1Providing for registration of discount plan organizations; and
2imposing penalties.

3Table of Contents

4Section 1. Short title.

5Section 2. Purpose.

6Section 3. Definitions.

7Section 4. Scope and applicability.

8Section 5. Registration requirements.

9Section 6. Minimum capital requirements.

10Section 7. Surety bond or deposit requirements.

11Section 8. Examinations and investigations.

12Section 9. Charges and fees, refund requirements and bundling
13of services.

14Section 10. Charge and form filing requirements.

15Section 11. Provider agreements and provider listing
16requirements.

17Section 12. Marketing requirements.

18Section 13. Marketing restrictions and disclosure requirements.

1Section 14. Notice of change in name or address.

2Section 15. Annual reports.

3Section 16. Compliance officer.

4Section 17. Penalties.

5Section 18. Injunctions.

6Section 38. Regulations.

7Section 39. Applicability.

8Section 40. Effective date.

9The General Assembly of the Commonwealth of Pennsylvania
10hereby enacts as follows:

11Section 1. Short title.

12This act shall be known and may be cited as the Discount Plan
13Organization Act.

14Section 2. Purpose.

15The purpose of this act is to promote the public interest by
16establishing standards for discount medical plan and discount
17prescription drug plan organizations to protect consumers from
18unfair or deceptive marketing, sales or enrollment practices and
19to facilitate consumer understanding of the role and function of
20discount medical plan organizations in providing access to
21medical or ancillary services and the role and function of
22discount prescription drug plan organizations in providing
23access to pharmacy services.

24Section 3. Definitions.

25The following words and phrases when used in this act shall
26have the meanings given to them in this section unless the
27context clearly indicates otherwise:

28"Affiliate." A person that directly or indirectly, through
29one or more intermediaries, controls, is controlled by or is
30under common control with the person specified.

1"Ancillary services." Services that include, but are not
2limited to, audiology, dental, vision, mental health, substance
3abuse, chiropractic and podiatry services. The term does not
4include pharmacy services.

5"Applicant." A person or entity applying to do business in
6this State as a discount plan organization.

7"Commissioner." The Insurance Commissioner of the
8Commonwealth.

9"Control," "controlled by" or "under common control with."
10The terms shall have the meanings given in section 1401 of the
11act of May 17, 1921 (P.L.682, No.284), known as The Insurance
12Company Law of 1921.

13"Department." The Insurance Department of the Commonwealth.

14"Discount medical plan." A business arrangement or contract
15in which a person, in exchange for fees, dues, charges or other
16consideration, offers or purports to offer access for plan
17members to providers of medical or ancillary services and the
18right to receive discounts on medical or ancillary services from
19those providers. The term does not include:

20(1) a plan that does not charge a membership or other
21fee to use the plan's discount medical card; or

22(2) any product otherwise regulated under the laws of
23this Commonwealth regulating health insurers.

24"Discount medical plan organization." An entity that, in
25exchange for fees, dues, charges or other consideration, offers
26or purports to offer a discount medical plan to plan members and
27that contracts with a provider, a provider network or another
28discount medical plan organization to offer the discount medical
29plan and determines the charge to plan members.

30"Discount plan." A discount medical plan or a discount

1prescription drug plan.

2"Discount plan organization." A discount medical plan
3organization or a discount prescription drug plan organization.

4"Discount prescription drug plan." A business arrangement or
5contract in which a person, in exchange for fees, dues, charges
6or other consideration, offers or purports to offer access for
7plan members to providers of pharmacy services and the right to
8receive discounts on pharmacy services from those providers. 
9The term does not include:

10(1) a plan that does not charge a membership or other
11fee to use the plan's discount prescription drug card;

12(2) a patient access program; or

13(3) a Medicare prescription drug plan or the PACE and
14PACENET program established under Chapters 5 and 7 of the act
15of August 26, 1971 (P.L.351, No.91), known as the State
16Lottery Law.

17"Discount prescription drug plan organization." An entity
18that, in exchange for fees, dues, charges or other
19consideration, offers or purports to offer access for plan
20members to providers of pharmacy services and the right to
21receive pharmacy services from those providers at a discount and
22that contracts with a provider, a pharmacy network or another
23discount prescription drug plan organization to offer the
24discount prescription drug plan and determines the charge to
25plan members.

