SB0164

SENATE BILL 164

52nd legislature - STATE OF NEW MEXICO - second session, 2016

INTRODUCED BY

Stuart Ingle

AN ACT

RELATING TO INSURANCE; AMENDING SECTIONS OF THE NEW MEXICO INSURANCE CODE TO CHANGE PENALTY ENFORCEMENT PROVISIONS AND TO INCLUDE STUDENT POLICIES WITHIN PROVISIONS RELATING TO INDIVIDUAL HEALTH INSURANCE; AMENDING SECTIONS OF THE NEW MEXICO INSURANCE CODE TO ENACT CHANGES IN PROVISIONS RELATING TO PREMIUM TAXES, PREMIUM SURTAXES, THE ISSUANCE OF REFUNDS AND ELECTRONIC TRANSFERS; AMENDING THE INSURANCE FRAUD ACT TO ESTABLISH A FEE PAYMENT DEADLINE AND LATE PAYMENT PENALTY; ENACTING A SEVERABILITY SECTION TO THE RISK-BASED CAPITAL ACT; AMENDING A SECTION OF THE NEW MEXICO INSURANCE CODE REGARDING PENALTIES FOR FAILING TO REPORT OR PAY TAXES OR FEES; AMENDING SECTIONS OF THE NEW MEXICO INSURANCE CODE RELATING TO EXAMINATION REPORTS; REMOVING HIGHER EDUCATION INSTITUTIONAL POLICIES AND CONTRACTS FROM NEW MEXICO INSURANCE CODE PROVISIONS RELATING TO BLANKET HEALTH INSURANCE; AMENDING A SECTION OF THE MINIMUM HEALTHCARE PROTECTION ACT TO PROVIDE THE SUPERINTENDENT OF INSURANCE WITH EXTENDED TIME TO REVIEW INSURER MARKETING PROPOSALS; AMENDING A SECTION OF THE LAW FOR REGULATION OF CREDIT LIFE INSURANCE AND CREDIT HEALTH INSURANCE TO PROVIDE THE SUPERINTENDENT OF INSURANCE WITH EXTENDED TIME TO REVIEW INSURER FORMS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 59A-4-9 NMSA 1978 (being Laws 1984, Chapter 127, Section 53, as amended) is amended to read:

"59A-4-9. EXAMINATION REPORT--CONTENTS.--[Upon] No later than sixty days following completion of an examination, the examiner in charge shall [make a true] file with the office of superintendent of insurance a verified, written examination report [thereof comprising]. The examination report shall comprise only facts appearing upon the books, records or other documents of the person examined, or from information provided to the examiner during the course of the examination by the examinee's officers or agents and other individuals examined concerning its affairs, together with such conclusions and recommendations of the examiners as may reasonably be warranted from such facts. The report of examination shall be verified by the oath of the examiner in charge of the examination."

SECTION 2. Section 59A-4-10 NMSA 1978 (being Laws 1984, Chapter 127, Section 54, as amended) is amended to read:

"59A-4-10. EXAMINATION REPORT--[DISTRIBUTION] CONFERENCE [AND HEARING--ADOPTING]--ADOPTION ORDERS--INVESTIGATORY HEARINGS.--

A. Upon completion of the examination and receipt of the examination report, the superintendent shall [furnish two copies thereof] transmit the report to the person examined and shall allow the person a reasonable period, but not to exceed twenty days, within which to review the report and to file with the superintendent in writing requested corrections or modifications, with the reasons therefor. For good [cause] reason shown, the superintendent may grant reasonable extension of the review period.

B. [As soon as reasonably possible] Within twenty days after the superintendent's receipt of such request, the person examined shall confer with the superintendent and examiner relative to requested corrections and modification. [If through such conference the report is acceptable to the person examined with such changes as the superintendent approves, the superintendent shall adopt the report as so changed. If the report is not acceptable, the superintendent shall hold a hearing with respect to the report and adopt the report with such changes as result with the superintendent's approval from the conference and hearing.

C. If no changes are requested, upon expiration of the period allowed by the superintendent for review of the report, the superintendent may adopt the report.

D. At any point prior to adoption of the examination report, the superintendent may reject the report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and the examiner in charge shall subsequently report in accordance with Section 59A-4-9 NMSA 1978.]

