Tenn. Code Ann. § 56-61-118 — TN Code / Title 56 / Chapter 61 / Section 56-61-118
Requests for external review when service or treatment determined to be investigational
Status: in_force

(a) Within six (6) months after the date of receipt of a notice of an adverse determination or final adverse determination that involves a denial of coverage based on a determination that the healthcare service or treatment recommended or requested is investigational, an aggrieved person may file a request for external review with the health carrier. (b) Within ten (10) business days following the date of receipt of the copy of the external review request, the health carrier shall conduct and complete a preliminary review of the request to determine whether: (1) The individual is or was a covered person in the health benefit plan at the time that the healthcare service or treatment was recommended or requested or, in the case of a retrospective review, was a covered person in the health benefit plan at the time that the healthcare service or treatment was provided; (2) The recommended or requested healthcare service or treatment that is the subject of the adverse determination or final adverse determination: (A) Is a covered benefit under the covered person's health benefit plan except for the health carrier's determination that the service or treatment is experimental or investigational for a particular medical condition; and (B) Is not explicitly listed as an excluded benefit under the covered person's health benefit plan with the health carrier; (3) The covered person's treating physician has certified that one (1) of the following situations is applicable: (A) Standard healthcare services or treatments have not been effective in improving the condition of the covered person; (B) Standard healthcare services or treatments are not medically appropriate for the covered person; or (C) There is no available standard healthcare service or treatment covered by the health carrier that is more beneficial than the recommended or requested healthcare service; or (4) The covered person's treating physician: (A) Has recommended a healthcare service or treatment that the physician certifies, in writing, is likely to be more beneficial to the covered person, in the physician's opinion, than any available standard healthcare services or treatments; or (B) Who is a licensed, board certified or board eligible physician qualified to practice in the area of medicine appropriate to treat the covered person's condition, has certified in writing that scientifically valid studies using accepted protocols demonstrate that the healthcare service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is likely to be more beneficial to the covered person than any available standard healthcare services or treatments; (5) The aggrieved person has exhausted the health carrier's internal grievance process as set forth in this chapter unless the aggrieved person is not required to exhaust the health carrier's internal grievance process pursuant to § 56-61-115 ; and (6) The aggrieved person has provided all the information and forms that are necessary to process an external review, including the release form provided under § 56-61-113 . (c) Within three (3) business days after completion of the preliminary review, the health carrier shall notify the aggrieved person in writing whether: (1) The request is complete; and (2) The request is eligible for external review. (d) If the request set out in subsection (a): (1) Is not complete, the health carrier shall notify the aggrieved person, in writing, and include in the notice what information or materials are needed to make the request complete; or (2) Is not eligible for external review, the health carrier shall notify the aggrieved person in writing and include in the notice the reasons for its ineligibility. (e) The notice of initial determination shall include a statement informing the aggrieved person that a health carrier's initial determination that the external review request is ineligible for review may be appealed to the commissioner. (f) (1) The commissioner may determine that a request is eligible for external review under this chapter notwithstanding a health carrier's initial determination that the request is ineligible and require that it be referred for external review. (2) In making a determination under this subsection (f), the commissioner's decision shall be made in accordance with the terms of the covered person's health benefit plan and shall be subject to all applicable provisions of this chapter. (g) (1) Whenever the health carrier or commissioner determines that a request is eligible for external review following the preliminary review conducted pursuant to subdivision (c)(2), within three (3) business days after the determination by the health carrier or within three (3) business days after the date of receipt of the determination by the commissioner, the health carrier shall notify the aggrieved person in writing of the request's eligibility and acceptance for external review. (2) The health carrier shall include in the notice provided to the aggrieved person, a statement that additional information may be submitted in writing to the health carrier, within six (6) business days following the date of receipt of the notice provided pursuant to this subsection (g), that the external review organization shall consider when conducting the external review. The health carrier is not required to, but may, accept and forward to the external review organization for consideration such additional information submitted by the aggrieved person after six (6) business days. (3) Within one (1) business day after the receipt of the notice of the request to conduct external review, the external review organization shall: (A) Select one (1) or more clinical reviewers, as it determines is appropriate, pursuant to subsection (o) to conduct the external review; and (B) Based on the opinion of the clinical reviewer, or opinions if more than one (1) clinical reviewer has been selected to conduct the external review, make a decision to uphold or reverse the adverse determination or final adverse determination. (4) In selecting clinical reviewers pursuant to subdivision (g)(3), the external review organization shall select physicians or other healthcare professionals who meet the minimum qualifications described in § 56-61-121 and, through clinical experience in the past three (3) years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested healthcare service or treatment. (5) Neither the aggrieved person nor the health carrier shall choose or control the choice of the physicians or other healthcare professionals selected to conduct the external review. (6) In accordance with subsection (h), each clinical reviewer shall provide a written opinion to the external review organization on whether the recommended or requested healthcare service or treatment should be covered. (7) In reaching an opinion, clinical reviewers are not bound by any decisions or conclusions reached during the health carrier's internal grievance process. (h) (1) Within six (6) business days after the date of receipt of the notice provided pursuant to subsections (c) or (f), the health carrier shall provide to the external review organization, any documents and information considered in making the adverse determination or the final adverse determination. (2) Failure by the health carrier to provide the documents and information within the time specified in subsection (h) shall not delay the conduct of the external review. (3) If the health carrier fails to provide the documents and information within the time specified in subsection (h), the external review organization may terminate the external review and make a decision to reverse the adverse determination or final adverse determination. (4) The external review organization shall notify the health carrier within one (1) business day of its decision to reverse the adverse determination or final adverse determination pursuant to subdivision (h)(3). The health carrier shall notify the aggrieved person within three (3) business days of the external review organization's decision. (i) Each clinical reviewer selected pursuant to subdivision (g)(3) shall review all of the information and documents received pursuant to subdivision (g)(2) and any other information submitted in writing by the aggrieved person. (j) (1) Upon receipt of the information required to be forwarded pursuant to subdivision (g)(2), the health carrier may reconsider its adverse determination or final adverse determination that is the subject of the external review. (2) Reconsideration by the health carrier of its adverse determination or final adverse determination shall not delay or terminate the external review. (3) The external review may terminate only if the health carrier decides, upon completion of its reconsideration, to reverse its adverse determination or final adverse determination and provide coverage or payment for the recommended or requested healthcare service or treatment that is the subject of the adverse determination or final adverse determination. (4) Within three (3) business days after making the decision to reverse its adverse determination or final adverse determination, the health carrier shall notify the aggrieved person of its decision in writing. (5) The external review organization shall terminate the external review upon receipt of the notice from the health carrier sent pursuant to subdivision (j)(4). (k) Within twenty (20) days after being selected in accordance with subdivision (g)(3) to conduct the external review, each clinical reviewer shall provide an opinion to the external review organization on whether the recommended or requested healthcare service or treatment should be covered. Each clinical reviewer's opinion shall be in writing and include the following information: (1) A description of the covered person's medical condition; (2) A description of the indicators relevant to determining whether there is sufficient evidence to demonstrate that the recommended or requested healthcare service or treatment is more likely than not to be beneficial to the covered person than any available standard healthcare services or treatments and the adverse risks of the recommended or requested healthcare service or treatment would not be substantially increased over those available standard healthcare services or treatments; (3) A description and analysis of any medical or scientific evidence, as that term is defined by this chapter; and (4) Information on whether the reviewer's rationale for the opinion is based on subdivision ( l )(5). (l) In addition to the documents and information provided pursuant to subsection (g), each clinical reviewer, to the extent that the information or documents are available and the reviewer considers appropriate, shall consider the following in reaching an opinion pursuant to subsection (k): (1) The covered person's pertinent medical records; (2) The attending physician or healthcare professional's recommendation; (3) Consulting reports from appropriate healthcare professionals and other documents submitted by the health carrier, aggrieved person, or the covered person's treating physician or healthcare professional; (4) The terms of coverage under the covered