26"Facility." An institution providing medical or ancillary
27services in a health care setting. The term includes, but is not
28limited to:

29(1) a hospital or other licensed inpatient center;

30(2) an ambulatory surgical or treatment center;

1(3) a skilled nursing center;

2(4) a residential treatment center;

3(5) a rehabilitation center; and

4(6) a diagnostic, laboratory or imaging center.

5"Health care professional." A physician, pharmacist or other
6health care practitioner who is licensed, accredited or
7certified to perform specified medical or ancillary services or
8pharmacy services within the scope of his or her license,
9accreditation, certification or other appropriate authority and
10consistent with State law.

11"Health insurer." A company or health insurance entity
12licensed in this Commonwealth to issue an individual or group
13health, sickness or accident policy or subscriber contract or
14certificate or plan that provides medical or health care
15coverage by a health care facility or licensed health care
16provider that is offered or governed under any of the following:

17(1) Article XXIV or another provision of the act of May
1817, 1921, (P.L.682, No.284), known as The Insurance Company
19Law of 1921.

20(2) The act of December 29, 1972 (P.L.1701, No.364),
21known as the Health Maintenance Organization Act.

22(3) The act of May 18, 1976 (P.L.123, No.54), known as
23the Individual Accident and Sickness Insurance Minimum
24Standards Act.

25(4) 40 Pa.C.S. Ch. 61 (relating to hospital plan
26corporations) or Ch. 63 (relating to professional health
27services plan corporations).

28"Marketer." A person or entity that markets, promotes, sells
29or distributes a discount plan, including a private label entity
30that places its name on and markets or distributes a discount

1plan pursuant to a marketing agreement with a discount plan
2organization.

3"Medical services." Maintenance care of or preventive care
4for the human body or care, service or treatment of an illness
5or dysfunction of or injury to the human body. The term
6includes, but is not limited to, physician care, inpatient care,
7hospital surgical services, emergency services, ambulance
8services, laboratory services and medical equipment and
9supplies. The term does not include pharmacy services or
10ancillary services.

11"Medicare prescription drug plan." A plan that provides a
12Medicare Part D prescription drug benefit in accordance with the
13requirements of the Medicare Prescription Drug, Improvement, and
14Modernization Act of 2003 (Public Law 108-172, 117 Stat. 2066)
15and the Medicare Improvements for Patients and Providers Act of
162008 (Public Law 110-275, 122 Stat. 2494).

17"Member." An individual who pays fees, dues, charges or
18other consideration in exchange for the right to receive the
19benefits of a discount plan. The term does not include any
20individual who enrolls in a patient access program.

21"Patient access program." A voluntary program sponsored by a
22pharmaceutical manufacturer, or a consortium of pharmaceutical
23manufacturers, that provides free or discounted health care
24products directly to low-income or uninsured individuals either
25through a discount card or direct shipment.

26"Person." An individual, a corporation, a partnership, an
27association, a joint venture, a joint stock company, a trust, an
28unincorporated organization, any similar entity or any
29combination of the foregoing.

30"Pharmacy services." Pharmaceutical supplies and

1prescription drugs.

2"Provider." A health care professional or facility that has
3contracted, directly or indirectly, with a discount medical plan
4organization to provide medical or ancillary services to members
5or with a discount prescription drug plan organization to
6provide pharmacy services to members.

7"Provider network." An entity that negotiates directly or
8indirectly with a discount medical plan organization on behalf
9of more than one provider to provide medical or ancillary
10services to members or with a discount prescription drug plan
11organization on behalf of more than one provider to provide
12pharmacy services to members.

13Section 4. Scope and applicability.

14(a) Scope.--This act applies to all discount plan
15organizations doing business in this Commonwealth.