C. Within thirty days of the end of the period allowed for the receipt of written submissions or rebuttals, the superintendent shall fully consider and review the report, together with any written submission or rebuttal, any conference and any relevant portion of the examiner's work papers and shall enter an order. An order entered pursuant to this subsection shall be accompanied by findings of fact and conclusions of law resulting from the superintendent's consideration and review of the examination report, any written submission or rebuttal, any conferences and any relevant portion of the examiner's work papers. An order shall be considered a final administrative decision that may be appealed pursuant to Section 59A-4-20 NMSA 1978. An order shall be served upon all parties by certified mail, together with a copy of the adopted examination report. An order issued pursuant to this subsection shall:

(1) adopt the examination report as filed or with modification or correction. If the examination report reveals that the person is operating in violation of statute, rule or prior order of the superintendent, the superintendent may order the person to take any action the superintendent considers necessary and appropriate to cure the violation;

(2) reject the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information and refiling pursuant to Section 59A-4-9 NMSA 1978; or

(3) call for an investigatory hearing with no less than twenty days' notice to the person for purposes of obtaining additional documentation, data, information or testimony.

D. An investigatory hearing held pursuant to Paragraph (3) of Subsection C of this section:

(1) may be conducted by the superintendent, or the superintendent may authorize a representative to conduct the hearing; provided that the superintendent shall not authorize an examiner to conduct the hearing;

(2) shall be conducted as a non-adversarial, confidential investigatory proceeding, as necessary for the resolution of any inconsistency, discrepancy or disputed issue apparent upon the face of the examination report or raised by or as a result of the superintendent's review of work papers and conferences or by the written submission or rebuttal of the person; and

(3) shall proceed expeditiously with discovery by the person limited to those work papers of the examiner that tend to substantiate any assertions set forth in any written submission or rebuttal.

E. Relating to an investigatory hearing held pursuant to Paragraph (3) of Subsection C of this section, the superintendent or the superintendent's representative may issue a subpoena to compel the attendance of any witness or the production of any document that the superintendent or the superintendent's representative deems relevant to the investigation, whether the document is under the control of the office of superintendent of insurance, the person being examined or any other person. Documents produced shall be included in the record and testimony taken by the superintendent or the superintendent's representative shall be made under oath and preserved for the record. The superintendent or the superintendent's representative shall pose questions to any person subpoenaed. Thereafter, the person being examined and the office of superintendent of insurance may present testimony relevant to the investigation. Only the superintendent or the superintendent's representative shall conduct cross-examination. The person being examined and the office of superintendent of insurance shall be permitted to make closing statements and may be represented by counsel of the person's choice. Nothing in this section shall be construed to require the office of superintendent of insurance to disclose any information or record that would indicate or demonstrate the existence or content of any investigation or activity of a criminal justice agency.

F. Within twenty days of the conclusion of an investigatory hearing pursuant to Paragraph (3) of Subsection C of this section, the superintendent shall enter an order in accordance with Paragraph (1) of Subsection C of this section."

SECTION 3. Section 59A-4-12 NMSA 1978 (being Laws 1984, Chapter 127, Section 56) is amended to read:

"59A-4-12. EXAMINATION REPORT--INFORMATION TO MANAGEMENT OF DOMESTIC ENTITIES.--If the examination is of a domestic insurer or other person domiciled in New Mexico, when the examination report has been filed for public inspection the chief executive officer of the insurer or person shall cause to be delivered to each member of the examinee's board of directors or other similar governing body, a copy of the report, or summary thereof and of its recommendations approved by the superintendent [and the officer's certificate to the effect that the report or summary has been so delivered shall be deemed to constitute proof that the contents of the report or summary are known to each such member]. Within thirty days of the issuance of the adopted report, the insurer shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders."

SECTION 4. Section 59A-5-30 NMSA 1978 (being Laws 1984, Chapter 127, Section 97) is amended to read:

"59A-5-30. PENALTIES FOR LATE, FALSE ANNUAL STATEMENTS.--

A. Any insurer failing, without just cause reasonably beyond control of the insurer, to file its annual statement as required in Section [96 of this article] 59A-5-29 NMSA 1978 shall be required to pay a penalty of one hundred dollars ($100) for each day's delay, but not to exceed five thousand dollars ($5,000) in aggregate amount [to be recovered in a civil action brought against the insurer in the name of the State of New Mexico by the attorney general. Such]. This penalty may be in addition to any refusal to continue, or suspension or revocation of, the insurer's certificate of authority for such failure.

