§ 6124. Rates and contracts.
(a) General rule.--The rates charged to subscribers by hospital plan corporations, all rates of payments
to hospitals made by such corporations pursuant to the contracts provided for in this
chapter, all acquisition costs in connection with the solicitation of subscribers
to such hospital plans, the reserves to be maintained by such corporations, the certificates
issued by such corporations representing their agreements with subscribers, and any
and all contracts entered into by any such corporation with any hospital, shall, at
all times, be subject to the prior approval of the department.
(b) Procedure.--Every application for such approval shall be made to the department in writing and
shall be subject to the provisions of subsections (c) through (f) of section 6102
of this title (relating to certification of hospital plan corporations) except that
the department may substitute publication in the Pennsylvania Bulletin of notice of
reasonable opportunity to submit written comments for publication of opportunity for
hearing in any case where the right to an oral hearing is not conferred by the Constitution
of the United States or the Constitution of Pennsylvania. Within 60 days after the
filing of the application the department shall approve or refuse such application.
(c) Maintenance of contractual relationships.--
(1) Declaration of necessity.--It is hereby found that many subscribers to nonprofit hospital plans make payments
over long periods of time prior to becoming entitled to benefits under such a plan
and that it is important in the public interest that the reasonable expectations of
such subscribers as to coverage should be fulfilled if possible. It is hereby declared
to be essential for the maintenance of the health of the residents of this Commonwealth
that subscribers to nonprofit hospital plans be assured receipt of the hospitalization
and related health benefits prepaid by them through payment of the rates approved
under this chapter and charged by a hospital plan corporation and that to accomplish
this essential purpose termination of contracts between hospital plan corporations
and hospitals entered into pursuant to section 6121 (relating to eligible hospitals)
and this section be subject to prior approval by the department as provided in this
subsection.
(2) Notification period.--No contract between a hospital plan corporation and any hospital providing for the
rendering of hospitalization to subscribers to the hospital plan shall be terminated
unless the party seeking such termination gives 90 days advance written notice to
the other party to the contract and to the department of the proposed termination.
(3) Hearing period.--Whenever a termination subject to paragraph (2) involves contracts with hospitals
having more than 5% of the beds in the area served by a hospital plan corporation,
the department shall hold public hearings on at least 15 days notice for the purpose
of investigating the reasons for the termination. Pending completion of said investigation
by the department, termination of the hospital contracts shall be suspended for a
period not to exceed six months from the expiration of the period provided for in
paragraph (2). All terms and conditions of the contract between the hospital plan
corporation and the hospital or hospitals shall continue in full force and effect
during said investigation by the department. Based on the record made during the hearings,
the department shall make specific findings as to the facts of the dispute and shall
either approve termination of the contracts or recommend such terms for continuation
of the contract as are in the public interest, based upon the facts, the right of
a hospital to be paid its costs for hospitalization services to subscribers and the
need of subscribers for efficient, reliable hospitalization at a reasonable cost.
(4) Negotiation period.--If the department recommends terms for continuation of the contract, the hospital
plan corporation and the hospitals involved shall renew their negotiations in order
to determine whether a new agreement can be reached substantially on the basis of
the terms for continuation recommended by the department and pending such negotiations,
the termination of the hospital contracts shall be suspended for a further period
not to exceed 90 days from the date of the decision of the department. If the hospital
plan corporation and the hospitals are unable to consummate a new contract within
said further period of 90 days, they shall so advise the department. The department
shall in that event approve termination of the contracts effective at the end of a
further period of 30 days and shall prescribe the form and extent of notice which
the hospital plan corporation shall use in advising its subscribers that hospitalization
in the hospitals involved is not covered by a contract between the hospital plan corporation
and such hospitals.
(5) Retroactivity.--Upon the settlement of any dispute between a hospital plan corporation and any hospital
pursuant to paragraphs (2) and (4), the terms and conditions of any new contract shall
be retroactive to the date of expiration of the contract previously in effect between
the parties.
(Aug. 2, 1975, P.L.293, No.94, eff. imd.)
