information in accordance with either division (B)(1) or (2) of this section.

(1) The standardized identification card or the electronic technology shall be in a format and contain information fields approved by the national council for prescription drug programs or a successor organization, as specified in the council's or successor organization's pharmacy identification card implementation guide in effect on the first day of October most immediately preceding the issuance or required use of the standardized identification card or the electronic technology.

(2) If the multiple employer welfare arrangement or person under contract with it to issue a standardized identification card or an electronic technology requires the information for the submission and routing of a claim, the standardized identification card or the electronic technology shall contain any of the following information:

(a) The name of the multiple employer welfare arrangement;

(b) The individual's name, group number, and identification number;

(c) A telephone number to inquire about pharmacy-related issues;

(d) The issuer's international identification number, labeled as "ANSI BIN" or "RxBIN";

(e) The processor's control number, labeled as "RxPCN";

(f) The individual's pharmacy benefits group number if different from the insured's medical group number, labeled as "RxGrp."

(C) If the standardized identification card or the electronic technology issued or required to be used as provided in division (A)(1) of this section is also used for submission and routing of nonpharmacy claims, the designation "Rx" is required to be included as part of the labels identified in divisions (B)(2)(d) and (e) of this section if the issuer's international identification number or the processor's control number is different for medical and pharmacy claims.

(D) Each multiple employer welfare arrangement described in division (A) of this section shall annually file a certificate with the superintendent of insurance certifying that it or any person it contracts with to issue a standardized identification card or electronic technology for submission and routing of prescription drug claims complies with this section.

(E)

(1) Except as provided in division (E)(2) of this section, if there is a change in the information contained in the standardized identification card or the electronic technology issued to an individual, the multiple employer welfare arrangement or person under contract with it to issue a standardized identification card or an electronic technology shall issue a new card or electronic technology to the individual.

(2) A multiple employer welfare arrangement or person under contract with it is not required under division (E)(1) of this section to issue a new card or electronic technology to an individual more than once during a twelve-month period.

(F) Nothing in this section shall be construed as requiring a multiple employer welfare arrangement to produce more than one standardized identification card or one electronic technology for use by individuals accessing health care benefits provided under a multiple employer welfare arrangement.

Amended by 130th General Assembly File No. 25, HB 59, §101.01, eff. 9/29/2013.

Effective Date: 10-13-2005

1739.07 Voluntary termination by member.

(A)

(1) Except as provided in division (B) of section 1739.15 of the Revised Code, unless otherwise stated in the agreement, a member may elect to terminate voluntarily its participation in a multiple employer welfare arrangement operating a group self-insurance program by giving no less than thirty days' written notice to the arrangement. Except as provided in division (A)(2) of this section, the voluntary termination shall be approved by the board of the arrangement upon a finding that the member is in good standing, that both the member and the arrangement have met all the requirements of sections 1739.01 to 1739.22 of the Revised Code and any rules adopted by the superintendent of insurance pursuant to such sections, and that the member has complied with all the requirements of the agreement as of the proposed effective date of termination.

(2) If a member voluntarily terminates its participation in a multiple employer welfare arrangement at a time when the total number of covered employees employed by the member represents less than five per cent of the total number of covered employees employed by all members of the arrangement, the member's voluntary termination of its participation, unless otherwise stated in the agreement, does not require approval by the board of the arrangement.

(B)

(1) A multiple employer welfare arrangement operating a group self-insurance program may involuntarily terminate a member upon a finding by the board of the arrangement, after notice is given in accordance with division (B)(2) of this section, that the member has done any of the following:

(a) Failed to comply with the requirements of sections 1739.01 to 1739.22 of the Revised Code;

(b) Failed to comply with the articles and bylaws of the arrangement or the applicable agreement;

(c) Failed to pay its proportionate share of any premiums or installments thereof due the arrangement;

(d) Otherwise failed to discharge its obligations to the arrangement when due.