B. Any director, officer, agent or employee of any insurer who subscribes to, makes or concurs in making or publishing any annual or other statement of the insurer required by law, knowing the same to contain any material statement [which] that is false, shall upon conviction thereof be guilty of a misdemeanor and upon conviction shall be sentenced to a fine of not more than one thousand dollars ($1,000), unless by its extent and nature the offense is punishable under other statutes as a felony."

SECTION 5. A new section of the Risk-Based Capital Act is enacted to read:

"[NEW MATERIAL] SEVERABILITY.--If any part or application of the Risk-Based Capital Act is held invalid, the remainder or its application to other situations or persons shall not be affected."

SECTION 6. Section 59A-6-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 102, as amended) is amended to read:

"59A-6-2. PREMIUM TAX--HEALTH INSURANCE PREMIUM SURTAX.--

A. The premium tax provided for in this section shall apply as to the following taxpayers:

(1) each insurer authorized to transact insurance in New Mexico;

(2) each insurer formerly authorized to transact insurance in New Mexico and receiving premiums on policies remaining in force in New Mexico, except that this provision shall not apply as to an insurer that withdrew from New Mexico prior to March 26, 1955;

(3) each plan operating under provisions of Chapter 59A, Articles 46 through 49 NMSA 1978;

(4) each property bondsman, as that person is defined in Section 59A-51-2 NMSA 1978, as to any consideration received as security or surety for a bail bond in connection with a judicial proceeding, which consideration shall be considered "gross premiums" for the purposes of this section; and

(5) each unauthorized insurer that has assumed a contract or policy of insurance directly or indirectly from an authorized or formerly authorized insurer and is receiving premiums on such policies remaining in force in New Mexico, except that this provision shall not apply if a ceding insurer continues to pay the tax provided in this section as to such policy or contract.

B. Each [such] taxpayer described in Subsection A of this section shall [pay in accordance with this subsection] report in Schedule T and supporting schedules of its annual financial statement on insurance or contracts covering risk within the state during the preceding calendar year and pay a premium tax of three and three-thousandths percent of the gross premiums and membership and policy fees [received or] written by it, [as reported in Schedule T and supporting schedules of its annual financial statement on insurance or contracts covering risks within this state during the preceding calendar year] less [all return premiums, including] dividends paid or credited to policyholders or contract holders [and premiums received for reinsurance on New Mexico risks].

C. In addition to the premium tax imposed pursuant to Subsection B of this section, each taxpayer described in Subsection A of this section that transacts health insurance in New Mexico or is a plan described in Chapter 59A, Article 46 or 47 NMSA 1978 shall pay a health insurance premium surtax of one percent of the [gross] direct health insurance premiums and membership and policy fees [received] written by it on hospital and medical expense incurred insurance or contracts; on nonprofit health care service plan contracts, excluding dental or vision only contracts; and on health maintenance organization subscriber contracts covering health risks within this state during the preceding calendar year, less all return health insurance premiums, including dividends paid or credited to health insurance policyholders or contract holders [and health insurance premiums received for reinsurance on New Mexico risks]. Except as provided in this section, all references in the Insurance Code to the premium tax shall include both the premium tax and the health insurance premium surtax.

D. For each calendar quarter, [an estimated] a report and payment of the premium tax and the health insurance premium surtax shall be made on April 15, July 15, October 15 and the following January 15. The [estimated] payments shall be equal to [at least one-fourth of the payment made during the previous calendar year or one-fifth of the actual payment due for the current calendar year, whichever is greater] the current actual tax due for the calendar quarter preceding the premium tax due date. The premium tax paid for each calendar quarter shall be based on all premiums written during that calendar quarter and shall not include any New Mexico medical insurance pool credits. The New Mexico medical insurance pool credits shall be granted only on the final annual premium tax return and shall be granted only after the New Mexico medical insurance pool final assessments have been issued for the prior calendar year. The credits granted for the New Mexico medical insurance pool shall not exceed the annual premium tax due on the final annual premium tax return. The final adjustment for payments due for the prior year shall be made with the final premium tax return, which shall be filed on April 15 of each year, at which time all taxes for that year are due. [Dividends paid or credited to policyholders or contract holders and refunds, savings, savings coupons and similar returns or credits applied or credited to payment of premiums for existing, new or additional insurance shall, in the amount so used, constitute premiums subject to tax under this section for the year in which so applied or credited.]