1996 Partial Repeal. Section 14 of Act 159 of 1996, known as the Accident and Health Filing Reform Act,
provided that subsec. (a) is repealed insofar as it provides for the approval of rates
and contracts.
1975 Amendment. Act 94 added subsec. (c). See sections 2 and 3 of Act 94 of 1975 in the appendix to
this title for special provisions relating to applicability and effective date and
retroactivity.
References in Text. Section 14 of Act 159 of 1996, known as the Accident and Health Filing Reform Act,
was renumbered 5101 by the act of December 22, 2011, P.L.614, No.134.
Notes of Decisions
Highmark Inc. v. C.L. Voltz, Esq., 163 A.3d 485 (Pa. Commw. Ct. 2017).
· cites it 2× “—the following acts and parts of acts are repealed to the extent specified: **** 40 Pa. C.S. §§6124(a) and 6329(a), insofar as they provide for the approval of rates and contracts.”
Ciamaichelo v. Indep. Blue Cross, 909 A.2d 1211 (Pa. 2006).
· cites it 2× “40 Pa. C.S. § 6124(a). The practical question before this Court is who should make that determination, for both trial court and Insurance Department have authority to do so [1] .”
Guest v. Fitzpatrick, 409 F. Supp. 818 (E.D. Pa. 1976).
· cites it 10× “[15] 40 Pa.C.S. § 6124. [16] See e. g., German Alliance Insurance Company v.”
Old Forge Sch. Dist. v. Highmark Inc., 924 A.2d 1205 (Pa. 2007).
· cites it 2× “In both submissions, the petitioners argued that they were entitled to an administrative hearing pursuant to the Health Plan Corporations Act, see 40 Pa.C.S. § 6124(b), in which they could conduct discovery as well as cross-examine adverse witnesses and Blue Cross officials.”
City of Philadelphia v. Pennsylvania Ins. Dep't, 889 A.2d 664 (Pa. Commw. Ct. 2005).
· cites it 3× “Pursuant to the provisions of the Health Plan Corporations Act (HPC Act) 4 , 40 Pa.C.S. §§ 6124 and 6329, on January 17, 2004, the Department issued a notice in the Pennsylvania Bulletin entitled Reserve and Surplus Levels of Hospital Plan and Professional Health Service Plan…”
Ciamaichelo v. Indep. Blue Cross, 814 A.2d 800 (Pa. Commw. Ct. 2002).
“40 Pa.C.S. § 6124(a). Any statute to the contrary notwithstanding, funds of any hospital plan corporation, equal to its reserves, shall be invested in compliance with the requirements of law for the investment of the capital and reserves of life insurance companies.”
Petty v. Hosp. Serv. Ass'n of Ne. Pennsylvania, 967 A.2d 439 (Pa. Commw. Ct. 2009).
“With respect to Counts I, II, and III of the Complaint, Northeastern Blue Cross asserted the following: a lack of subject matter jurisdiction based on 40 Pa.C.S. § 6124(c), in which it alleged the Legislature vested the Pennsylvania Insurance Department (Department) with the…”
Capital Blue Cross v. Commonwealth, 383 A.2d 1306 (Pa. Commw. Ct. 1978).
“On June 10, 1977, the Commissioner disapproved the rate filings, stating in his Adjudication that the proposed filings did not meet the requirements for approval pursuant to 40 Pa. C.S. §6124(a) since they did not contain a factor for community rating.”
Ins. Dep't of the Commonwealth v. Saint Lukes Hosp., 342 A.2d 773 (Pa. Commw. Ct. 1975).
“Dissenting Opinion by President Judge Bowman: Emerging from the procedural morass of this appeal are several related issues centering upon the power and authority conferred upon the Insurance Commissioner by section 6124 of the Nonprofit Corporation Law of 1972, 40 Pa. C.S.…”
Petty v. Hosp. Serv. Ass'n, 967 A.2d 439 (Pa. Commw. Ct. 2009).