16(b) Applicability.--A discount plan organization that is a
17health insurer:

18(1) is not required to obtain a certificate of
19registration under section 5, except that it or any of its
20subsidiaries or affiliates that operate as a discount plan
21organization in this State shall obtain a certificate of
22registration under section 5 and comply with all other
23provisions of this act; but

24(2) is required to comply with sections 9, 10, 11, 12
25and 13 and report, in the form and manner the department may
26require, any of the information described in section 15(b)
27(2), (3) or (4) that is not otherwise already reported.

28Section 5. Registration requirements.

29(a) General rule.--Before doing business in this
30Commonwealth as a discount plan organization, a person shall:

1(1) be authorized to transact business in this
2Commonwealth under this act; and

3(2) obtain a certificate of registration from the
4department to operate as a discount plan organization.

5(b) Application.--An application or renewal application for
6a certificate of registration to operate as a discount plan
7organization shall:

8(1) be in a form prescribed by the department and
9published in the Pennsylvania Bulletin;

10(2) be verified by an officer or authorized
11representative of the applicant;

12(3) be accompanied by a fee in an amount equal to that
13required for a license or annual renewal for a manager or
14exclusive general agent for a domestic insurance company, as
15specified in section 612-A(4) of the act of April 9, 1929
16(P.L.177, No.175), known as The Administrative Code of 1929;

17(4) include information on whether:

18(i) a previous application for a certificate of
19registration or licensure has been denied, revoked,
20suspended or terminated for cause;

21(ii) the applicant is under investigation for or the
22subject of any pending action or has been found in
23violation of any statute or regulation in any
24jurisdiction within the previous five years;

25(iii) the applicant has established an Internet
26website to conform to the requirements of section 11(b);
27and

28(5) include information, as the department may require,
29that permits the department, after reviewing all of the
30information submitted pursuant to this subsection, to make a

1determination that the applicant:

2(i) is financially responsible;

3(ii) has adequate expertise or experience to operate
4a discount plan organization; and

5(iii) is of good character.

6(c) Review of application.--After the receipt of an
7application filed under subsection (b), the department shall
8review the application and notify the applicant of any
9deficiencies in the application.

10(d) Decision on application.--Within 90 days after the date
11of receipt of a completed application, the department shall:

12(1) issue a certificate of registration if the
13department is satisfied that the applicant:

14(i) met the requirements of subsection (b); and

15(ii) has the required minimum capital in accordance
16with section 6; or

17(2) disapprove the application and state the grounds for
18disapproval.

19(e) Internet website.--Prior to issuance of a certificate of
20registration by the department, a discount plan organization
21shall establish an Internet website in order to conform to the
22requirements of section 11(b).

23(f) Certificate of registration.--

24(1) A certificate of registration is effective for one
25year, unless, prior to its expiration, it is renewed in
26accordance with this subsection or suspended or revoked in
27accordance with subsection (g).

28(2) At least 90 days before a certificate of
29registration expires, a discount plan organization shall
30submit:

1(i) a renewal application form; and

2(ii) the renewal fee.

3(3) The department shall renew the certificate of
4registration of each holder that meets the requirements of
5this act and pays the appropriate renewal fee required by
6this act.

7(g) Suspension, nonrenewal and revocation.--

8(1) The commissioner may suspend the authority of a
9discount plan organization to enroll new members or refuse to
10renew or revoke a discount plan organization's certificate of
11registration if the commissioner finds that any of the
12following conditions exist:

13(i) the discount plan organization is not operating
14in compliance with this act;

15(ii) the discount plan organization does not have
16the minimum net worth as required under section 6;

17(iii) the discount plan organization has advertised,
18merchandised or attempted to merchandise its services in
19such a manner as to misrepresent its services or capacity
20for service or has engaged in deceptive, misleading or
21unfair practices with respect to advertising or
22merchandising; or

23(iv) the continued operation of the discount plan
24organization would be hazardous to its members.

25(2) If the department has cause to believe that grounds
26for the nonrenewal, suspension or revocation of a certificate
27of registration exists, the department shall notify the
28discount plan organization in writing, specifically stating
29the grounds for the refusal to renew or suspension or
30revocation and informing the discount plan organization that

1it may pursue a hearing on the matter in accordance with the
2provisions of 2 Pa.C.S. Ch. 5 Subch. A (relating to practice
3and procedure of Commonwealth agencies).

