To amend chapter 354, RSMo, by adding eight new sections relating to the restructuring of certain health care companies.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI,

AS FOLLOWS:

Section A. Chapter 354, RSMo, is amended by adding thereto eight new sections, to be known as sections 354.750, 354.753, 354.755, 354.757, 354.759, 354.761, 354.763 and 354.765, to read as follows:

354.750. For the purposes of sections 354.750 to 354.765, the following words and phrases shall mean:

(1) "Entity", a chapter 355, RSMo, not for profit corporation which holds a certificate of authority as a health services corporation pursuant to the provisions of chapter 354 and which has elected and undergone restructuring;

(2) "Entity statutory net worth", the total reserves and unassigned funds of the entity required to be reported on the entity's liabilities, reserves and other funds schedule of the annual statement as filed with the Missouri department of insurance;

(3) "Restructured entity", an entity organized as a for profit company or corporation under the provisions of chapter 347 or chapter 351, RSMo, to which a health care service plan or health services corporation sells, leases, conveys, exchanges, transfers or otherwise similarly disposes of a substantial amount, but not substantially all, of the assets of the plan or corporation, after the effective date of this act;

(4) "Restructured entity statutory net worth", the statutory statement value of all subsidiaries, controlled, or affiliated companies of the entity required to be reported on schedule D-part 6 of the entity's annual statement as filed with the Missouri department of insurance;

(5) "Restructuring", or "restructure" by a nonprofit or not for profit health care service corporation organized under chapter 355, RSMo, means the sale, lease, conveyance, exchange, transfer, or other similar disposition of a substantial amount, but not substantially all of the assets of the entity to a restructured entity operated or carried on for profit, organized under chapter 347 or chapter 351, RSMo, and owned in whole or in part by the entity, after August 28, 1996.

354.753. Any entity subject to the provisions of chapter 354 shall, in addition to any forms of business organization available under that chapter, have the option of restructuring pursuant to the provisions of sections 354.750 to 354.765.

354.755. Any entity choosing to restructure under sections 354.750 to 354.765 shall not, as a result of the restructuring, be affected in regard to its not for profit status under chapter 354. Any dividends paid by a restructured entity to an entity under this act shall not affect the entity in its not for profit status under chapter 354.

354.757. Restructured entities shall have all of the powers and obligations of a company or corporation organized under the provisions of chapter 347 or chapter 351 from its inception including the power to make a public offering of stock or private placement of stock.

354.759. Entities restructuring pursuant to sections 354.750 to 354.765 must have a board of directors which is independent from the board of any restructured entity with the exception of one director who may serve on both boards.

354.761. Entities restructuring under sections 354.750 to 354.765 shall be assessed, at the time of any public offering or private placement of stock, at an amount equal to the entity's statutory net worth at the end of their fiscal year immediately preceding the year in which the restructuring occurs. This assessment shall be payable, without interest, in equal annual installments over a period of twenty years and subject to the following credits:

(1) The portion of the entity's statutory net worth attributable to for profit subsidiaries already paying Missouri premium or income taxes shall be deducted;

(2) The portion of the restructured entity's statutory net worth attributable to business generated outside of the state of Missouri shall be deducted;

(3) The portion of the entity's statutory net worth which remains in the entity shall be deducted;

(4) The entity's statutory net worth as of December 31, 1986, shall be deducted. This date coincides with changes in federal income tax treatment for all tax exempt entities engaged in insurance activities, as further detailed in the Federal Tax Reform Act of 1986. The entity shall not be allowed to deduct its entity net worth for any year prior to 1986 in which the department of insurance found in a market conduct study, triennial examination and other audits that the entity did not fulfill the statutory requirements to receive exemption from Missouri premium taxes.

354.763. The assessment paid under sections 354.750 to 354.765 shall be committed to the operating area of the entity to be spent for purposes as determined by agreement between the department of insurance and the entity. In making these determinations both the entity and the department of insurance shall incorporate to the greatest extent possible the suggestions of the advisory committee established as follows:

(1) Two Missouri senators of different political parties, if possible, whose districts contain some portion of the entity's operating area who shall be appointed for a two-year term by the president pro tem of the Missouri senate; and

(2) Two members of the Missouri house of representatives of different political parties, if possible, whose districts contain some portion of the entity's operating area who shall be appointed by the speaker of the Missouri house of representatives. Funds transfer for designated programs and projects shall occur through direct payments or through payments to a foundation in the entity's operating area. Funds shall not be required to flow through the department of insurance or the Missouri general revenue fund.

354.765. For the purposes of restructuring under sections 354.750 to 354.765, the entity shall not be deemed to have dissolved as prescribed under chapters 354 and 355, RSMo. The provisions of sections 354.761 and 354.763 shall be deemed to be the only assessments due for restructuring, and the provisions of sections 354.750 to 354.765 shall be exclusive in regard to restructuring.