person's health benefit plan with the health carrier to ensure that, but for the health carrier's determination that the recommended or requested healthcare service or treatment that is the subject of the opinion is experimental or investigational, the reviewer's opinion is not contrary to the terms of coverage under the covered person's health benefit plan with the health carrier; and (5) Whether: (A) The recommended or requested healthcare service or treatment has been approved by the federal food and drug administration, if applicable, for the condition; or (B) Medical or scientific evidence based standards that demonstrate that the expected benefits of the recommended or requested healthcare service or treatment is more likely than not to be beneficial to the covered person than any available standard healthcare service or treatment and the adverse risks of the recommended or requested healthcare service or treatment would not be substantially increased over those of available standard healthcare services or treatments. (m) (1) Within twenty (20) days after the date it receives the opinion of each clinical reviewer, the external review organization shall make a decision and provide written notice of the decision to the health carrier. The health carrier shall notify the aggrieved person within three (3) business days of the external review organization decision. (2) If a majority of the clinical reviewers recommend that the recommended or requested healthcare service or treatment should be covered, the external review organization shall render a decision to reverse the health carrier's adverse determination or final adverse determination. (3) If a majority of the clinical reviewers recommend that the recommended or requested healthcare service or treatment should not be covered, the external review organization shall render a decision to uphold the health carrier's adverse determination or final adverse determination. (4) If the clinical reviewers are evenly split as to whether the recommended or requested healthcare service or treatment should be covered, then the external review organization shall obtain the opinion of an additional clinical reviewer in order for the external review organization to render a decision based on the opinions of a majority of the clinical reviewers; provided, that: (A) The additional clinical reviewer selected under this subdivision (m)(4) shall use the same information to reach an opinion as the clinical reviewers who have already submitted their opinions pursuant to subsection (i); (B) The selection of the additional clinical reviewer under this subdivision (m)(4) shall not extend the time within which the external review organization is required to render a decision based on the opinions of the clinical reviewers selected under subsection (g). (5) The external review organization shall include in the notice provided pursuant to this subsection (m): (A) A general description of the reason for the request for external review; (B) The written opinion of each clinical reviewer, including the recommendation of each clinical reviewer as to whether the recommended or requested healthcare service or treatment should be covered and the rationale for the clinical reviewer's recommendation; (C) The date that the external review organization was notified by the health carrier to conduct the external review; (D) The date that the external review was conducted; (E) The date of external review organization's decision; (F) The principal reason or reasons for external review organization's decision; and (G) The rationale for the external review organization's decision. (6) Upon receipt of a notice of a decision reversing the adverse determination or final adverse determination, the health carrier shall immediately approve coverage of the recommended or requested healthcare service or treatment that was the subject of the adverse determination or final adverse determination. If the decision involved healthcare provider compensation, the health carrier shall make appropriate payment to the healthcare provider within ten (10) business days of the receipt of a notice of the decision from the external review organization. (n) (1) Within six (6) months after the date of a notice of an adverse determination that involves a denial of coverage based upon the determination that the healthcare service or treatment recommended or requested is experimental or investigational, an aggrieved person may file a request for an expedited external review of the adverse determination. The covered person's treating physician must certify, in writing, that the recommended or requested healthcare service or treatment that is the subject of the request would be significantly less effective if not promptly initiated. (2) Upon notice of the request for expedited external review, the health carrier shall immediately determine whether the request meets the reviewability requirements of subsection (b). The health carrier shall immediately notify the aggrieved person of its eligibility determination. (3) The notice of initial determination shall include a statement informing the aggrieved person that a health carrier's initial determination that the request for external review is ineligible for review and may be appealed to the commissioner; provided, that: (A) The commissioner may determine that a request is eligible for external review notwithstanding a health carrier's initial determination that the request is ineligible and that it be referred to external review; and (B) In making a determination under subdivision (n)(3)(A), the commissioner's decision shall be made in accordance with the terms of the covered person's health benefit plan and shall be subject to all applicable provisions of this chapter. (4) Upon making a determination that a request is eligible for expedited external review, the health carrier shall immediately notify the aggrieved person in writing the request is eligible for external review. (5) At the same time, the health carrier shall immediately notify the external review organization and provide or transmit all necessary documents and information considered when making the adverse determination or final adverse determination electronically or by telephone, facsimile or any other expeditious method available. (6) Within one (1) business day after the receipt of the notice to conduct an expedited external review, the external review organization shall: (A) Select one (1) or more clinical reviewers, as it deems appropriate to conduct the expedited external review; (B) Based on the decision of the clinical reviewer or reviewers render a decision to uphold or reverse the decision of the adverse determination; (C) Require each clinical reviewer to provide an opinion, orally or in writing, to the external review organization as expeditiously as the covered person's medical condition or circumstances requires, but in no event more than five (5) days after being selected; and (D) If the opinion was not in writing, within forty-eight (48) hours following the date that the opinion was provided, require the clinical reviewer to provide written confirmation of the opinion to the external review organization and include the information required in subsections (k) and ( l ). (7) Upon receipt of a notice of a decision reversing the adverse determination, the health carrier shall immediately approve the coverage of the recommended or requested healthcare service or treatment that was the subject of the adverse determination. (o) The health carrier, regardless of utilization review accreditation commission (URAC) accreditation, shall have a contract with at least two (2) or more external review entities and may give the aggrieved person the opportunity to select, from among the external review organizations that the health carrier has contracts with, the external review organization to conduct the review; provided, however, that the commissioner may require assignments of external review organizations on a random basis if such random assignment is required per the direction of the United States department of health and human services. The commissioner is hereby granted emergency rulemaking authority to implement random assignments pursuant to this subsection (o). Acts 2010 , ch. 980, § 19; 2011 , ch. 206, § 2.
(a) Within six (6) months after the date of receipt of a notice of an adverse determination or final adverse determination that involves a denial of coverage based on a determination that the healthcare service or treatment recommended or requested is investigational, an aggrieved person may file a request for external review with the health carrier.
(b) Within ten (10) business days following the date of receipt of the copy of the external review request, the health carrier shall conduct and complete a preliminary review of the request to determine whether: (1) The individual is or was a covered person in the health benefit plan at the time that the healthcare service or treatment was recommended or requested or, in the case of a retrospective review, was a covered person in the health benefit plan at the time that the healthcare service or treatment was provided; (2) The recommended or requested healthcare service or treatment that is the subject of the adverse determination or final adverse determination: (A) Is a covered benefit under the covered person's health benefit plan except for the health carrier's determination that the service or treatment is experimental or investigational for a particular medical condition; and (B) Is not explicitly listed as an excluded benefit under the covered person's health benefit plan with the health carrier; (3) The covered person's treating physician has certified that one (1) of the following situations is applicable: (A) Standard healthcare services or treatments have not been effective in improving the condition of the covered person; (B) Standard healthcare services or treatments are not medically appropriate for the covered person; or (C) There is no available standard healthcare service or treatment covered by the health carrier that is more beneficial than the recommended or requested healthcare service; or (4) The covered person's treating physician: (A) Has recommended a healthcare service or treatment that the physician certifies, in writing, is likely to be more beneficial to the covered person, in the physician's opinion, than any available standard healthcare services or treatments; or (B) Who is a licensed, board certified or board eligible physician qualified to practice in the area of medicine appropriate to treat the covered person's condition, has certified in writing that scientifically valid studies using accepted protocols demonstrate that the healthcare service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is likely to be more beneficial to the covered person than any available standard healthcare services or treatments; (5) The aggrieved person has exhausted the health carrier's internal grievance process as set forth in this chapter unless the aggrieved person is not required to exhaust the health carrier's internal grievance process pursuant to § 56-61-115 ; and (6) The aggrieved person has provided all the information and forms that are necessary to process an external review, including the release form provided under § 56-61-113 .