4(3) When the certificate of registration of a discount
5plan organization is suspended, revoked or not renewed, the
6discount plan organization shall proceed, immediately
7following the effective date of the order of revocation or,
8in the case of a nonrenewal, the date of expiration of the
9certificate of registration, to wind up its affairs
10transacted under the certificate of registration. The
11discount plan organization shall not engage in any further
12advertising, solicitation, collecting of fees or renewal of
13contracts.

14(4) (i) The commissioner shall, in his order suspending
15the authority of the discount plan organization to enroll
16new members, specify the period during which the
17suspension is to be in effect and the conditions, if any,
18that must be met by the discount plan organization prior
19to reinstatement of its certificate of registration to
20enroll members.

21(ii) The commissioner may rescind or modify the
22order of suspension prior to the expiration of the
23suspension period.

24(iii) The certificate of registration of a discount
25plan organization shall not be reinstated unless
26requested by the discount plan organization. The
27commissioner shall not grant the request for
28reinstatement if the commissioner finds that the
29circumstances for which the suspension occurred still
30exist or are likely to recur.

1(h) Penalty.--In lieu of suspending or revoking a discount
2plan organization's certificate of registration under subsection
3(g), whenever the discount plan organization has been found to
4have violated any provision of this act, the commissioner may:

5(1) issue and cause to be served upon the organization
6charged with the violation a copy of the findings and an
7order requiring the organization to cease and desist from
8engaging in the act or practice that constitutes the
9violation; and

10(2) impose a monetary penalty of not more than $5,000
11for each violation.

12(i) Notice of action in other jurisdiction.--A discount plan
13organization shall notify the department within ten days
14whenever the discount plan organization's certificate of
15registration, or other form of authority, to operate as a
16discount plan organization in another jurisdiction is suspended,
17revoked or nonrenewed in that jurisdiction.

18(j) Exemption.--A provider who provides discounts to his or
19her own patients without any cost or fee of any kind to the
20patient for medical services or ancillary services the provider
21directly provides is not required to obtain and maintain a
22certificate of registration under this act as a discount medical
23plan organization.

24Section 6. Minimum capital requirements.

25(a) Minimum capital requirement for applicant.--Before the
26department issues a certificate of registration to any person
27required to obtain a certificate of registration under section
285, the person seeking to operate a discount plan organization
29shall have a net worth of at least $150,000.

30(b) Minimum capital requirement for registrant.--A discount

1plan organization shall at all times maintain a net worth of at
2least $150,000.

3(c) Adjustment.--At the commissioner's discretion, the
4amounts in subsections (a) and (b) may be adjusted annually for
5inflation.

6Section 7. Surety bond or deposit requirements.

7(a) Surety bond.--A registered discount plan organization
8shall maintain in force a surety bond in its own name in an
9amount not less than $35,000 to be used in the discretion of the
10commissioner to protect the financial interest of members. The
11bond shall be issued by an insurance company licensed to do
12business in this Commonwealth.

13(b) Deposit.--In lieu of the bond specified in subsection
14(a), a registered discount plan organization may deposit and
15maintain deposited with the department, or at the discretion of
16the commissioner, with any organization or trustee acceptable to
17the commissioner through which a custodial or controlled account
18is utilized, cash, securities or any combination of these or
19other measures that are acceptable to the commissioner with at
20all times having a market value of not less than $35,000.

21(c) Income on deposit.--All income from a deposit made under
22subsection (b) shall be an asset of the discount plan
23organization.

24(d) Exemption from levy.--Except for the commissioner, the
25assets or securities held in this Commonwealth as a deposit
26under subsection (a) or (b) shall not be subject to levy by a
27judgment creditor or other claimant of the discount plan
28organization.

29(e) Adjustment.--At the commissioner's discretion, the 
30amounts in subsections (a) and (b) may be adjusted annually for
 

1inflation.

2Section 8. Examinations and investigations.

3(a) General rule.--The department and any of its examiners
4may examine or investigate the business and affairs of any
5discount plan organization to protect the interests of the
6residents of this State based on the following reasons,
7including, but not limited to, complaint indices, recent
8complaints, information from other states or as the commissioner
9deems necessary.