(2) A multiple employer welfare arrangement operating a group self-insurance program shall give the member written notice stating the time when the termination is effective, which time shall not be less than fifteen days from the date of the notice or any longer period as may be specified by rule of the superintendent or the agreement. Notice may be delivered in person, or sent by certified mail to the last address of record of the member. The notice may or may not be accompanied by a tender of the unearned premium paid by the member, calculated on a pro rata basis. If the tender is not made simultaneously with the notice, it shall be made within fifteen days after notice of termination unless an audit or rate investigation is required, in which case the tender shall be made as soon as practicable after completion of the audit or investigation.

(C) Any member that terminates its membership or is involuntarily terminated from membership in a multiple employer welfare arrangement pursuant to division (A) or (B) of this section shall remain liable for all obligations of the arrangement incurred during its membership in proportion to the ratio of the total number of covered employees employed by the member at the time of termination to the total number of covered employees employed by all members of the arrangement at the time of termination.

Effective Date: 04-09-1993

1739.08 Powers of board of trustees.

(A) A multiple employer welfare arrangement created pursuant to sections 1739.01 to 1739.22 of the Revised Code shall be operated by a board of trustees chosen by a majority of the participating members of the arrangement in accordance with sections 1739.01 to 1739.22 of the Revised Code and with the articles and bylaws of the arrangement.

(B) The board, in addition to other powers contained in its articles, shall do all of the following:

(1) Invest and reinvest funds held by it in accordance with section 3925.08 of the Revised Code;

(2) Collect and disburse all money due or payable;

(3) Employ and contract with actuaries, accountants, and other agents and employees necessary for the operation of the arrangement.

(C) The board, in addition to other powers contained in its articles, may do all of the following:

(1) Employ and contract with banks, corporate trustees, insurance agents, and insurers authorized to do business in this state;

(2) Employ third-party administrators;

(3) Contract with any person or any agency of the state or of a political subdivision for the use of services or facilities necessary, useful, or incidental to the operation of the arrangement;

(4) Employ legal counsel;

(5) Execute contracts necessary or incidental to the operation of the arrangement;

(6) Pay dividends, with the approval of the superintendent of insurance, to or levy assessments on its members;

(7) Purchase bonds and insurance necessary to comply with requirements of the "Employee Retirement Income Security Act of 1974," 88 Stat. 829, 29 U.S.C.A. 1001 , as amended, sections 1739.01 to 1739.22 of the Revised Code, and rules adopted by the superintendent pursuant to such sections;

(8) Perform such other acts, not inconsistent with sections 1739.01 to 1739.22 of the Revised Code or other laws of this state.

Effective Date: 04-09-1993

1739.09 Annual report.

(A) Each multiple employer welfare arrangement operating a group self-insurance program, no later than the thirty-first day of March, shall make and file with the superintendent of insurance an annual report of its affairs and operations during the last preceding calendar year. The report shall be made pursuant to the forms, instructions, and manuals prescribed by the national association of insurance commissioners for the preparation of statutory financial statements and other financial information for domestic insurance companies other than life. However, the superintendent may modify such prescribed forms, instructions, and manuals as he considers necessary.

(B) For circumstances not addressed by the forms, instructions, and manuals prescribed by the national association of insurance commissioners, the superintendent may determine accounting practices and methods for purposes of preparing statutory financial statements and other financial information.

(C) For the purposes of preparing an annual report required under division (A) of this section, the arrangement shall report admitted assets in accordance with rules adopted by the superintendent in accordance with Chapter 119. of the Revised Code.

(D) The superintendent may employ actuaries, accountants, or other professionals to assist in performing the review of the report filed pursuant to division (A) of this section.

(E) At the request of the arrangement, the superintendent shall furnish a printed copy of the forms for the filing of statutory financial statements and other financial information required to be made by it under division (A) of this section.

(F) No arrangement shall fail to file a report with the superintendent in compliance with division (A) of this section.

Effective Date: 04-09-1993

1739.10 Examinations by superintendent.

The superintendent of insurance, or any person appointed by him, may examine, as often as he considers it necessary, the affairs of a multiple employer welfare arrangement and its members.