(1) The individual is or was a covered person in the health benefit plan at the time that the healthcare service or treatment was recommended or requested or, in the case of a retrospective review, was a covered person in the health benefit plan at the time that the healthcare service or treatment was provided;
(2) The recommended or requested healthcare service or treatment that is the subject of the adverse determination or final adverse determination: (A) Is a covered benefit under the covered person's health benefit plan except for the health carrier's determination that the service or treatment is experimental or investigational for a particular medical condition; and (B) Is not explicitly listed as an excluded benefit under the covered person's health benefit plan with the health carrier;
(A) Is a covered benefit under the covered person's health benefit plan except for the health carrier's determination that the service or treatment is experimental or investigational for a particular medical condition; and
(B) Is not explicitly listed as an excluded benefit under the covered person's health benefit plan with the health carrier;
(3) The covered person's treating physician has certified that one (1) of the following situations is applicable: (A) Standard healthcare services or treatments have not been effective in improving the condition of the covered person; (B) Standard healthcare services or treatments are not medically appropriate for the covered person; or (C) There is no available standard healthcare service or treatment covered by the health carrier that is more beneficial than the recommended or requested healthcare service; or
(A) Standard healthcare services or treatments have not been effective in improving the condition of the covered person;
(B) Standard healthcare services or treatments are not medically appropriate for the covered person; or
(C) There is no available standard healthcare service or treatment covered by the health carrier that is more beneficial than the recommended or requested healthcare service; or
(4) The covered person's treating physician: (A) Has recommended a healthcare service or treatment that the physician certifies, in writing, is likely to be more beneficial to the covered person, in the physician's opinion, than any available standard healthcare services or treatments; or (B) Who is a licensed, board certified or board eligible physician qualified to practice in the area of medicine appropriate to treat the covered person's condition, has certified in writing that scientifically valid studies using accepted protocols demonstrate that the healthcare service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is likely to be more beneficial to the covered person than any available standard healthcare services or treatments;
(A) Has recommended a healthcare service or treatment that the physician certifies, in writing, is likely to be more beneficial to the covered person, in the physician's opinion, than any available standard healthcare services or treatments; or
(B) Who is a licensed, board certified or board eligible physician qualified to practice in the area of medicine appropriate to treat the covered person's condition, has certified in writing that scientifically valid studies using accepted protocols demonstrate that the healthcare service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is likely to be more beneficial to the covered person than any available standard healthcare services or treatments;
(5) The aggrieved person has exhausted the health carrier's internal grievance process as set forth in this chapter unless the aggrieved person is not required to exhaust the health carrier's internal grievance process pursuant to § 56-61-115 ; and
(6) The aggrieved person has provided all the information and forms that are necessary to process an external review, including the release form provided under § 56-61-113 .
(c) Within three (3) business days after completion of the preliminary review, the health carrier shall notify the aggrieved person in writing whether: (1) The request is complete; and (2) The request is eligible for external review.
(1) The request is complete; and
(2) The request is eligible for external review.
(d) If the request set out in subsection (a): (1) Is not complete, the health carrier shall notify the aggrieved person, in writing, and include in the notice what information or materials are needed to make the request complete; or (2) Is not eligible for external review, the health carrier shall notify the aggrieved person in writing and include in the notice the reasons for its ineligibility.
(1) Is not complete, the health carrier shall notify the aggrieved person, in writing, and include in the notice what information or materials are needed to make the request complete; or
(2) Is not eligible for external review, the health carrier shall notify the aggrieved person in writing and include in the notice the reasons for its ineligibility.
(e) The notice of initial determination shall include a statement informing the aggrieved person that a health carrier's initial determination that the external review request is ineligible for review may be appealed to the commissioner.
(f) (1) The commissioner may determine that a request is eligible for external review under this chapter notwithstanding a health carrier's initial determination that the request is ineligible and require that it be referred for external review. (2) In making a determination under this subsection (f), the commissioner's decision shall be made in accordance with the terms of the covered person's health benefit plan and shall be subject to all applicable provisions of this chapter.
(1) The commissioner may determine that a request is eligible for external review under this chapter notwithstanding a health carrier's initial determination that the request is ineligible and require that it be referred for external review.
(2) In making a determination under this subsection (f), the commissioner's decision shall be made in accordance with the terms of the covered person's health benefit plan and shall be subject to all applicable provisions of this chapter.
(g) (1) Whenever the health carrier or commissioner determines that a request is eligible for external review following the preliminary review conducted pursuant to subdivision (c)(2), within three (3) business days after the determination by the health carrier or within three (3) business days after the date of receipt of the determination by the commissioner, the health carrier shall notify the aggrieved person in writing of the request's eligibility and acceptance for external review. (2) The health carrier shall include in the notice provided to the aggrieved person, a statement that additional information may be submitted in writing to the health carrier, within six (6) business days following the date of receipt of the notice provided pursuant to this subsection (g), that the external review organization shall consider when conducting the external review. The health carrier is not required to, but may, accept and forward to the external review organization for consideration such additional information submitted by the aggrieved person after six (6) business days. (3) Within one (1) business day after the receipt of the notice of the request to conduct external review, the external review organization shall: (A) Select one (1) or more clinical reviewers, as it determines is appropriate, pursuant to subsection (o) to conduct the external review; and (B) Based on the opinion of the clinical reviewer, or opinions if more than one (1) clinical reviewer has been selected to conduct the external review, make a decision to uphold or reverse the adverse determination or final adverse determination. (4) In selecting clinical reviewers pursuant to subdivision (g)(3), the external review organization shall select physicians or other healthcare professionals who meet the minimum qualifications described in § 56-61-121 and, through clinical experience in the past three (3) years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested healthcare service or treatment. (5) Neither the aggrieved person nor the health carrier shall choose or control the choice of the physicians or other healthcare professionals selected to conduct the external review. (6) In accordance with subsection (h), each clinical reviewer shall provide a written opinion to the external review organization on whether the recommended or requested healthcare service or treatment should be covered. (7) In reaching an opinion, clinical reviewers are not bound by any decisions or conclusions reached during the health carrier's internal grievance process.
(1) Whenever the health carrier or commissioner determines that a request is eligible for external review following the preliminary review conducted pursuant to subdivision (c)(2), within three (3) business days after the determination by the health carrier or within three (3) business days after the date of receipt of the determination by the commissioner, the health carrier shall notify the aggrieved person in writing of the request's eligibility and acceptance for external review.
(2) The health carrier shall include in the notice provided to the aggrieved person, a statement that additional information may be submitted in writing to the health carrier, within six (6) business days following the date of receipt of the notice provided pursuant to this subsection (g), that the external review organization shall consider when conducting the external review. The health carrier is not required to, but may, accept and forward to the external review organization for consideration such additional information submitted by the aggrieved person after six (6) business days.