10(b) Conduct of examinations.--An examination or
11investigation conducted as provided in subsection (a) shall be
12performed in accordance with the provisions of Article IX of the
13act of May 17, 1921 (P.L.789, No.285), known as The Insurance
14Department Act of 1921.

15(c) Discovery.--The department or any of its examiners may:

16(1) order any discount plan organization or applicant
17that operates or any applicant that anticipates operating a
18discount plan organization to produce any records, books,
19files, advertising and solicitation materials or other
20information; and

21(2) take statements under oath to determine whether the
22discount plan organization or applicant is in violation of
23the law or is acting contrary to the public interest.

24(d) Expenses.--A discount plan organization or applicant
25that is the subject of the examination or investigation shall
26pay the expenses incurred in conducting the examination or
27investigation. Failure by the discount plan organization or
28applicant to pay the expenses is grounds for denial of a
29certificate of registration to operate as a discount plan
30organization or revocation of a certificate of registration to

1operate as a discount plan organization.

2Section 9. Charges and fees, refund requirements and bundling
3of services.

4(a) Charges and fees.--A discount plan organization may 
5charge a periodic charge as well as a reasonable one-time 
6processing fee for a discount plan.

7(b) Refund requirements.--

8(1) (i) If a member cancels his or her membership in a
9discount plan organization within the first 30 days after
10the date of receipt of the written document for the
11discount plan described in section 13(d), the member
12shall receive a reimbursement of all periodic charges and
13the amount of any one-time processing fee that exceeds
14$30 upon return of the discount plan card to the discount
15plan organization.

16(ii) Cancellation occurs when notice of cancellation
17is given to the discount plan organization. Notice of
18cancellation is deemed given when delivered by hand or
19deposited in a mailbox, properly addressed and postage
20prepaid to the mailing address of the discount plan
21organization or e-mailed to the e-mail address of the
22discount plan organization.

23(iii) A discount plan organization shall return any
24periodic charge charged or collected after the member has
25returned the discount plan card or given the discount
26plan organization notice of cancellation.

27(2) If the discount plan organization cancels a
28membership for any reason other than nonpayment of charges by
29the member, the discount plan organization shall make a pro
30rata reimbursement of all periodic charges to the member.

1(c) Bundling of services.--When a marketer or discount plan 
2organization sells a discount plan in conjunction with any other
3products, the marketer or discount plan organization shall:

4(1) provide the charges for each discount plan in
5writing to the member; or

6(2) reimburse the member for all periodic charges for
7the discount plan and all periodic charges for any other
8product if the member cancels his or her membership in
9accordance with subsection (b)(1).

10(d) Exemption.--Any discount plan organization that is a 
11health insurer that provides a discount plan product that is 
12incidental to an insurance product offered by the health insurer 
13is not subject to this section.

14Section 10. Charge and form filing requirements.

15(a) List of fees and charges.--A discount plan organization
16shall file with the department a list of all prospective member
17fees and charges associated with the discount plan.

18(b) Forms.--In addition to the information required under
19subsection (a), a discount plan organization shall file all
20forms, including the form for the written document described
21under section 13(d), to be used by a discount plan organization
22with the department prior to use. Each form filed shall be 
23identified in the manner as may be required by the department.

24Section 11. Provider agreements and provider listing
25requirements.

26(a) Provider agreements.--

27(1) A discount medical plan organization shall have a
28written provider agreement with all providers offering
29medical or ancillary services to its members. A discount
30prescription drug plan organization shall have a written

1provider agreement with all providers offering pharmacy
2services to its members. The written provider agreement may
3be entered into directly with the provider or indirectly with
4a provider network to which the provider belongs.

5(2) A provider agreement between a discount plan
6organization and a provider shall provide the following:

7(i) a list of the services to be provided at a
8discount;

9(ii) the amount or amounts of the discounts or,
10alternatively, a fee schedule that reflects the
11provider's discounted rates; and

12(iii) that the provider will not charge members more
13than the discounted rates.