“[3] With respect to Counts I, II, and III of the Complaint, Northeastern Blue Cross asserted the following: a lack of subject matter jurisdiction based on 40 Pa.C.S. § 6124(c), in which it alleged the Legislature vested the Pennsylvania Insurance Department (Department) with the…”
— 40 Pa. Cons. Stat. § 6124(a) — 6 cases
Highmark Inc. v. C.L. Voltz, Esq., 163 A.3d 485 (Pa. Commw. Ct. 2017).
“—the following acts and parts of acts are repealed to the extent specified: **** 40 Pa. C.S. §§6124(a) and 6329(a), insofar as they provide for the approval of rates and contracts.”
Ciamaichelo v. Indep. Blue Cross, 909 A.2d 1211 (Pa. 2006).
“40 Pa. C.S. § 6124(a). The practical question before this Court is who should make that determination, for both trial court and Insurance Department have authority to do so [1] .”
Ciamaichelo v. Indep. Blue Cross, 814 A.2d 800 (Pa. Commw. Ct. 2002).
“40 Pa.C.S. § 6124(a). Any statute to the contrary notwithstanding, funds of any hospital plan corporation, equal to its reserves, shall be invested in compliance with the requirements of law for the investment of the capital and reserves of life insurance companies.”
Guest v. Fitzpatrick, 409 F. Supp. 818 (E.D. Pa. 1976).
“[15] 40 Pa.C.S. § 6124. [16] See e. g., German Alliance Insurance Company v.”
Capital Blue Cross v. Commonwealth, 383 A.2d 1306 (Pa. Commw. Ct. 1978).
“On June 10, 1977, the Commissioner disapproved the rate filings, stating in his Adjudication that the proposed filings did not meet the requirements for approval pursuant to 40 Pa. C.S. §6124(a) since they did not contain a factor for community rating.”
— 40 Pa. Cons. Stat. § 6124(b) — 2 cases
Old Forge Sch. Dist. v. Highmark Inc., 924 A.2d 1205 (Pa. 2007).
“In both submissions, the petitioners argued that they were entitled to an administrative hearing pursuant to the Health Plan Corporations Act, see 40 Pa.C.S. § 6124(b), in which they could conduct discovery as well as cross-examine adverse witnesses and Blue Cross officials.”
City of Philadelphia v. Pennsylvania Ins. Dep't, 889 A.2d 664 (Pa. Commw. Ct. 2005).
“Pursuant to the provisions of the Health Plan Corporations Act (HPC Act) 4 , 40 Pa.C.S. §§ 6124 and 6329, on January 17, 2004, the Department issued a notice in the Pennsylvania Bulletin entitled Reserve and Surplus Levels of Hospital Plan and Professional Health Service Plan…”
— 40 Pa. Cons. Stat. § 6124(c) — 3 cases
Guest v. Fitzpatrick, 409 F. Supp. 818 (E.D. Pa. 1976).
“[15] 40 Pa.C.S. § 6124. [16] See e. g., German Alliance Insurance Company v.”
Petty v. Hosp. Serv. Ass'n of Ne. Pennsylvania, 967 A.2d 439 (Pa. Commw. Ct. 2009).
“With respect to Counts I, II, and III of the Complaint, Northeastern Blue Cross asserted the following: a lack of subject matter jurisdiction based on 40 Pa.C.S. § 6124(c), in which it alleged the Legislature vested the Pennsylvania Insurance Department (Department) with the…”
Petty v. Hosp. Serv. Ass'n, 967 A.2d 439 (Pa. Commw. Ct. 2009).
“[3] With respect to Counts I, II, and III of the Complaint, Northeastern Blue Cross asserted the following: a lack of subject matter jurisdiction based on 40 Pa.C.S. § 6124(c), in which it alleged the Legislature vested the Pennsylvania Insurance Department (Department) with the…”
— 40 Pa. Cons. Stat. § 6124(c)(3) — 1 case
Guest v. Fitzpatrick, 409 F. Supp. 818 (E.D. Pa. 1976).
“[15] 40 Pa.C.S. § 6124. [16] See e. g., German Alliance Insurance Company v.”
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