(3) Within one (1) business day after the receipt of the notice of the request to conduct external review, the external review organization shall: (A) Select one (1) or more clinical reviewers, as it determines is appropriate, pursuant to subsection (o) to conduct the external review; and (B) Based on the opinion of the clinical reviewer, or opinions if more than one (1) clinical reviewer has been selected to conduct the external review, make a decision to uphold or reverse the adverse determination or final adverse determination.
(A) Select one (1) or more clinical reviewers, as it determines is appropriate, pursuant to subsection (o) to conduct the external review; and
(B) Based on the opinion of the clinical reviewer, or opinions if more than one (1) clinical reviewer has been selected to conduct the external review, make a decision to uphold or reverse the adverse determination or final adverse determination.
(4) In selecting clinical reviewers pursuant to subdivision (g)(3), the external review organization shall select physicians or other healthcare professionals who meet the minimum qualifications described in § 56-61-121 and, through clinical experience in the past three (3) years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested healthcare service or treatment.
(5) Neither the aggrieved person nor the health carrier shall choose or control the choice of the physicians or other healthcare professionals selected to conduct the external review.
(6) In accordance with subsection (h), each clinical reviewer shall provide a written opinion to the external review organization on whether the recommended or requested healthcare service or treatment should be covered.
(7) In reaching an opinion, clinical reviewers are not bound by any decisions or conclusions reached during the health carrier's internal grievance process.
(h) (1) Within six (6) business days after the date of receipt of the notice provided pursuant to subsections (c) or (f), the health carrier shall provide to the external review organization, any documents and information considered in making the adverse determination or the final adverse determination. (2) Failure by the health carrier to provide the documents and information within the time specified in subsection (h) shall not delay the conduct of the external review. (3) If the health carrier fails to provide the documents and information within the time specified in subsection (h), the external review organization may terminate the external review and make a decision to reverse the adverse determination or final adverse determination. (4) The external review organization shall notify the health carrier within one (1) business day of its decision to reverse the adverse determination or final adverse determination pursuant to subdivision (h)(3). The health carrier shall notify the aggrieved person within three (3) business days of the external review organization's decision.
(1) Within six (6) business days after the date of receipt of the notice provided pursuant to subsections (c) or (f), the health carrier shall provide to the external review organization, any documents and information considered in making the adverse determination or the final adverse determination.
(2) Failure by the health carrier to provide the documents and information within the time specified in subsection (h) shall not delay the conduct of the external review.
(3) If the health carrier fails to provide the documents and information within the time specified in subsection (h), the external review organization may terminate the external review and make a decision to reverse the adverse determination or final adverse determination.
(4) The external review organization shall notify the health carrier within one (1) business day of its decision to reverse the adverse determination or final adverse determination pursuant to subdivision (h)(3). The health carrier shall notify the aggrieved person within three (3) business days of the external review organization's decision.
(i) Each clinical reviewer selected pursuant to subdivision (g)(3) shall review all of the information and documents received pursuant to subdivision (g)(2) and any other information submitted in writing by the aggrieved person.
(j) (1) Upon receipt of the information required to be forwarded pursuant to subdivision (g)(2), the health carrier may reconsider its adverse determination or final adverse determination that is the subject of the external review. (2) Reconsideration by the health carrier of its adverse determination or final adverse determination shall not delay or terminate the external review. (3) The external review may terminate only if the health carrier decides, upon completion of its reconsideration, to reverse its adverse determination or final adverse determination and provide coverage or payment for the recommended or requested healthcare service or treatment that is the subject of the adverse determination or final adverse determination. (4) Within three (3) business days after making the decision to reverse its adverse determination or final adverse determination, the health carrier shall notify the aggrieved person of its decision in writing. (5) The external review organization shall terminate the external review upon receipt of the notice from the health carrier sent pursuant to subdivision (j)(4).
(1) Upon receipt of the information required to be forwarded pursuant to subdivision (g)(2), the health carrier may reconsider its adverse determination or final adverse determination that is the subject of the external review.
(2) Reconsideration by the health carrier of its adverse determination or final adverse determination shall not delay or terminate the external review.
(3) The external review may terminate only if the health carrier decides, upon completion of its reconsideration, to reverse its adverse determination or final adverse determination and provide coverage or payment for the recommended or requested healthcare service or treatment that is the subject of the adverse determination or final adverse determination.
(4) Within three (3) business days after making the decision to reverse its adverse determination or final adverse determination, the health carrier shall notify the aggrieved person of its decision in writing.
(5) The external review organization shall terminate the external review upon receipt of the notice from the health carrier sent pursuant to subdivision (j)(4).
(k) Within twenty (20) days after being selected in accordance with subdivision (g)(3) to conduct the external review, each clinical reviewer shall provide an opinion to the external review organization on whether the recommended or requested healthcare service or treatment should be covered. Each clinical reviewer's opinion shall be in writing and include the following information: (1) A description of the covered person's medical condition; (2) A description of the indicators relevant to determining whether there is sufficient evidence to demonstrate that the recommended or requested healthcare service or treatment is more likely than not to be beneficial to the covered person than any available standard healthcare services or treatments and the adverse risks of the recommended or requested healthcare service or treatment would not be substantially increased over those available standard healthcare services or treatments; (3) A description and analysis of any medical or scientific evidence, as that term is defined by this chapter; and (4) Information on whether the reviewer's rationale for the opinion is based on subdivision ( l )(5).
(1) A description of the covered person's medical condition;
(2) A description of the indicators relevant to determining whether there is sufficient evidence to demonstrate that the recommended or requested healthcare service or treatment is more likely than not to be beneficial to the covered person than any available standard healthcare services or treatments and the adverse risks of the recommended or requested healthcare service or treatment would not be substantially increased over those available standard healthcare services or treatments;
(3) A description and analysis of any medical or scientific evidence, as that term is defined by this chapter; and
(4) Information on whether the reviewer's rationale for the opinion is based on subdivision ( l )(5).
(l) In addition to the documents and information provided pursuant to subsection (g), each clinical reviewer, to the extent that the information or documents are available and the reviewer considers appropriate, shall consider the following in reaching an opinion pursuant to subsection (k): (1) The covered person's pertinent medical records; (2) The attending physician or healthcare professional's recommendation; (3) Consulting reports from appropriate healthcare professionals and other documents submitted by the health carrier, aggrieved person, or the covered person's treating physician or healthcare professional; (4) The terms of coverage under the covered person's health benefit plan with the health carrier to ensure that, but for the health carrier's determination that the recommended or requested healthcare service or treatment that is the subject of the opinion is experimental or investigational, the reviewer's opinion is not contrary to the terms of coverage under the covered person's health benefit plan with the health carrier; and (5) Whether: (A) The recommended or requested healthcare service or treatment has been approved by the federal food and drug administration, if applicable, for the condition; or (B) Medical or scientific evidence based standards that demonstrate that the expected benefits of the recommended or requested healthcare service or treatment is more likely than not to be beneficial to the covered person than any available standard healthcare service or treatment and the adverse risks of the recommended or requested healthcare service or treatment would not be substantially increased over those of available standard healthcare services or treatments.