14(3) A provider agreement between a discount plan
15organization and a provider network shall require that the
16provider network have written agreements with its providers
17that:

18(i) contain the provisions described in paragraph
19(2);

20(ii) authorize the provider network to contract with
21the discount plan organization on behalf of the provider;
22and

23(iii) require the provider network to maintain an 
24up-to-date list of its contracted providers and to 
25provide the list on a monthly basis to the discount plan 
26organization.

27(4) A provider agreement between a discount plan
28organization and an entity that contracts with a provider
29network shall require that the entity, in its contract with
30the provider network, require the provider network to have

1written agreements with its providers that comply with
2paragraph (3).

3(5) The discount plan organization shall maintain a copy
4of each active provider agreement into which it has entered.

5(b) Provider listing requirements.--

6(1) A discount plan organization shall maintain on an
7Internet website an up-to-date list of the names and
8addresses of the providers with which it has contracted
9directly or through a provider network. The Internet website
10address shall be prominently displayed on all of its
11advertisements, marketing materials, brochures and discount
12plan cards.

13(2) This subsection applies to providers that the 
14discount plan organization has contracted with directly as
15well as providers that are members of a provider network with
16which the discount plan organization has contracted.

17Section 12. Marketing requirements.

18(a) General rule.--A discount plan organization may market
19directly or contract with other marketers for the distribution
20of its product.

21(b) Marketing agreement.--

22(1) A discount plan organization shall have an executed
23written agreement with a marketer prior to the marketer's
24marketing, promoting, selling or distributing the discount
25plan.

26(2) An agreement between a discount plan organization
27and the marketer shall prohibit a marketer from using
28advertising, marketing materials, brochures and discount plan
29cards without the discount plan organization's approval in
30writing.

1(3) A discount plan organization shall be bound by and
2responsible for the activities of a marketer that are within
3the scope of the marketer's agency relationship with the
4organization.

5(c) Approval of marketing materials.--A discount plan
6organization shall approve in writing all advertisements,
7marketing materials, brochures and discount cards used by
8marketers to market, promote, sell or distribute the discount
9plan prior to their use.

10(d) Filing requirement.--Upon request, a discount plan
11organization shall submit to the commissioner all advertising,
12marketing materials and brochures regarding a discount plan.

13Section 13. Marketing restrictions and disclosure requirements.

14(a) General rule.--

15(1) All advertisements, marketing materials, brochures, 
16discount plan cards and any other communications of a
17discount plan organization provided to prospective members
18and members shall be truthful and not misleading in fact or
19in implication.

20(2) An advertisement, any marketing material, brochure,
21discount plan card or other communication is misleading in
22fact or in implication if it has a capacity or tendency to
23mislead or deceive based on the overall impression that it is
24reasonably expected to create within the segment of the
25public to which it is directed.

26(b) Restrictions.--A discount plan organization shall not:

27(1) except as otherwise provided in this act or as a
28disclaimer of any relationship between discount plan benefits
29and insurance, or as a description of an insurance product
30connected with a discount plan, use in its advertisements,

1marketing material, brochures and discount plan cards the
2term "insurance";

3(2) except as otherwise provided under State law,
4describe or characterize the discount plan as being insurance
5whenever a discount plan is bundled with an insurance product
6and the insurance benefits are incidental to the discount
7plan benefits;

8(3) use in its advertisements, marketing material,
9brochures or discount plan cards the terms "health plan,"
10"coverage," "copay," "copayments," "deductible," "preexisting
11conditions," "guaranteed issue," "premium," "PPO," "preferred
12provider organization" or other terms in a manner that could
13reasonably mislead an individual into believing that the
14discount plan is health insurance;

15(4) use language in its advertisements, marketing
16material, brochures and discount plan cards with respect to
17being registered by the department in a manner that could
18reasonably mislead an individual into believing that the
19discount plan is insurance or has been endorsed by the
20Commonwealth;

21(5) make misleading, deceptive or fraudulent
22representations regarding the discount or range of discounts
23offered by the discount plan card or the access to any range
24of discounts offered by the discount plan card;

25(6) have restrictions on access to discount plan
26providers, including, except for hospital services, waiting
27periods and notification periods; or

28(7) pay providers any fees for services or collect or
29accept money from a member to pay a provider for services
30provided under the discount plan, unless the discount plan

1organization has an active certificate of authority to act as
2a third party administrator under Article VIII of the act of
3May 17, 1921 (P.L.789, No. 285), known as The Insurance
4Department Act of 1921.