E. Exempted from the taxes imposed by this section are:

(1) premiums attributable to insurance or contracts purchased by the state or a political subdivision for the state's or political subdivision's active or retired employees; and

(2) payments received by a health maintenance organization from the federal secretary of health and human services pursuant to a contract issued under the provisions of 42 U.S.C. Section 1395 mm(g)."

SECTION 7. Section 59A-6-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 102, as amended by Section 6 of this act) is repealed and a new Section 59A-6-2 NMSA 1978 is enacted to read:

"59A-6-2. [NEW MATERIAL] PREMIUM TAX--HEALTH INSURANCE PREMIUM SURTAX.--

A. The premium tax provided for in this section shall apply as to the following taxpayers:

(1) each insurer authorized to transact insurance in New Mexico;

(3) each plan operating under provisions of Chapter 59A, Articles 46 through 49 NMSA 1978;

B. Each taxpayer described in Subsection A of this section shall report in Schedule T and supporting schedules of its annual financial statement on insurance or contracts covering risk within the state during the preceding calendar year and pay a premium tax of three and three-thousandths percent of the gross premiums and membership and policy fees written by it, less dividends paid or credited to policyholders or contract holders.

(1) report the direct premiums written by it on health insurance or on health contracts covering risk within the state during the preceding calendar year for the following lines of business as defined by the instructions to the exhibit of premiums, enrollment and utilization of a health insurer's annual financial statement:

(a) comprehensive hospital and medical;

(b) medicare supplement; and

(2) pay a health insurance premium surtax of one percent of the direct health premiums for the lines of business listed in Paragraph (1) of this subsection that are written by it during the preceding calendar year. Except as provided in this section, all references in the Insurance Code to the premium tax shall include both the premium tax and the health insurance premium surtax.

D. For each calendar quarter, a report and payment of the premium tax and the health insurance premium surtax shall be made on April 15, July 15, October 15 and the following January 15. The payments shall be equal to the current actual tax due for the calendar quarter preceding the premium tax due date. The premium tax paid for each calendar quarter shall be based on all premiums written during that calendar quarter and shall not include any New Mexico medical insurance pool credits. The New Mexico medical insurance pool credits shall be granted only on the final annual premium tax return and shall be granted only after the New Mexico medical insurance pool final assessments have been issued for the prior calendar year. The credits granted for the New Mexico medical insurance pool shall not exceed the annual premium tax due on the final annual premium tax return. The final adjustment for payments due for the prior year shall be made with the final premium tax return, which shall be filed on April 15 of each year, at which time all taxes for that year are due.

E. Exempted from the taxes imposed by this section are:

(1) premiums attributable to insurance or contracts purchased by the state or a political subdivision for the state's or political subdivision's active or retired employees; and

(2) payments received by a health maintenance organization from the federal secretary of health and human services pursuant to a contract issued under the provisions of 42 U.S.C. Section 1395 mm(g)."

SECTION 8. Section 59A-6-4 NMSA 1978 (being Laws 1984, Chapter 127, Section 104, as amended) is amended to read:

"59A-6-4. PENALTY FOR FAILURE TO REPORT OR PAY TAX OR FEES.--

A. Every insurer, bail bondsman, nonprofit health care plan, health maintenance organization, prepaid dental plan or prearranged funeral plan transacting business in New Mexico that fails to file when due any report for taxation, regardless of whether tax is due, or to pay when due any tax or fees as required in this article shall be liable to the state for the amount thereof [and for penalty of one thousand dollars ($1,000) for each month or part thereof it has failed to file the report or pay the tax or fees] after demand therefor. [Services of process in any action against a person to recover the tax, fee or penalty may be made upon the superintendent as attorney for service of process as provided in Section 59A-5-32 NMSA 1978.]

B. The penalty accrues the day after failure:

(1) to file a complete report upon the due date as required pursuant to Section 59A-6-2 NMSA 1978 and the New Mexico premium tax instructions promulgated by the office of superintendent of insurance;

(2) to pay in full a fee required pursuant to the Insurance Code; or

(3) to pay in full the amount owed as required pursuant to Section 59A-6-2 NMSA 1978 and the New Mexico premium tax instructions promulgated by the office of superintendent of insurance.

C. For failure to file a complete report or to pay in full a fee upon the due date pursuant to Paragraph (1) or (2) of Subsection B of this section, the penalty shall be one thousand dollars ($1,000) for each thirty-day period in which the report remains unfiled or the full fee unpaid.