The arrangement shall pay to the superintendent the expenses incurred by the department of insurance in making an examination authorized under this section. To the extent that expenses are the result of the use of the personnel of the examination department of the department of insurance, the superintendent shall remit expenses paid to him by the arrangement to the state treasury to the credit of the superintendent's examination fund pursuant to section 3901.071 of the Revised Code.

As used in this section, "expenses" has the same meaning as in section 3901.07 of the Revised Code.

Effective Date: 04-09-1993

1739.11 Determining financial capacity of multiple employer welfare arrangement.

In determining the financial capacity of a multiple employer welfare arrangement operating a group self-insurance program to pay employee welfare benefit obligations promptly and to otherwise meet its obligations under sections 1739.01 to 1739.22 of the Revised Code, the superintendent of insurance may take into consideration all of the following:

(A) Maintenance of minimum reserves that are necessary in the exercise of sound and prudent actuarial judgment either/and that are certified by a member of the American academy of actuaries as having been computed in accordance with accepted loss reserving standards and as being fairly stated in accordance with sound loss reserving principles, or determined to be sufficient through such other documentation acceptable to the superintendent;

(B) The existence and face value of contracts or policies of excess insurance;

(C) Any other measure of financial capacity as the superintendent considers appropriate.

Effective Date: 04-09-1993

1739.12 Excess loss funding program.

(A) The excess loss funding program of a multiple employer welfare arrangement operating a group self-insurance program shall be filed with the superintendent of insurance.

(B) As a condition to the issuance and maintenance of a certificate of authority, a multiple employer welfare arrangement operating a group self-insurance program shall purchase individual stop-loss insurance from insurers authorized to transact business in this state with a deductible retention of no more than five per cent of the arrangement's annual aggregate premium up to one million dollars and no more than two and one-half per cent of the arrangement's annual aggregate premium above that amount. If the superintendent determines that aggregate stop-loss insurance is available for arrangements, the arrangement also shall purchase, as a condition to the issuance and maintenance of a certificate of authority, aggregate stop-loss insurance from insurers authorized to transact business in this state with a deductible retention of no more than one hundred twenty-five per cent of its projected claims for the succeeding fiscal year.

(C) Any excess or stop-loss insurance policy purchased by a multiple employer welfare arrangement shall provide that the superintendent must be notified by the arrangement of the cancellation of the policy for any reason, including the failure of the arrangement to pay any applicable premium.

Effective Date: 04-09-1993

1739.13 Minimum surplus - investment and maintenance of assets.

(A) A multiple employer welfare arrangement operating a group self-insurance program shall maintain a minimum surplus of not less than one hundred fifty thousand dollars or such higher amounts of surplus as the superintendent of insurance may establish by rule for the protection of the members and their employees.

(B) Except as otherwise provided for in sections 1739.01 to 1739.21 of the Revised Code, the assets of a multiple employer welfare arrangement operating a group self-insurance program shall be invested only in securities or other investments permitted by the laws of this state for the investment of assets of domestic insurance companies other than life.

(C) A multiple employer welfare arrangement operating a group self-insurance program shall maintain assets in cash, receivables, or securities authorized by the laws of this state for the investment of assets of domestic insurance companies other than life in an amount that is equivalent to or higher than the unearned premiums and minimum surplus required under sections 1739.01 to 1739.22 of the Revised Code, the reserves for losses outstanding and unpaid, and any other liabilities of the arrangement.

Effective Date: 04-09-1993

1739.14 Payment of premiums by members.

(A) Each member shall pay to the multiple employer welfare arrangement operating a group self-insurance program a premium equal to its share of the arrangement's projected obligation for employee welfare benefit liability, administrative expenses, and other costs incurred by the arrangement as determined by the board of the arrangement or by a third-party administrator and approved by the board of the arrangement. This amount may be adjusted by the board according to the claims experience of each participating member in accordance with criteria set forth in the articles or bylaws of the arrangement.