5(c) General disclosures.--

6(1) A discount plan organization shall make the
7following general disclosures along with any enrollment forms
8given to a prospective member:

9(i) that the plan is a discount plan and is not
10insurance coverage;

11(ii) that the range of discounts for services
12provided under the plan will vary depending on the type
13of provider and service received;

14(iii) unless the discount plan organization has an
15active certificate of authority to act as a third party
16administrator as described in subsection (b)(7), that the
17plan does not make payments to providers for the services
18received under the discount plan;

19(iv) that the plan member is obligated to pay for
20all services, but will receive a discount from those
21providers that have contracted with the discount plan
22organization; and

23(v) the toll-free telephone number and Internet
24website address for the registered discount plan
25organization for prospective members and members to
26obtain additional information about and assistance on the
27discount plan and up-to-date lists of providers
28participating in the discount plan.

29The disclosures shall be made in writing in not less than 12-
30point font and shall appear on the first content page of any

1advertisements, marketing materials or brochures made
2available to the public relating to a discount plan.

3(2) If the initial contact with a prospective member is
4by telephone, the disclosures required under paragraph (1)
5shall be made orally and included in the initial written
6materials that describe the benefits under the discount plan
7provided to the prospective or new member.

8(d) Additional disclosures.--

9(1) In addition to the general disclosures required
10under subsection (c), each discount plan organization shall
11provide to:

12(i) each prospective member, at a time not later
13than the enrollment application form is executed by the
14prospective member, information that describes the terms
15and conditions of the discount plan, including any
16limitations or restrictions on the refund of any
17processing fees or periodic charges associated with the
18discount plan; and

19(ii) each new member a written document that
20contains the terms and conditions of the discount plan.

21(2) The document required under paragraph (1)(ii) shall
22be written in simple words and with sentences as short as
23possible and shall include the following information:

24(i) the name of the member;

25(ii) the benefits to be provided under the discount
26plan;

27(iii) any processing fees and periodic charges
28associated with the discount plan, including any
29limitations or restrictions on the refund of any
30processing fees and periodic charges;

1(iv) the mode of payment of any processing fees and
2periodic charges, such as monthly, quarterly, etc., and
3procedures for changing the mode of payment;

4(v) any limitations, exclusions or exceptions
5regarding the receipt of discount plan benefits;

6(vi) any waiting periods for certain services under
7the discount plan;

8(vii) procedures for obtaining discounts under the
9discount plan, such as requiring members to contact the
10discount plan organization to make an appointment with a
11provider on the member's behalf or to order pharmacy
12services on the member's behalf;

13(viii) cancellation procedures, including
14information on the member's 30-day cancellation rights
15and refund requirements and procedures for obtaining
16refunds;

17(ix) renewal, termination and cancellation terms and
18conditions;

19(x) procedures for adding new members to a family
20discount plan, if applicable;

21(xi) procedures for filing complaints under the
22discount plan organization's complaint system and
23information that, if the member remains dissatisfied
24after completing the organization's complaint system, the
25plan member may contact the department; and

26(xii) the name and mailing address of the registered
27discount plan organization or other entity where the
28member may make inquiries about the plan, send
29cancellation notices and file complaints.

30Section 14. Notice of change in name or address.

1A discount plan organization shall provide the department at
2least 30 days' advance notice of any change in the discount plan
3organization's name, address, principal business address or
4mailing address or Internet website address.

5Section 15. Annual reports.

6(a) Requirements.--If the information required under
7subsection (b) is not provided at the time of renewal of a
8certificate of registration under section 5, a discount plan
9organization shall file an annual report with the department in
10the form prescribed by the department within three months after
11the end of each calendar year.