D. In a finding of a determination of underpayment pursuant to Paragraph (3) of Subsection B of this section, the penalty shall be:

(1) two hundred fifty dollars ($250) for each thirty-day period in which the underpayment exists, accruing upon the date after the tax was due, when the amount of underpayment is less than two hundred fifty dollars ($250);

(2) five hundred dollars ($500) for each thirty-day period in which the underpayment exists, accruing upon the date after the tax was due, when the amount of underpayment is two hundred fifty dollars ($250) or greater, but less than five hundred dollars ($500); or

(3) one thousand dollars ($1,000) for each thirty-day period in which the underpayment exists, accruing upon the date after the tax was due, when the amount of underpayment is five hundred dollars ($500) or greater.

E. Service of process in any action against a person to recover the tax, fee or penalty may be made upon the superintendent as attorney for service of process, as provided in Section 59A-5-32 NMSA 1978.

F. As used in this section, "determination of underpayment" means a finding of underpayment made pursuant to an audit or review by the financial audit bureau of the office of superintendent of insurance, or other entity, that may occur at any time."

SECTION 9. Section 59A-6-5 NMSA 1978 (being Laws 1984, Chapter 127, Section 105, as amended) is amended to read:

"59A-6-5. DISTRIBUTION OF [DIVISION] OFFICE OF SUPERINTENDENT OF INSURANCE COLLECTIONS.--

A. All money received by the [division] office of superintendent of insurance for fees, licenses, penalties and taxes shall be paid daily by the superintendent to the state treasurer and credited to the "insurance department suspense fund" except as provided by:

(1) the Law Enforcement Protection Fund Act; and

(2) Section 59A-6-1.1 NMSA 1978.

B. The superintendent may authorize refund of money [erroneously] paid [as] in excess of liability for fees, licenses, penalties or taxes from the insurance department suspense fund under request for refund made within three years after the [erroneous] excess payment. In the case of premium taxes [erroneously] paid or overpaid in accordance with law, refund may also be requested as a credit against premium taxes due in any annual or quarterly premium tax return filed within three years of the [erroneous or] excess payment.

C. If required by a compact to which New Mexico has joined pursuant to law, the superintendent shall authorize the allocation of premiums collected pursuant to Section 59A-14-12 NMSA 1978 to other states that have joined the compact pursuant to an allocation formula agreed upon by the compacting states.

D. The "insurance operations fund" is created in the state treasury. The fund shall consist of the distributions made to it pursuant to Subsection E of this section. The legislature shall annually appropriate from the fund to the [division] office of superintendent of insurance those amounts necessary for the [division] office of superintendent of insurance to carry out its responsibilities pursuant to the Insurance Code and other laws. Any balance in the fund at the end of a fiscal year greater than one-half of that fiscal year's appropriation shall revert to the general fund.

E. At the end of every month, after applicable refunds are made pursuant to Subsection B of this section and after any allocations have been made pursuant to Subsection C of this section, the treasurer shall make the following transfers from the balance remaining in the insurance department suspense fund:

(1) to the "fire protection fund", that part of the balance derived from property and vehicle insurance business;

(2) to the insurance operations fund, that part of the balance derived from the fees imposed pursuant to Subsections A and E of Section 59A-6-1 NMSA 1978 other than fees derived from property and vehicle insurance business; and

(3) to the general fund, the balance remaining in the insurance department suspense fund derived from all other kinds of insurance business."

SECTION 10. Section 59A-16-21 NMSA 1978 (being Laws 1984, Chapter 127, Section 287, as amended) is amended to read:

"59A-16-21. PAYMENT OF CLAIM BY CHECK, [OR] DRAFT OR ELECTRONIC TRANSFER--FAILURE TO PAY--INTEREST.--

A. An insurer shall pay claims arising under its policies with checks or drafts, [which] or by electronic transfer if a claimant requests, that are promptly paid. Without amending other statutes dealing with checks, [and] drafts and electronic transfers of funds, a resident of New Mexico is granted a cause of action for ten percent of the amount of any check, [or] draft or electronic transfer of funds that is not paid or lawfully rejected within ten days of forwarding by a New Mexico financial institution, but in no case to be less than five hundred dollars ($500) plus costs of suit and [attorneys'] attorney fees. The insurer shall not be required to pay such civil damages for delay if it proves that the delay in processing and payment was caused by a financial institution or postal or delivery service and the check, [or] draft or electronic transfer of funds was paid or lawfully rejected within forty-eight hours of actual receipt of the draft, [or] check or electronic transfer of funds by the person on whom drawn.

