19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 38 39 Covffcilmember Elissa Silverman’ Councilmember Charles Allen A PROPOSED RESOLUTION IN THE COUNCIL OF THE DISTRICT OF COLUMBIA. To declare, on an emergency basis, the sense of the Council that the Department of Insurance, Securities, and Banking should promptly develop and order Group Hospitalization and ‘Medical Services, Inc. to implement a plan for reinvesting $56 million in excess 2011 surplus under the Medical Insurance Empowerment Amendment Act of 2008. RESOLVED, BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this resolution may be cited as the “Sense of the Council Regarding the 2011 Surplus Review of Groups Hospitalization and Medical Services, Inc, Emergency Resolution of 2016”. Sec. 2. The Council finds that: (1) Group Hospitalization and Medical Services, Inc. (“GHMSI"), a subsidiary of CareFirst BlueCross BlueShield, is the District’s only nonprofit hospital and medical services 141 42 43 45 46 47 48 49 St 52 53 54. 55 56 57 58 59 61 62 corporation, which was chartered by Congress in 1939 as a “charitable and benevolent institution.” (2) On December 16, 2008, the Council, citing “deep uncertainty surrounding CareFirst’s degree of dedication to its charitable public health mission,” unanimously adopted the Medical Insurance Empowerment Amendment Act of 2008, effective March 25, 2009 (D.C. Law 17-369; 56 DCR 1346) (“MIEAA”), to provide “a framework to ensure that CareFirst meets its public health obligation to the community.” (3) MIEAA requires the Department of Insurance, Securities, and Banking (DISB”) to review GHMSI’s surplus at least every 3 years to determine if itis excessive; if so, DISB must order GHMSI to submit a fair and equitable plan for dedicating the portion of the excess attributable to the District to community health reinvestment. (4) MIBAA further requires that if GHMSI fails to submit a plan as ordered, DISB shall deny rate increases for 12 months, or issue such orders as are necessary to enforce MIBAA, including developing a plan and ordering GHMSI to implement it. (5) On October 29, 2010, DISB determined that GHMSI’s 2008 surplus of $687 million was not excessive under MIEAA and ordered a subsequent review by July 31, 2012. (© On September 13, 2012, following an expedited petition for review of the October 29, 2010, decision, the District of Columbia Court of Appeals (“Court”) unanimously determined that DISB had failed to apply MIEAA, as mandated by the Council, and remanded the case for the next surplus review, to be completed no later than three years from the date of the previous order. (7) On December 30, 2014, DISB determined that GHMSI’s 2011 surplus was excessive by $268 million over the target of $696 million (721% RBC) and ordered GHMSI toa zg a 66 67 68 9 70 n 2 3 4 15 16 1 8 79 81 8 submit a plan for dedicating $56 million of that excess attributable to the District to community health reinvestment by February 13, 2015, subsequently amended to March 16, 2015. (8) On March 16, 2015, GHMSI submitted a plan claiming that its surplus was not excessive and that, in any case, it had already reinvested $56 million. (9) One week after GHSMI submitted its plan to DISB, on March 23, 2015, Virginia enacted a law prohibiting GHMSI from reinvesting excess surplus pursuant to the ‘Commissioner’s order without the approval of the Virginia State Corporation Commission. (10) One month after GHMSI submitted its statement to DISB, on April 14, 2015, Maryland enacted a law prohibiting GHMSI from reinvesting excess surplus pursuant to the ‘Commissioner's order without the approval of the Commissioner of the Maryland Insurance Administration. (11) On April 28, 2015, the Court denied petitions for review of the December 30, 2014, order by DISB. The Court determined that the petition was not ripe for review, because DISB had “not yet determined whether the community health reinvestment plan submitted by GHMSI is ‘fair and equitable” under MIEAA. (12) On December 18, 2015, Congress amended GHMSI’s charter to prohibit it from reinvesting excess surplus without the agreement of the District, Maryland, and Virginia, but expressly exempted the pending 2011 surplus review from this requirement. (13) On March 1, 2016, GHMSI reported a 2015 surplus of $960 million (882% RBC). This shows that a reinvestment of the $56 million ordered by the DISB would result in a surplus of $904 million (829% RBC), which far exceeds the target surplus of 721% RBC established by the December 30, 2014, order by DISB.85 86 87 89 91 92 93 95 98 99 100 101 102 103 104 105 106 107 (14) To date, the Commissioner has not issued a final order in the 2011 GHMSI surplus review under MIEAA. (15) It has been 7 years since the Council adopted MIEAA, and its intent to hold GHMSI accountable has never been effectuated, which undermines the Council’s legislative authority. (16) It has been more than 2 years since the date the Court determined that the remanded proceeding should be completed. (17) Ithas been more than a year since GHMSI filed a reinvestment plan, and DISB has not issued a final order on the merits of that plan. (18) During the delay, Maryland, Virginia, and Congress have taken steps to limit the District’s authority as the GHMSI’s primary regulator, which undermines the District’s home rule, (19) The delay means that $56 million in excess surplus funds has not yet been devoted to community health reinvestment as it should have been. Sec. 3. It is the sense of the Council that DISB should promptly ing the 2011 surplus review to a conclusion by: (1) Within 20 days of the effective date of this resolution, publishing notice of the agency's intent in the District of Columbia Register to develop a community reinvestment plan for $56 million in excess GHMSI 2011 surplus consistent with MIEAA; (2) Allowing public comment on a community reinvestment plan until 30 days after publication of notice in the District of Columbia Register; and (3) Approving the plan within 45 days of the deadline for public comment and ordering GHMSI to implement that plan within 30 days.108 109 110 un 112 Sec. 4. The Secretary to the Council shall transmit copies of this resolution, upon its adoption, to the Mayor and the Commissioner of the Department of Insurance, Securities, and Banking. Sec. 5. This resolution shall take effect immediately.OFFICE OF THE GENERAL COUNSEL 1 onmeivnta Aree NW Behe Watkin De S04 ‘ann ean MEMORANDUM TO: Councilmember Vincent B. Orange FROM: Ellen A. Efros, General Counsel €4€ March $1, 2016 RE: Legal sufficiency determination for the Sense of the Council Regarding the 2011 Surplus Review of Groups Hospitalization and Medical Services, Inc. Emergency Resolution of 2016 ‘The measure is legally and technically sufficient for Council consideration. ‘The proposed resolution does not establish law or rule. It expresses the sense of the Council that the Department of Insurance, Securities and Banking should act without delay to implement a plan to use 2011 excess surplus funds of Group Hospitalization and Medical Services, Inc. for community health reinvestment, as mandated by the Hospital and Medical Services Corporation Regulatory Act of 1996. Tam available if you have any questions. * Effective April 9, 1997 (D.C. Law 11-245; D.C. Official Code § 31-3501 et seq.) as amended by the Medical Insurance Empowerment Amendment Act of 2008, effective March 25, 2009 (D.C, Law 17-369; 56 DCR 1346).