(B) Each member shall pay a premium for each year at the beginning of each fiscal year unless otherwise provided for under the agreement.

(C) A multiple employer welfare arrangement operating a group self-insurance program shall make payments, or arrange to have payments made, to the employees of the members out of the fund for employee welfare benefits in accordance with section 3901.38 and sections 3901.381 to 3901.3814 of the Revised Code.

(D) A board of the multiple employer welfare arrangement operating a group self-insurance program shall determine whether any dividends or assessments shall be paid to or levied against participating members.

Effective Date: 07-24-2002

1739.15 Liability of members.

(A) A member of a multiple employer welfare arrangement operating a group self-insurance program is liable for all legal obligations of the arrangement, including any obligations of the arrangement to pay claims against it arising out of any occurrence, incident, or accident covered under sections 1739.01 to 1739.22 of the Revised Code, in proportion to the ratio of the total number of covered employees employed by the member on the first day of the month that the obligation arose to the total number of covered employees employed by all members of the arrangement at the time the obligation arose.

(B) Division (A) of this section applies only to the extent that the total legal obligations of the multiple employer welfare arrangement exceed the amount of any separate reserve fund that is established by the arrangement for payment of the legal obligations of the arrangement, provided the fund consists only of amounts in excess of the minimum reserves required under division (A) of section 1739.11 of the Revised Code.

(C) A multiple employer welfare arrangement operating a group self-insurance program may sue and be sued in its own name.

If the principal place of business of the arrangement is located in this state, service of process shall be perfected upon the arrangement by serving its registered agent in this state for service of process or by serving the arrangement in accordance with the laws of this state.

If the principal place of business of the arrangement is not located in this state, the arrangement shall agree and consent that a civil action may be commenced against it in the court of common pleas of the county of this state in which the cause of action arose or in which the plaintiff resides. Service of process in the action shall be perfected upon the arrangement by serving the superintendent of insurance in accordance with the laws of this state.

Effective Date: 04-09-1993

1739.16 Contracts with third-party administrator.

(A) If a multiple employer welfare arrangement operating a group self-insurance program contracts with a third-party administrator that is not an employee of the arrangement, it shall enter into a written agreement. The agreement is subject to review and approval by the superintendent of insurance in accordance with this section.

(B) The agreement may provide both of the following:

(1) The right of substitution of the third-party administrator and the revocation of the agreement upon notice to the superintendent;

(2) Restrictions upon the exercise of powers by the third-party administrator.

(C) The terms of the agreement shall be reasonable and equitable. The agreement and any amendments to the agreement shall be filed by the arrangement with the superintendent at least thirty days prior to their use. Any agreement and amendments that have not been disapproved by the superintendent within thirty days after their filing with him shall be deemed to be approved.

(D) The multiple employer welfare arrangement shall furnish a copy of the agreement and any amendments to the agreement to each member upon request.

(E) Except as provided in this division and division (D) of this section, the agreement and any amendments to the agreement are confidential and privileged and shall not be released to the public by the superintendent without the prior written consent of the parties to the agreement. However, the superintendent, without the prior written consent of the parties, may release to the public, in the manner the superintendent considers appropriate, all or any part of the agreement or any amendments to the agreement if the superintendent does both of the following:

(1) Prior to release, gives notice and opportunity to be heard to the arrangement and its affiliates that would be affected by the release;

(2) Determines that the release will serve the interests of the members and their employees, or the public.

Effective Date: 04-09-1993

1739.17 Fiduciary status of trustee, officer or third-party administrator.

A trustee, officer, or third-party administrator of a multiple employer welfare arrangement operating a group self-insurance program that receives, collects, disburses, or invests money in connection with the activities of the arrangement is a fiduciary as defined in the "Employee Retirement Income Security Act of 1974," 88 Stat. 829, 29 U.S.C.A. 1001 , as amended.

Effective Date: 04-09-1993

1739.18 Contracts with third-party administrators.

A multiple employer welfare arrangement operating a group self-insurance program shall contract only with a third-party administrator that meets all of the following conditions:

(A) The third-party administrator has and maintains a fidelity bond as required by the "Employee Retirement Income Security Act of 1974," 88 Stat. 829, 29 U.S.C.A. 1001 , as amended.