B. Notwithstanding any provision of the Insurance Code, any insurer issuing any policy, certificate or contract of insurance, surety, guaranty or indemnity of any kind or nature [which] that fails for a period of forty-five days, after required proof of loss has been furnished, to pay to the person entitled the amount justly due shall be liable for the amount due and unpaid with interest on that amount at the rate of one and one-half times the prime lending rate, as determined by the superintendent, for New Mexico banks per year during the period the claim is unpaid.

C. Subsection B of this section shall not apply to any claims in arbitration or litigation."

SECTION 11. Section 59A-16C-14 NMSA 1978 (being Laws 1998, Chapter 115, Section 14, as amended) is amended to read:

"59A-16C-14. INSURANCE FRAUD FUND CREATED--APPROPRIATION.--

A. There is created an "insurance fraud fund" in the state treasury. All fees collected [under] pursuant to the provisions of the Insurance Fraud Act shall be deposited in the fund and are subject to appropriation for use in paying the expenses incurred by the superintendent in carrying out the provisions of the Insurance Fraud Act. Interest on the fund shall be credited to the fund. The fund is a continuing, nonreverting fund.

B. To implement the provisions of the Insurance Fraud Act, the superintendent shall determine a rate of assessment and collect a fee from authorized insurers in an amount not less than two hundred dollars ($200) and not exceeding one-tenth of one percent of the correctly reported direct written premiums on policies written in New Mexico by the authorized insurers. The fee shall be due each October 1. The failure of an insurer to pay this fee when due shall subject the insurer to a penalty of one thousand dollars ($1,000) per month or part thereof, after notice and demand therefor. The superintendent, after taking into account unexpended money produced by collection of the fee, shall adjust the rate of assessment each year to produce the amount of money that [he] the superintendent estimates will be necessary to pay expenses incurred by the superintendent in carrying out the provisions of the Insurance Fraud Act. The assessment for a title insurer, as defined in Section 59A-30-3 NMSA 1978, shall be determined by the superintendent at the annual hearing conducted pursuant to Section 59A-30-8 NMSA 1978.

C. In calculating the direct written premiums for an insurer pursuant to the provisions of this section, all direct written premiums for workers' compensation insurance shall be excluded from the calculation.

D. The fees required by this section are in addition to all other taxes and fees now imposed or that may be subsequently imposed."

SECTION 12. Section 59A-22-1 NMSA 1978 (being Laws 1984, Chapter 127, Section 422) is amended to read:

"59A-22-1. SCOPE OF ARTICLE.--[This article] Chapter 59A, Article 22 NMSA 1978 applies generally to policies of individual health insurance, including student policies. Nothing in [this] that article shall apply to or affect:

A. any policy of [workmen's] workers' compensation insurance or any policy of liability insurance with or without supplementary expense coverage therein; [or]

B. life insurance, endowment or annuity contracts or contracts supplemental thereto [which] that contain only such provisions relating to health insurance as:

(1) provide additional benefits in case of death by accident; and

(2) operate to safeguard such contracts against lapse or to give a special surrender value or special benefit or annuity in event the insured or annuitant becomes totally and permanently disabled, as defined by the contract or supplemental contract;

C. group or blanket health insurance, except as stated in Chapter 59A, Article 23 [of the Insurance Code] NMSA 1978; or

D. reinsurance."

SECTION 13. Section 59A-23-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 461) is amended to read:

"59A-23-2. BLANKET HEALTH INSURANCE.--

A. Blanket health insurance is [hereby] declared to be that form of health insurance covering special groups of not less than ten [(10)] persons as enumerated in one of the following paragraphs [(1) to (5) inclusive]:

(1) under a policy or contract issued to [any] a common carrier, which shall be deemed the policyholder, covering a group defined as all persons who may become passengers on [such] the common carrier;

(2) under a policy or contract issued to an employer, who shall be deemed the policyholder, covering [any] a group of employees defined by reference to exceptional hazards incident to [such] employment;

[(3) under a policy or contract issued to a college, school or other institution of learning or to the head or principal thereof, who or which shall be deemed the policyholder, covering students and teachers;

(4)] (3) under a policy or contract issued in the name of [any] a volunteer fire department or first aid or other such volunteer group, which shall be deemed the policyholder, covering all of the members of [such] the department or group; or

[(5)] (4) under a policy or contract issued to any other substantially similar group [which] that, in the discretion of the superintendent, may be subject to the issuance of a blanket health policy or contract.