(1) The covered person's pertinent medical records;
(2) The attending physician or healthcare professional's recommendation;
(3) Consulting reports from appropriate healthcare professionals and other documents submitted by the health carrier, aggrieved person, or the covered person's treating physician or healthcare professional;
(4) The terms of coverage under the covered person's health benefit plan with the health carrier to ensure that, but for the health carrier's determination that the recommended or requested healthcare service or treatment that is the subject of the opinion is experimental or investigational, the reviewer's opinion is not contrary to the terms of coverage under the covered person's health benefit plan with the health carrier; and
(5) Whether: (A) The recommended or requested healthcare service or treatment has been approved by the federal food and drug administration, if applicable, for the condition; or (B) Medical or scientific evidence based standards that demonstrate that the expected benefits of the recommended or requested healthcare service or treatment is more likely than not to be beneficial to the covered person than any available standard healthcare service or treatment and the adverse risks of the recommended or requested healthcare service or treatment would not be substantially increased over those of available standard healthcare services or treatments.
(A) The recommended or requested healthcare service or treatment has been approved by the federal food and drug administration, if applicable, for the condition; or
(B) Medical or scientific evidence based standards that demonstrate that the expected benefits of the recommended or requested healthcare service or treatment is more likely than not to be beneficial to the covered person than any available standard healthcare service or treatment and the adverse risks of the recommended or requested healthcare service or treatment would not be substantially increased over those of available standard healthcare services or treatments.
(m) (1) Within twenty (20) days after the date it receives the opinion of each clinical reviewer, the external review organization shall make a decision and provide written notice of the decision to the health carrier. The health carrier shall notify the aggrieved person within three (3) business days of the external review organization decision. (2) If a majority of the clinical reviewers recommend that the recommended or requested healthcare service or treatment should be covered, the external review organization shall render a decision to reverse the health carrier's adverse determination or final adverse determination. (3) If a majority of the clinical reviewers recommend that the recommended or requested healthcare service or treatment should not be covered, the external review organization shall render a decision to uphold the health carrier's adverse determination or final adverse determination. (4) If the clinical reviewers are evenly split as to whether the recommended or requested healthcare service or treatment should be covered, then the external review organization shall obtain the opinion of an additional clinical reviewer in order for the external review organization to render a decision based on the opinions of a majority of the clinical reviewers; provided, that: (A) The additional clinical reviewer selected under this subdivision (m)(4) shall use the same information to reach an opinion as the clinical reviewers who have already submitted their opinions pursuant to subsection (i); (B) The selection of the additional clinical reviewer under this subdivision (m)(4) shall not extend the time within which the external review organization is required to render a decision based on the opinions of the clinical reviewers selected under subsection (g). (5) The external review organization shall include in the notice provided pursuant to this subsection (m): (A) A general description of the reason for the request for external review; (B) The written opinion of each clinical reviewer, including the recommendation of each clinical reviewer as to whether the recommended or requested healthcare service or treatment should be covered and the rationale for the clinical reviewer's recommendation; (C) The date that the external review organization was notified by the health carrier to conduct the external review; (D) The date that the external review was conducted; (E) The date of external review organization's decision; (F) The principal reason or reasons for external review organization's decision; and (G) The rationale for the external review organization's decision. (6) Upon receipt of a notice of a decision reversing the adverse determination or final adverse determination, the health carrier shall immediately approve coverage of the recommended or requested healthcare service or treatment that was the subject of the adverse determination or final adverse determination. If the decision involved healthcare provider compensation, the health carrier shall make appropriate payment to the healthcare provider within ten (10) business days of the receipt of a notice of the decision from the external review organization.
(1) Within twenty (20) days after the date it receives the opinion of each clinical reviewer, the external review organization shall make a decision and provide written notice of the decision to the health carrier. The health carrier shall notify the aggrieved person within three (3) business days of the external review organization decision.
(2) If a majority of the clinical reviewers recommend that the recommended or requested healthcare service or treatment should be covered, the external review organization shall render a decision to reverse the health carrier's adverse determination or final adverse determination.
(3) If a majority of the clinical reviewers recommend that the recommended or requested healthcare service or treatment should not be covered, the external review organization shall render a decision to uphold the health carrier's adverse determination or final adverse determination.
(4) If the clinical reviewers are evenly split as to whether the recommended or requested healthcare service or treatment should be covered, then the external review organization shall obtain the opinion of an additional clinical reviewer in order for the external review organization to render a decision based on the opinions of a majority of the clinical reviewers; provided, that: (A) The additional clinical reviewer selected under this subdivision (m)(4) shall use the same information to reach an opinion as the clinical reviewers who have already submitted their opinions pursuant to subsection (i); (B) The selection of the additional clinical reviewer under this subdivision (m)(4) shall not extend the time within which the external review organization is required to render a decision based on the opinions of the clinical reviewers selected under subsection (g).
(A) The additional clinical reviewer selected under this subdivision (m)(4) shall use the same information to reach an opinion as the clinical reviewers who have already submitted their opinions pursuant to subsection (i);
(B) The selection of the additional clinical reviewer under this subdivision (m)(4) shall not extend the time within which the external review organization is required to render a decision based on the opinions of the clinical reviewers selected under subsection (g).
(5) The external review organization shall include in the notice provided pursuant to this subsection (m): (A) A general description of the reason for the request for external review; (B) The written opinion of each clinical reviewer, including the recommendation of each clinical reviewer as to whether the recommended or requested healthcare service or treatment should be covered and the rationale for the clinical reviewer's recommendation; (C) The date that the external review organization was notified by the health carrier to conduct the external review; (D) The date that the external review was conducted; (E) The date of external review organization's decision; (F) The principal reason or reasons for external review organization's decision; and (G) The rationale for the external review organization's decision.
(A) A general description of the reason for the request for external review;
(B) The written opinion of each clinical reviewer, including the recommendation of each clinical reviewer as to whether the recommended or requested healthcare service or treatment should be covered and the rationale for the clinical reviewer's recommendation;
(C) The date that the external review organization was notified by the health carrier to conduct the external review;
(D) The date that the external review was conducted;
(E) The date of external review organization's decision;
(F) The principal reason or reasons for external review organization's decision; and
(G) The rationale for the external review organization's decision.
(6) Upon receipt of a notice of a decision reversing the adverse determination or final adverse determination, the health carrier shall immediately approve coverage of the recommended or requested healthcare service or treatment that was the subject of the adverse determination or final adverse determination. If the decision involved healthcare provider compensation, the health carrier shall make appropriate payment to the healthcare provider within ten (10) business days of the receipt of a notice of the decision from the external review organization.
(n) (1) Within six (6) months after the date of a notice of an adverse determination that involves a denial of coverage based upon the determination that the healthcare service or treatment recommended or requested is experimental or investigational, an aggrieved person may file a request for an expedited external review of the adverse determination. The covered person's treating physician must certify, in writing, that the recommended or requested healthcare service or treatment that is the subject of the request would be significantly less effective if not promptly initiated. (2) Upon notice of the request for expedited external review, the health carrier shall immediately determine whether the request meets the reviewability requirements of subsection (b). The health carrier shall immediately notify the aggrieved person of its eligibility determination. (3) The notice of initial determination shall include a statement informing the aggrieved person that a health carrier's initial determination that the request for external review is ineligible for review and may be appealed to the commissioner; provided, that: (A) The commissioner may determine that a request is eligible for external review notwithstanding a health carrier's initial determination that the request is ineligible and that it be referred to external review; and (B) In making a determination under subdivision (n)(3)(A), the commissioner's decision shall be made in accordance with the terms of the covered person's health benefit plan and shall be subject to all applicable provisions of this chapter. (4) Upon making a determination that a request is eligible for expedited external review, the health carrier shall immediately notify the aggrieved person in writing the request is eligible for external review. (5) At the same time, the health carrier shall immediately notify the external review organization and provide or transmit all necessary documents and information considered when making the adverse determination or final adverse determination electronically or by telephone, facsimile or any other expeditious method available. (6) Within one (1) business day after the receipt of the notice to conduct an expedited external review, the external review organization shall: (A) Select one (1) or more clinical reviewers, as it deems appropriate to conduct the expedited external review; (B) Based on the decision of the clinical reviewer or reviewers render a decision to uphold or reverse the decision of the adverse determination; (C) Require each clinical reviewer to provide an opinion, orally or in writing, to the external review organization as expeditiously as the covered person's medical condition or circumstances requires, but in no event more than five (5) days after being selected; and (D) If the opinion was not in writing, within forty-eight (48) hours following the date that the opinion was provided, require the clinical reviewer to provide written confirmation of the opinion to the external review organization and include the information required in subsections (k) and ( l ). (7) Upon receipt of a notice of a decision reversing the adverse determination, the health carrier shall immediately approve the coverage of the recommended or requested healthcare service or treatment that was the subject of the adverse determination.