(B) The third-party administrator has and maintains errors and omissions coverage or other appropriate liability insurance in an amount set forth in rules adopted by the superintendent. The arrangement shall file with the superintendent a certificate of the insurer or other appropriate evidence of such coverage or insurance.

(C) The third-party administrator maintains an office in this state for the payment, processing, adjustment, and settlement of the claims of the arrangement.

Effective Date: 04-09-1993

1739.19 Member and employees deemed insureds or policyholders.

(A) For the purpose of determining whether a multiple employer welfare arrangement operating a group self-insurance program has violated any provision of the Revised Code or any rule adopted by the superintendent of insurance, a member or its employees are deemed "insureds" or "policyholders" as used in Title XXXIX [39] of the Revised Code.

(B) Notwithstanding division (A) of this section, no multiple employer welfare arrangement operating a group self-insurance program shall be considered an insurer for the purposes of Chapters 3955. and 3956. of the Revised Code, or the laws of this state that relate solely to insurers or insurance companies.

(C) Except for the purpose of describing any sickness and accident or excess insurance or stop-loss insurance policy to which a multiple employer welfare arrangement operating a group self-insurance program is a party, no such arrangement shall use in its name, contracts, literature, advertising in any medium, or any other printed matter the words "insurance," "casualty," "surety," "mutual," or any other words descriptive of the insurance business or deceptively similar to the name or description of any insurer doing business in the state.

Effective Date: 04-09-1993

1739.20 Prohibited acts.

(A) No multiple employer welfare arrangement operating a group self-insurance program shall do any of the following:

(1) Refuse, without just cause, to pay proper claims arising under coverage provided by the arrangement;

(2) Compel, without just cause, employee claimants of members or other persons entitled to the proceeds of the coverage to accept less than the amount due them;

(3) Compel, without just cause, employee claimants of members or other persons entitled to the proceeds of the coverage to bring an action against the arrangement to secure full payment or settlement thereof.

(B) No officer, director, trustee, third-party administrator, member of any board or committee, or employee of a multiple employer welfare arrangement operating a group self-insurance program who is charged with the duty of investing or handling the arrangement's assets shall do any of the following:

(1) Deposit or invest the assets except in the name of the arrangement;

(2) Borrow the assets of the arrangement;

(3) Have a pecuniary interest in any loan, pledge of deposit, security, investment, sale, purchase, exchange, reinsurance, or other similar transaction or property of the arrangement;

(4) Take or receive for his own use any fee, brokerage, commission, gift, or other consideration for, or use any fee, brokerage, commission, gift, or other consideration for, or on account of any transaction made by or on behalf of the arrangement. Division (B)(4) of this section does not prevent either of the following:

(a) The reimbursement of a third-party administrator for administrative services related to the adjustment and settlement of claims pursuant to a contract with an arrangement;

(b) The payment of reasonable compensation to a corporation or firm, which is affiliated with a trade association, industry association, or professional association that establishes, maintains, or operates the arrangement, for necessary services performed or sales or purchases made to or for the arrangement in the ordinary course of the arrangement's business.

(C) No multiple employer welfare arrangement operating a group self-insurance program shall guarantee any financial obligation of any of its officers, directors, trustees, board or committee members, or third-party administrators.

(D) This section does not prohibit a trustee, officer, director, member of a board or committee, or employee of a multiple employer welfare arrangement operating a group self-insurance program from being covered by the arrangement as a member or an employee of a member.

(E) The superintendent of insurance may allow, by rule, exceptions to division (B) of this section to allow the payment of reasonable compensation to a trustee or third-party administrator who is not an officer or employee of the multiple employer welfare arrangement operating a group self-insurance program or to a corporation or firm with which a trustee or third-party administrator is affiliated, for necessary services performed or sales or purchases made to or for the arrangement in the ordinary course of the arrangement's business and in the usual, private[,] professional or business capacity of the trustee, third-party administrator, corporation, or firm.