B. An individual application shall not be required from a person covered under a blanket sickness or accident policy or contract.

C. All benefits under any blanket sickness and accident policy shall be payable to the person insured or [his] the person's agent, or to [his] the person's designated beneficiary or beneficiaries, or to [his] the person's estate, except that if the person insured [be] is a minor, such benefits may be made payable to [his] the minor's parent, guardian or other person actually supporting [him] the minor.

D. A blanket sickness or accident policy or contract issued to a college, school or other institution of learning or to the head or principal thereof shall not be identified or sold as a student health plan."

SECTION 14. Section 59A-23B-5 NMSA 1978 (being Laws 1991, Chapter 111, Section 5) is amended to read:

"59A-23B-5. POLICY OR PLAN DISCLOSURE REQUIREMENTS.--

A. Upon offering coverage under a policy or plan for any individual, family or group member, an insurer, fraternal benefit society, health maintenance organization or nonprofit healthcare plan shall provide the individual, family or group member with a written disclosure statement containing at least the following:

(1) a general explanation of those mandated benefits and providers not covered by the policy or plan;

(2) an explanation of the managed care and cost control features of the policy or plan, along with all appropriate mailing addresses and telephone numbers to be utilized by the insured or enrollees seeking information or authorization; and

(3) an explanation of the primary and preventive care features of the policy or plan.

B. Any disclosure statement provided pursuant to Subsection A of this section shall be written in a clear and understandable form and format and shall be separate from the insurance policy or certificate or other evidence of coverage provided to the individual, family and group member.

C. Before any insurer, fraternal benefit society, health maintenance organization or nonprofit healthcare plan issues a policy or plan contract, the insurer, fraternal benefit society, health maintenance organization or nonprofit healthcare plan shall obtain from the prospective policyholder, contract holder or member a signed written statement in which the prospective policyholder, contract holder or member:

(1) certifies as to the eligibility of the individual, family or group for coverage under the policy or plan;

(2) acknowledges the limited nature of the coverage, including the managed care and cost control features of the policy or plan;

(3) acknowledges that if misrepresentations are made regarding eligibility for coverage under a policy or plan, the person making such misrepresentations shall forfeit coverage provided by the policy or plan if the insurer, fraternal benefit society, health maintenance organization or nonprofit healthcare plan relied upon the misrepresentation to its detriment; and

(4) acknowledges that the prospective policyholder, contract holder or member had, at the time of application for the policy or plan, been offered the opportunity to purchase coverage that included all applicable mandated benefits and the prospective policyholder, contract holder or member rejected such coverage.

D. A copy of the written statement required by Subsection C of this section shall be provided to the prospective policyholder, contract holder or member no later than at the time of delivery of the policy or plan and the original signed written statement shall be retained in the files of the insurer, fraternal benefit society, health maintenance organization or nonprofit healthcare plan while the policy or plan remains in effect or for three years, whichever is less.

E. Any material statement made by an applicant for coverage under a policy or plan that falsely certifies to the applicant's eligibility for coverage shall serve as the basis for termination of coverage under the policy or plan if the insurer, fraternal benefit society, health maintenance organization or nonprofit healthcare plan detrimentally relied upon the misrepresentation.

F. All printed, radio or television communication intended to be used for marketing a policy or plan in the state and the disclosures required by Subsection A of this section shall be submitted for review and approval by the superintendent of insurance prior to use. The superintendent of insurance shall complete the review within [thirty] sixty days or else the materials submitted shall be deemed approved for use."

SECTION 15. Section 59A-25-8 NMSA 1978 (being Laws 1984, Chapter 127, Section 479) is amended to read:

"59A-25-8. FILING, APPROVAL AND WITHDRAWAL OF FORMS.--

A. All policies, certificates of insurance, notice of proposed insurance, applications for insurance, endorsements and riders delivered or issued for delivery in this state and the schedules of premium rates pertaining [thereto] to them shall be filed by the insurer with the superintendent.

B. The superintendent shall, within [thirty (30)] sixty days after the filing of any such policies, certificates of insurance, notice of proposed insurance, applications for insurance, endorsements and riders, disapprove any [such] form if the benefits provided therein are not reasonable in relation to the premium charge or if it contains provisions [which] that are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of the coverage or that are contrary to [any] a provision of the Insurance Code or of [any] a rule or regulation promulgated thereunder.