(1) Within six (6) months after the date of a notice of an adverse determination that involves a denial of coverage based upon the determination that the healthcare service or treatment recommended or requested is experimental or investigational, an aggrieved person may file a request for an expedited external review of the adverse determination. The covered person's treating physician must certify, in writing, that the recommended or requested healthcare service or treatment that is the subject of the request would be significantly less effective if not promptly initiated.
(2) Upon notice of the request for expedited external review, the health carrier shall immediately determine whether the request meets the reviewability requirements of subsection (b). The health carrier shall immediately notify the aggrieved person of its eligibility determination.
(3) The notice of initial determination shall include a statement informing the aggrieved person that a health carrier's initial determination that the request for external review is ineligible for review and may be appealed to the commissioner; provided, that: (A) The commissioner may determine that a request is eligible for external review notwithstanding a health carrier's initial determination that the request is ineligible and that it be referred to external review; and (B) In making a determination under subdivision (n)(3)(A), the commissioner's decision shall be made in accordance with the terms of the covered person's health benefit plan and shall be subject to all applicable provisions of this chapter.
(A) The commissioner may determine that a request is eligible for external review notwithstanding a health carrier's initial determination that the request is ineligible and that it be referred to external review; and
(B) In making a determination under subdivision (n)(3)(A), the commissioner's decision shall be made in accordance with the terms of the covered person's health benefit plan and shall be subject to all applicable provisions of this chapter.
(4) Upon making a determination that a request is eligible for expedited external review, the health carrier shall immediately notify the aggrieved person in writing the request is eligible for external review.
(5) At the same time, the health carrier shall immediately notify the external review organization and provide or transmit all necessary documents and information considered when making the adverse determination or final adverse determination electronically or by telephone, facsimile or any other expeditious method available.
(6) Within one (1) business day after the receipt of the notice to conduct an expedited external review, the external review organization shall: (A) Select one (1) or more clinical reviewers, as it deems appropriate to conduct the expedited external review; (B) Based on the decision of the clinical reviewer or reviewers render a decision to uphold or reverse the decision of the adverse determination; (C) Require each clinical reviewer to provide an opinion, orally or in writing, to the external review organization as expeditiously as the covered person's medical condition or circumstances requires, but in no event more than five (5) days after being selected; and (D) If the opinion was not in writing, within forty-eight (48) hours following the date that the opinion was provided, require the clinical reviewer to provide written confirmation of the opinion to the external review organization and include the information required in subsections (k) and ( l ).
(A) Select one (1) or more clinical reviewers, as it deems appropriate to conduct the expedited external review;
(B) Based on the decision of the clinical reviewer or reviewers render a decision to uphold or reverse the decision of the adverse determination;
(C) Require each clinical reviewer to provide an opinion, orally or in writing, to the external review organization as expeditiously as the covered person's medical condition or circumstances requires, but in no event more than five (5) days after being selected; and
(D) If the opinion was not in writing, within forty-eight (48) hours following the date that the opinion was provided, require the clinical reviewer to provide written confirmation of the opinion to the external review organization and include the information required in subsections (k) and ( l ).
(7) Upon receipt of a notice of a decision reversing the adverse determination, the health carrier shall immediately approve the coverage of the recommended or requested healthcare service or treatment that was the subject of the adverse determination.
(o) The health carrier, regardless of utilization review accreditation commission (URAC) accreditation, shall have a contract with at least two (2) or more external review entities and may give the aggrieved person the opportunity to select, from among the external review organizations that the health carrier has contracts with, the external review organization to conduct the review; provided, however, that the commissioner may require assignments of external review organizations on a random basis if such random assignment is required per the direction of the United States department of health and human services. The commissioner is hereby granted emergency rulemaking authority to implement random assignments pursuant to this subsection (o).
Acts 2010 , ch. 980, § 19; 2011 , ch. 206, § 2.
Tenn. Code Ann. § 56-61-113 — TN Code / Title 56 / Chapter 61 / Section 56-61-113
Notice of right to external review
Status: in_force

(a) A health carrier shall notify the aggrieved person in writing of the right to request an external review to be conducted pursuant to §§ 56-61-116 and 56-61-118 and include the appropriate statements and information set forth in subsection (b) at the same time that the health carrier sends written notice of a final adverse determination. As part of the written notice required under this subsection (a), a health carrier shall include the following, or substantially equivalent language: We have denied your request for the provision of or payment for a healthcare service or course of treatment. You have the right to have our decision reviewed by healthcare professionals who have no association with us if our decision involved making a judgment as to the medical necessity, appropriateness, healthcare setting, level of care or effectiveness of the healthcare service or treatment you requested by submitting a written request for external review to us. (b) The health carrier shall include the following in the notice required under subsection (a): (1) For a notice related to an adverse determination, a statement informing the aggrieved person that: (A) If the covered person has a medical condition where the timeframe for completion of an expedited review of a grievance involving an adverse determination set forth in § 56-61-109 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review to be conducted pursuant to § 56-61-117 ; (B) The aggrieved person may file a grievance under the health carrier's internal grievance process as set forth in § 56-61-107 . An aggrieved person shall be considered to have exhausted the health carrier's internal grievance process for purposes of this section, if the aggrieved person: (i) Has filed a grievance involving an adverse determination pursuant to § 56-61-107 ; and (ii) Has not received a written decision on the grievance from the health carrier within thirty (30) days for prospective review determinations and sixty (60) days for retrospective review determinations following the date the aggrieved person filed the grievance with the health carrier unless the aggrieved person requested or agreed to a delay; (2) For a notice related to a final adverse determination, a statement informing the aggrieved person that: (A) If the covered person has a medical condition where the timeframe for completion of a standard external review pursuant to § 56-61-116 or § 56-61-118 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) ; (B) If the final adverse determination concerns an admission, availability of care, continued stay or healthcare service for which the covered person received emergency services, but has not been discharged from a facility, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) . (c) In addition to the information to be provided pursuant to subdivision (b)(1), the health carrier shall include a copy of the description of both the standard and expedited external review procedures highlighting the provisions in the external review procedures that give the aggrieved person the opportunity to submit additional information and any forms used to process an external review. (d) As part of any forms provided under subdivision (b)(2), the health carrier shall include an authorization form that complies with the requirements of 45 CFR 164.508 , by which the covered person, for purposes of conducting an external review under this chapter, authorizes the health carrier and the covered person's treating healthcare provider to disclose protected health information, including, but not limited to, medical records concerning the covered person that are pertinent to the external review. Acts 2010, ch. 980, § 14.