12(b) Contents.--The report shall include:

13(1) audited financial statements prepared in accordance
14with generally accepted accounting principles certified by an
15independent certified public accountant, including the
16organization's balance sheet, income statement and statement
17of changes in cash flow for the preceding year, except that,
18subject to the approval of the department, an organization
19that is an affiliate of a parent entity that is publicly
20traded and that prepares audited financial statements
21reflecting the consolidated operations of the parent entity
22may submit the audited financial statement of the parent
23entity and a written guaranty that the minimum capital
24requirements required under section 6 will be met by the
25parent entity instead of the audited financial statement of
26the organization;

27(2) if different from the initial application for a
28certificate of registration or at the time of renewal of a
29certificate of registration or the last annual report, as
30appropriate, a list of the names and residence addresses of

1all persons responsible for the conduct of the organization's
2affairs, together with a disclosure of the extent and nature
3of any contracts or arrangements with these persons and the
4discount plan organization, including any possible conflicts
5of interest;

6(3) the number of discount plan members in this
7Commonwealth; and

8(4) any other information relating to the performance of
9the discount plan organization that may be required by the
10department.

11(c) Penalty.--A discount plan organization that fails to
12file an annual report in the form and within the time required
13by this section shall:

14(1) pay a penalty of up to $500 each day for the first
15ten days during which the violation continues;

16(2) pay a penalty of up to $1,000 each day after the
17first ten days during which the violation continues; and

18(3) upon notice by the commissioner, lose its authority
19to enroll new members or to do business in this Commonwealth
20while the violation continues.

21Section 16. Compliance officer.

22A discount plan organization shall designate and provide the
23department with the name, address and telephone number of a
24discount plan compliance officer responsible for ensuring
25compliance with the provisions of this act.

26Section 17. Penalties.

27(a) Civil penalties.--In addition to the penalties and other
28enforcement provisions of this act, any person who willfully
29violates this act is subject to a civil penalty of not more than
30$10,000 for each violation. Penalties imposed against an

1individual discount plan organization under this act shall not
2exceed $500,000 in the aggregate in any single calendar year.

3(b) Insurance fraud.--A person that willfully operates as or
4aids and abets another operating as a discount plan organization
5in violation of section 5(a) commits insurance fraud and shall
6be subject to the penalties applicable to offenses under 18
7Pa.C.S. § 4117 (relating to insurance fraud), as if the
8unregistered discount plan organization were an unauthorized
9insurer, and the fees, dues, charges or other consideration
10collected from the members by the unregistered discount plan
11organization or marketer were insurance premiums.

12(c) Theft.--A person that collects fees for purported
13membership in a discount plan, but purposefully fails to provide
14the promised benefits, commits a theft and upon conviction is
15subject to the penalties applicable to offenses under 18 Pa.C.S.
16Ch. 39 (relating to theft and related offenses). In addition,
17upon conviction, the person shall be ordered to pay restitution
18to persons aggrieved by the violation of this act. Restitution
19shall be ordered in addition to a fine or imprisonment, but not
20in lieu of a fine or imprisonment.

21Section 18. Injunctions.

22(a) Injunctive relief.--In addition to the penalties and
23other enforcement provisions of this act, the commissioner may
24seek both temporary and permanent injunctive relief when:

25(1) a discount plan is being operated by a person or
26entity that is not registered pursuant to this act; or

27(2) a person, entity, discount medical plan organization
28or discount prescription drug plan organization has engaged
29in any activity prohibited by this act or any regulation
30adopted pursuant to this act.

1(b) Venue.--The venue for any proceeding brought under this
2section shall be in the Commonwealth Court.

3(c) Procedure.--The commissioner's authority to seek
4injunctive relief is not conditioned on having conducted any
5proceeding pursuant to the provisions of the 2 Pa.C.S. (relating
6to administrative law and procedure).

7Section 38. Regulations.

8The department may promulgate rules and regulations to
9administer and enforce this act.

10Section 39. Applicability.

11A person doing business in this Commonwealth as a discount
12medical plan organization or a discount prescription drug plan
13organization on or before the effective date of this act shall
14have six months following the effective date of this act to come
15into compliance with the requirements of this act.

16Section 40. Effective date.

17This act shall take effect immediately.