C. If the superintendent notifies the insurer that the form is disapproved, it is unlawful thereafter for the insurer to issue or use [such] the form. In [such] the notice, the superintendent shall specify the reason for disapproval and state that a hearing will be granted within twenty [(20)] days after request in writing by the insurer. No such policy, certificate of insurance, notice of proposed insurance, nor any application, endorsement or rider shall be issued or used until the expiration of thirty [(30)] days after it has been [so] filed, unless the superintendent gives [his] prior written approval thereto.

D. The superintendent may, at any time after a hearing held not less than twenty [(20)] days after written notice to the insurer, withdraw [his] approval of [any such] a form on any ground set forth in Subsection B [above] of this section. The written notice of hearing shall state the reason for the proposed withdrawal.

E. The insurer shall not issue [such] the forms or use them after the effective date of [such] withdrawal.

F. If a group policy of credit life insurance or credit health insurance has been or is delivered in another state, the insurer shall be required to file only the group certificate and notice of proposed insurance delivered or issued for delivery in this state as specified in Subsections B and D of Section [478 of this article] 59A-25-7 NMSA 1978, and [such] the forms shall be approved by the superintendent if they conform with the requirements specified in such subsections and if the schedules of premium rates applicable to the insurance evidenced by [such] the certificate or notice are not in excess of the insurer's schedules of premium rates filed with the superintendent."

SECTION 16. Section 59A-57-3 NMSA 1978 (being Laws 1998, Chapter 107, Section 3) is amended to read:

"59A-57-3. DEFINITIONS.--As used in the Patient Protection Act:

A. "continuous quality improvement" means an ongoing and systematic effort to measure, evaluate and improve a managed health care plan's process in order to improve continually the quality of health care services provided to enrollees;

B. "covered person", "enrollee", "patient" or "consumer" means an individual who is entitled to receive health care benefits provided by a managed health care plan;

C. "department" means the office of superintendent of insurance [department];

D. "emergency care" means health care procedures, treatments or services delivered to a covered person after the sudden onset of what reasonably appears to be a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could be reasonably expected by a reasonable layperson to result in jeopardy to a person's health, serious impairment of bodily functions, serious dysfunction of a bodily organ or part or disfigurement to a person;

E. "health care facility" means an institution providing health care services, including a hospital or other licensed inpatient center; an ambulatory surgical or treatment center; a skilled nursing center; a residential treatment center; a home health agency; a diagnostic, laboratory or imaging center; and a rehabilitation or other therapeutic health setting;

F. "health care insurer" means a person that has a valid certificate of authority in good standing under the Insurance Code to act as an insurer, health maintenance organization, nonprofit health care plan or prepaid dental plan;

G. "health care professional" means a physician or other health care practitioner, including a pharmacist, who is licensed, certified or otherwise authorized by the state to provide health care services consistent with state law;

H. "health care provider" or "provider" means a person that is licensed or otherwise authorized by the state to furnish health care services and includes health care professionals and health care facilities;

I. "health care services" includes, to the extent offered by the plan, physical health or community-based mental health or developmental disability services, including services for developmental delay;

J. "managed health care plan" or "plan" means a health care insurer or a provider service network when offering a benefit that either requires a covered person to use, or creates incentives, including financial incentives, for a covered person to use, health care providers managed, owned, under contract with or employed by the health care insurer or provider service network. "Managed health care plan" or "plan" does not include a health care insurer or provider service network offering a traditional fee-for-service indemnity benefit or a benefit that covers only short-term travel, accident-only, limited benefit [student health plan] or specified disease policies;

K. "person" means an individual or other legal entity;

L. "point-of-service plan" or "open plan" means a managed health care plan that allows enrollees to use health care providers other than providers under direct contract with or employed by the plan, even if the plan provides incentives, including financial incentives, for covered persons to use the plan's designated participating providers;

M. "provider service network" means two or more health care providers affiliated for the purpose of providing health care services to covered persons on a capitated or similar prepaid flat-rate basis that hold a certificate of authority pursuant to the Provider Service Network Act;

N. "superintendent" means the superintendent of insurance; and

O. "utilization review" means a system for reviewing the appropriate and efficient allocation of health care services given or proposed to be given to a patient or group of patients."

SECTION 17. DELAYED EFFECTIVE DATE.--The effective date of the provisions of Section 7 of this act is January 1, 2018.

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