(a) A health carrier shall notify the aggrieved person in writing of the right to request an external review to be conducted pursuant to §§ 56-61-116 and 56-61-118 and include the appropriate statements and information set forth in subsection (b) at the same time that the health carrier sends written notice of a final adverse determination. As part of the written notice required under this subsection (a), a health carrier shall include the following, or substantially equivalent language: We have denied your request for the provision of or payment for a healthcare service or course of treatment. You have the right to have our decision reviewed by healthcare professionals who have no association with us if our decision involved making a judgment as to the medical necessity, appropriateness, healthcare setting, level of care or effectiveness of the healthcare service or treatment you requested by submitting a written request for external review to us.
We have denied your request for the provision of or payment for a healthcare service or course of treatment. You have the right to have our decision reviewed by healthcare professionals who have no association with us if our decision involved making a judgment as to the medical necessity, appropriateness, healthcare setting, level of care or effectiveness of the healthcare service or treatment you requested by submitting a written request for external review to us.
(b) The health carrier shall include the following in the notice required under subsection (a): (1) For a notice related to an adverse determination, a statement informing the aggrieved person that: (A) If the covered person has a medical condition where the timeframe for completion of an expedited review of a grievance involving an adverse determination set forth in § 56-61-109 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review to be conducted pursuant to § 56-61-117 ; (B) The aggrieved person may file a grievance under the health carrier's internal grievance process as set forth in § 56-61-107 . An aggrieved person shall be considered to have exhausted the health carrier's internal grievance process for purposes of this section, if the aggrieved person: (i) Has filed a grievance involving an adverse determination pursuant to § 56-61-107 ; and (ii) Has not received a written decision on the grievance from the health carrier within thirty (30) days for prospective review determinations and sixty (60) days for retrospective review determinations following the date the aggrieved person filed the grievance with the health carrier unless the aggrieved person requested or agreed to a delay; (2) For a notice related to a final adverse determination, a statement informing the aggrieved person that: (A) If the covered person has a medical condition where the timeframe for completion of a standard external review pursuant to § 56-61-116 or § 56-61-118 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) ; (B) If the final adverse determination concerns an admission, availability of care, continued stay or healthcare service for which the covered person received emergency services, but has not been discharged from a facility, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) .
(1) For a notice related to an adverse determination, a statement informing the aggrieved person that: (A) If the covered person has a medical condition where the timeframe for completion of an expedited review of a grievance involving an adverse determination set forth in § 56-61-109 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review to be conducted pursuant to § 56-61-117 ; (B) The aggrieved person may file a grievance under the health carrier's internal grievance process as set forth in § 56-61-107 . An aggrieved person shall be considered to have exhausted the health carrier's internal grievance process for purposes of this section, if the aggrieved person: (i) Has filed a grievance involving an adverse determination pursuant to § 56-61-107 ; and (ii) Has not received a written decision on the grievance from the health carrier within thirty (30) days for prospective review determinations and sixty (60) days for retrospective review determinations following the date the aggrieved person filed the grievance with the health carrier unless the aggrieved person requested or agreed to a delay;
(A) If the covered person has a medical condition where the timeframe for completion of an expedited review of a grievance involving an adverse determination set forth in § 56-61-109 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review to be conducted pursuant to § 56-61-117 ;
(B) The aggrieved person may file a grievance under the health carrier's internal grievance process as set forth in § 56-61-107 . An aggrieved person shall be considered to have exhausted the health carrier's internal grievance process for purposes of this section, if the aggrieved person: (i) Has filed a grievance involving an adverse determination pursuant to § 56-61-107 ; and (ii) Has not received a written decision on the grievance from the health carrier within thirty (30) days for prospective review determinations and sixty (60) days for retrospective review determinations following the date the aggrieved person filed the grievance with the health carrier unless the aggrieved person requested or agreed to a delay;
(i) Has filed a grievance involving an adverse determination pursuant to § 56-61-107 ; and
(ii) Has not received a written decision on the grievance from the health carrier within thirty (30) days for prospective review determinations and sixty (60) days for retrospective review determinations following the date the aggrieved person filed the grievance with the health carrier unless the aggrieved person requested or agreed to a delay;
(2) For a notice related to a final adverse determination, a statement informing the aggrieved person that: (A) If the covered person has a medical condition where the timeframe for completion of a standard external review pursuant to § 56-61-116 or § 56-61-118 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) ; (B) If the final adverse determination concerns an admission, availability of care, continued stay or healthcare service for which the covered person received emergency services, but has not been discharged from a facility, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) .
(A) If the covered person has a medical condition where the timeframe for completion of a standard external review pursuant to § 56-61-116 or § 56-61-118 would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) ;
(B) If the final adverse determination concerns an admission, availability of care, continued stay or healthcare service for which the covered person received emergency services, but has not been discharged from a facility, the aggrieved person may file a request for an expedited external review pursuant to § 56-61-117 or § 56-61-118(n) .
(c) In addition to the information to be provided pursuant to subdivision (b)(1), the health carrier shall include a copy of the description of both the standard and expedited external review procedures highlighting the provisions in the external review procedures that give the aggrieved person the opportunity to submit additional information and any forms used to process an external review.
(d) As part of any forms provided under subdivision (b)(2), the health carrier shall include an authorization form that complies with the requirements of 45 CFR 164.508 , by which the covered person, for purposes of conducting an external review under this chapter, authorizes the health carrier and the covered person's treating healthcare provider to disclose protected health information, including, but not limited to, medical records concerning the covered person that are pertinent to the external review.
Acts 2010, ch. 980, § 14.
