5979776 Resolution 21-462, Sense of the Council Regarding the 2011 Surplus Review of Group Hospitalization and Medical Services, Inc. Emergency Resolution of 2016

 A RESOLUTION

                                                        

21-462

 

IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

 

April 5, 2016        

 

                                                                                                                                             

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 pursuant to 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 Group 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 corporation, which was chartered by Congress in 1939 as a charitable and benevolent institution.

(2) On December 16, 2008, following a determination by the Committee on Public Services and Consumer Affairs that “deep uncertainty surrounding CareFirst’s degree of dedication to its charitable public health mission” compelled the enactment of legislation to provide “a framework to ensure that CareFirst meets it public health obligation to the community,” the Council  unanimously enacted the Medical Insurance Empowerment Amendment Act of 2008, effective March 25, 2009 (D.C. Law 17-369; 56 DCR 1346) (“MIEAA”).   

(3) MIEAA requires the Department of Insurance, Securities, and Banking (“DISB”) to review GHMSI’s surplus at least every 3 years to determine if it is excessive. If it is determined to be excessive, DISB must order GHMSI to submit a fair and equitable plan for dedicating the portion of the excess attributable to the District for community health reinvestment.

(4) MIEAA 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 MIEAA, 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.

(6) 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 3 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% Risk Based Capital) (“RBC”) and ordered GHMSI to 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.

(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 enacted 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) It has 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 have not yet been devoted to community health reinvestment as they should have been.

 

Sec. 3. It is the sense of the Council that DISB should promptly bring 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.

 

Sec. 4. The Council shall transmit a copy 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.