Bill Summary for H 346 (2023-2024)

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Summary date: 

Apr 25 2023

Bill Information:

View NCGA Bill Details2023-2024 Session
House Bill 346 (Public) Filed Thursday, March 9, 2023
Intro. by Bradford, Setzer, Reives, Bell.

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Bill summary

House committee substitute to the 1st edition makes the following changes.

Revises new Part 3 of Article 65 of GS Chapter 58, regulating the reorganization of hospital service corporations into nonprofit holding corporation, as follows. Adds control to the Part's defined terms, defined by statutory cross-reference; deletes the identical definition set out in new GS 58-65-177. Modifies the definitions for nonprofit holding corporation and reorganization to specify that the indirect holding of membership interests in the hospital service corporation must be through another domestic corporation operating under GS Chapter 55A.

Amends new GS 58-65-177 to eliminate the permitted activities listed for a reorganization. Permits the transfer of a hospital service corporation's interests in subsidiaries or other owned businesses entities through distribution in connection with the reorganization. Adds authority to engage in other related transactions regarding interests between the service corporation and the nonprofit holding corporation and any other subsidiaries. Moves the provisions deeming the Part's provisions the exclusive means of reorganization approval to a stand alone statute, enacted as GS 58-65-178.

Amends new GS 58-65-179 to consistently refer to a hospital service corporation's charter. Now requires the Commissioner of Insurance to approve charter amendment within 30 days of receipt of the application unless the proposed amendments no not comply with GS Chapter 55A (was Article 65 or GS Chapter 55A).

Enacts new GS 58-65-180 to require a hospital service corporation reorganizing to file eight listed data points with the Commissioner. Authorizes the Commissioner to contract with professional advisors to assist in review of the submitted materials, at cost to the hospital service corporation and exempt from Articles 3 and 3C of GS Chapter 143. Requires the hospital service corporation to provide a notice of completion of reorganization to the Commissioner. Deems confidential, privileged, and not public record, any information submitted as part of a reorganization that constitutes trade secrets or personal information. Adds that privileged information is not subject to subpoena or discovery, and is not admissible evidence in any private civil action.

Amends GS 58-65-181, revising and adding to the requirements set forth for a nonprofit holding corporation upon and after reorganization. Deems the nonprofit holding corporation to remain a nonprofit corporation subject to GS Chapter 55A with no members (was, under GS 55A-1-40). Adds requirements for all or substantially all of the nonprofit holding corporation's net worth to be invested in insurance companies, affiliates, or subsidiaries that meat one of three criteria, excluding its investment portfolio held in the ordinary course of business. Allows the Commissioner to waive the investment requirement for showing of good cause. Excepts investments in affiliates and subsidiaries from the restrictions set out in GS 58-19-10. Adds that the nonprofit holding corporation and its subsidiaries are automatically a party to any delinquency proceeding under Article 30 involving a hospital service corporation that is a subsidiary of the nonprofit holding corporation due to a reorganization. Deems the assets of the nonprofit holding corporation to be assets of the estate of the hospital service corporation for purposes of satisfying claims pursuant to delinquency proceedings. Prohibits the nonprofit holding corporation from dissolving or liquidating without Commissioner-approval or pursuant to court order under Article 30. Adds a new requirement for the nonprofit holding corporation to annually file consolidated financial statements for the preceding calendar year. Authorizes the Commissioner to enforce nonprofit corporations' compliance pursuant to GS 58-2-40 and GS 58-2-60.

Changes the caption for new GS 58-65-183. Now provides that the hospital service corporation can make and pay direct or indirect dividends or distributions to the nonprofit holding corporation or its member and not be subject to listed state laws pertaining to conversion if the dividends or distributions satisfy the applicable standards for payments set forth in GS 55A-13-02 (authorized distributions of nonprofit corporation), GS 58-7-130 (dividends and distributions to stockholders), GS 58-19-25(d) (registration of insurers), and GS 58-19-30 (standards and management of an insurer within an insurance holding company). Specifies that if the hospital service corporation undertakes a conversion pursuant to GS 58-65-131, GS 58-65-132, and GS 58-65-133 at any time following a reorganization, then, for the purposes of that conversion, the references in GS 58-65-131, GS 58-65-132, and GS 58-65-133 to "fair market value of the  corporation" or "value of the corporation" mean the fair market value of the nonprofit holding corporation and its consolidated subsidiaries (was, fair market value of the nonprofit holding corporation alone).

Makes technical and organizational changes.