SB 471

Under current law, associations may be organized on a cooperative nonprofit

basis (cooperative associations) to establish and operate sickness care plans for their

members through contracts with providers. This bill makes various changes to those

provisions, including the following:

1. The bill changes the name of the plans that cooperative associations may

establish and operate from "sickness care plans" to "health care plans."

2. The bill specifies that establishing and maintaining these plans may be the

primary, as opposed to exclusive, purpose of the cooperative association.

3. Current law provides that cooperative associations may enter into contracts

for services with physicians and surgeons, optometrists, chiropractors, and dentists.

The bill allows contracts with other providers, too.

4. The bill adds that nothing in the provisions pertaining to the purpose of the

cooperative association as being primarily to establish and operate a health care plan

precludes a cooperative association from owning an interest in other entities for

improving member services or for investment.

5. Under current law, a cooperative association may not spend more than 5

percent of capital stock or membership fees on promotional expenses. The bill

provides that this limit does not apply to a cooperative association operating a health

care plan.

6. Current law prohibits a contract by or on behalf of a cooperative association

from providing for the payment of cash or other material benefit to a subscriber or

the subscriber's estate on account of death, illness, or injury. The bill eliminates this

provision.

7. Under current law, a cooperative association may stipulate in a plan that it

will pay a nonparticipating physician and surgeon, optometrist, chiropractor, or

dentist outside of the cooperative association's normal territory for care rendered to

a member or a member's covered dependent who needs the care when he or she is

outside the cooperative association's territory in which the plan benefits are

normally available. Under the bill, a cooperative association may stipulate in its

plans that it will pay a nonparticipating physician and surgeon, optometrist,

chiropractor, dentist, or other provider for health care rendered to a covered person,

without limitation to being outside the association's normal territory.

8. Current law provides that a cooperative association may provide benefits

only to its members. The bill allows a cooperative association to offer its services to

nonmembers, too.

9. Finally, the bill makes various technical changes, such as conforming the

language to current statutory drafting practice and eliminating redundant

provisions.