Effective Date: 04-09-1993

1739.201 [Repealed].

Effective Date: 10-01-1987

1739.21 Fines - probation.

(A) The superintendent of insurance, after notice and opportunity for hearing in accordance with Chapter 119. of the Revised Code, may impose a fine upon a multiple employer welfare arrangement operating a group self-insurance program, a third-party administrator, or other entity if he finds either of the following:

(1) The arrangement, third-party administrator, or other entity, through the acts of its officers, directors, board or committee members, employees, agents, or representatives, has engaged in an act in violation of any applicable provision of division (B) of section 1739.02 , division (F) of section 1739.09 , or division (A), (B), or (C) of section 1739.20 of the Revised Code or of any rule or order adopted or issued by the superintendent to enforce or carry out the purposes of such sections;

(2) Division (C)(2), (3), (4), or (6) of section 1739.04 of the Revised Code, or any rule or order adopted or issued by the superintendent to enforce or carry out the purposes of such section, applies to the arrangement, third-party administrator, or other entity.

(B) The fine imposed for any violation described in division (A) of this section shall not exceed one thousand dollars for each violation, except that a fine of not more than five thousand dollars may be imposed for each act of willful misconduct constituting a violation described in division (A) of this section.

(C) In addition to any penalty provided under this section, the superintendent, in lieu of an order of suspension or revocation under section 1739.04 of the Revised Code, may place any multiple employer welfare arrangement on probation for a period not to exceed one year for each violation described in division (A) of this section, and may subject the arrangement to a fine of up to one thousand dollars for each such violation. If the arrangement or its third-party administrator knew or reasonably should have known that the arrangement was engaged in a violation described in division (A) of this section, the fine provided in this division may be increased to an amount up to five thousand dollars for each such violation.

(D)

(1) If the superintendent places an arrangement on probation under division (C) of this section, the superintendent may appoint a supervisor to supervise the arrangement and may prohibit the arrangement from doing any of the following, during the period of probation, without the prior approval of the superintendent or the supervisor:

(a) Dispose of, convey, or encumber any of its assets or its business in force;

(b) Withdraw from any of its bank accounts;

(c) Lend any of its funds;

(d) Invest any of its funds;

(e) Transfer any of its property;

(f) Incur any debt, obligation, or liability;

(g) Merge or consolidate with another company;

(h) Enter into any new reinsurance contract or treaty.

(2) All expenses incurred as a result of probation shall be borne by the arrangement.

(E) All fines collected under this section shall be paid into the state treasury to the credit of the department of insurance operating fund created under section 3901.021 of the Revised Code.

Effective Date: 04-09-1993

1739.211 [Repealed].

Effective Date: 10-01-1987

1739.22 Rules.

All rules adopted by the superintendent of insurance pursuant to sections 1739.01 to 1739.22 of the Revised Code shall be adopted in accordance with Chapter 119. of the Revised Code.

Effective Date: 04-09-1993

1739.23 to 1739.26 [Repealed].

Effective Date: 10-01-1987

1739.27 Requiring valid certificate of authority.

No insurance agent, broker, or other person shall advertise, solicit, negotiate, collect a premium on, or sell any enrollment in, a group self-insurance program in this state, unless the multiple employer welfare arrangement has a valid certificate of authority from the superintendent of insurance.

Effective Date: 07-02-2004

1739.99 Penalty.

(A) Whoever violates division (B) of section 1739.02 of the Revised Code is guilty of a felony of the fourth degree.

(B) Whoever violates division (D) of section 1739.02 of the Revised Code is guilty of a felony of the fourth degree.

(C) Whoever violates section 1739.27 of the Revised Code is guilty of a misdemeanor of the first degree on a first offense and a felony of the fifth degree on each subsequent offense.

(D) If a person is found guilty under this section, the court may award restitution in accordance with section 2929.18 of the Revised Code.

Effective Date: 07-02-2004