Tenn. Code Ann. § 56-13-102 — TN Code / Title 56 / Chapter 13 / Section 56-13-102
Chapter definitions
Status: in_force

As used in this chapter, unless the context requires otherwise: (1) "Affiliated company" means any company in the same corporate system as a parent, an industrial insured, or a member organization by virtue of common ownership, control, operation, or management; (2) "Agency captive insurance company" means a company or protected cell formed under this chapter that is owned by an insurance agency or brokerage and that only reinsures risks of policies that are placed by or through the agency or brokerage; (3) "Alien" means a company formed according to the legal requirements of a foreign country; (4) "Association" means any legal association of individuals, corporations, limited liability companies, partnerships, associations, or other entities, whereby: (A) The member organizations of such or the association itself, whether or not in conjunction with some or all of the member organizations: (i) Own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; (ii) Have complete voting control over an association captive insurance company incorporated as a mutual insurer; (iii) Constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer; or (iv) Have complete voting control over an association captive insurance company formed as a limited liability company; or (B) Each member organization of the association is either: (i) A not-for-profit corporation, nonprofit association, or similar nonprofit organization; (ii) An entity or organization exempt from taxation under § 501(c) of the Internal Revenue Code ( 26 U.S.C. § 501(c) ); or (iii) A municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity, whether organized by private act or public act of the general assembly, or any agency, board, or commission of any municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity. This subdivision (4)(B)(iii) shall be liberally construed; (5) "Association captive insurance company" means any company that insures risks of the member organizations of an association, and that also may insure the risks of affiliated companies of the member organizations and the risks of the association itself; (6) "Captive insurance company" means any pure captive insurance company, association captive insurance company, agency captive insurance company, industrial insured captive insurance company, risk retention group, protected cell captive insurance company, incorporated cell captive insurance company, or special purpose financial captive insurance company formed or licensed under this chapter; (7) "Commissioner" means the commissioner of the department, or the commissioner's designee; (8) "Controlled unaffiliated business" means any person: (A) That is not in the corporate system of a parent and its affiliated companies in the case of a pure captive insurance company, or that is not in the corporate system of an industrial insured and its affiliated companies in the case of an industrial insured captive insurance company; (B) That has an existing contractual relationship with a parent or one (1) of its affiliated companies in the case of a pure captive insurance company, or with an industrial insured or one (1) of its affiliated companies in the case of an industrial insured captive insurance company; and (C) Whose risks are managed by a pure captive insurance company or an industrial insured captive insurance company, as applicable, in accordance with § 56-13-117 ; (9) "Department" means the department of commerce and insurance; (10) "Excess workers' compensation insurance" or "excess accident and health insurance" means, in the case of an employer that has insured or self-insured its workers' compensation or accident and health insurance risks in accordance with applicable state or federal law, insurance in excess of a specified per incident or aggregate limit established by the commissioner; (11) "Incorporated cell" means a protected cell of an incorporated cell captive insurance company that is organized as a corporation or other legal entity separate from the incorporated cell captive insurance company; (12) "Incorporated cell captive insurance company" means a protected cell captive insurance company that is established as a corporation or other legal entity separate from its incorporated cells that are also organized as separate legal entities; (13) "Industrial insured" means an insured: (A) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer; (B) Whose aggregate annual premiums for insurance on all risks total at least twenty-five thousand dollars ($25,000); and (C) Who has at least twenty-five (25) full-time employees; (14) "Industrial insured captive insurance company" means any company that insures risks of the industrial insureds that comprise the industrial insured group, and that may insure the risks of the affiliated companies of the industrial insureds and the risks of the controlled unaffiliated business of an industrial insured or its affiliated companies; (15) "Industrial insured group" means any group of industrial insureds that collectively: (A) Own, control, or hold with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer; (B) Have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; (C) Constitute all of the subscribers of an industrial insured captive insurance company formed as a reciprocal insurer; or (D) Have complete voting control over an industrial insured captive insurance company formed as a limited liability company; (16) "Member organization" means any individual, corporation, limited liability company, partnership, association, or other entity that belongs to an association; (17) "Mutual corporation" means a corporation organized without stockholders and includes a nonprofit corporation with members; (18) "Mutual insurer" means a company owned by its policyholders where no stock is available for purchase on the stock exchanges; (19) "Organizational documents" means the documents that must be submitted pursuant to title 48 and title 61 in order to legally form a business in this state or to obtain a certificate of authority to transact business in this state; (20) "Parametric insurance" means a type of insurance that does not indemnify the pure loss, but ex ante agrees to make a payment upon the occurrence of a triggering event; (21) "Parent" means an individual, corporation, limited liability company, partnership, association, or other entity, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent (50%) of the outstanding voting: (A) Securities of a pure captive insurance company organized as a stock corporation; (B) Membership interests of a pure captive insurance company organized as a nonprofit corporation; or (C) Membership interests of a pure captive insurance company organized as a limited liability company; (22) "Pure captive insurance company" means any company that insures risks of its parent and affiliated companies or a controlled unaffiliated business or businesses; and (23) "Risk retention group" means a captive insurance company organized under the laws of this state pursuant to the Liability Risk Retention Act of 1986, as amended, ( 15 U.S.C. § 3901 et seq.), as a stock or mutual corporation, a reciprocal or other limited liability entity. Risk retention groups formed under this chapter are subject to all applicable insurance laws including, but not limited to any applicable provisions in chapters 1, 2, 5, 6, 11, and 45 of this title. Amended by 2024 Tenn. Acts, ch. 643,s 2, eff. 4/4/2024. Amended by 2024 Tenn. Acts, ch. 643,s 1, eff. 4/4/2024. Amended by 2021 Tenn. Acts, ch. 537, s 9, eff. 7/1/2021. Acts 2011 , ch. 468, § 1.
As used in this chapter, unless the context requires otherwise:
(1) "Affiliated company" means any company in the same corporate system as a parent, an industrial insured, or a member organization by virtue of common ownership, control, operation, or management;
(2) "Agency captive insurance company" means a company or protected cell formed under this chapter that is owned by an insurance agency or brokerage and that only reinsures risks of policies that are placed by or through the agency or brokerage;
(3) "Alien" means a company formed according to the legal requirements of a foreign country;
(4) "Association" means any legal association of individuals, corporations, limited liability companies, partnerships, associations, or other entities, whereby: (A) The member organizations of such or the association itself, whether or not in conjunction with some or all of the member organizations: (i) Own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; (ii) Have complete voting control over an association captive insurance company incorporated as a mutual insurer; (iii) Constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer; or (iv) Have complete voting control over an association captive insurance company formed as a limited liability company; or (B) Each member organization of the association is either: (i) A not-for-profit corporation, nonprofit association, or similar nonprofit organization; (ii) An entity or organization exempt from taxation under § 501(c) of the Internal Revenue Code ( 26 U.S.C. § 501(c) ); or (iii) A municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity, whether organized by private act or public act of the general assembly, or any agency, board, or commission of any municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity. This subdivision (4)(B)(iii) shall be liberally construed;
(A) The member organizations of such or the association itself, whether or not in conjunction with some or all of the member organizations: (i) Own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; (ii) Have complete voting control over an association captive insurance company incorporated as a mutual insurer; (iii) Constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer; or (iv) Have complete voting control over an association captive insurance company formed as a limited liability company; or
(i) Own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer;
(ii) Have complete voting control over an association captive insurance company incorporated as a mutual insurer;
(iii) Constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer; or
(iv) Have complete voting control over an association captive insurance company formed as a limited liability company; or
(B) Each member organization of the association is either: (i) A not-for-profit corporation, nonprofit association, or similar nonprofit organization; (ii) An entity or organization exempt from taxation under § 501(c) of the Internal Revenue Code ( 26 U.S.C. § 501(c) ); or (iii) A municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity, whether organized by private act or public act of the general assembly, or any agency, board, or commission of any municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity. This subdivision (4)(B)(iii) shall be liberally construed;
(i) A not-for-profit corporation, nonprofit association, or similar nonprofit organization;
(ii) An entity or organization exempt from taxation under § 501(c) of the Internal Revenue Code ( 26 U.S.C. § 501(c) ); or
(iii) A municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity, whether organized by private act or public act of the general assembly, or any agency, board, or commission of any municipality, metropolitan government, county, authority, utility district or other public body generally classified as a governmental body or governmental entity. This subdivision (4)(B)(iii) shall be liberally construed;
(5) "Association captive insurance company" means any company that insures risks of the member organizations of an association, and that also may insure the risks of affiliated companies of the member organizations and the risks of the association itself;
(6) "Captive insurance company" means any pure captive insurance company, association captive insurance company, agency captive insurance company, industrial insured captive insurance company, risk retention group, protected cell captive insurance company, incorporated cell captive insurance company, or special purpose financial captive insurance company formed or licensed under this chapter;
(7) "Commissioner" means the commissioner of the department, or the commissioner's designee;
(8) "Controlled unaffiliated business" means any person: (A) That is not in the corporate system of a parent and its affiliated companies in the case of a pure captive insurance company, or that is not in the corporate system of an industrial insured and its affiliated companies in the case of an industrial insured captive insurance company; (B) That has an existing contractual relationship with a parent or one (1) of its affiliated companies in the case of a pure captive insurance company, or with an industrial insured or one (1) of its affiliated companies in the case of an industrial insured captive insurance company; and (C) Whose risks are managed by a pure captive insurance company or an industrial insured captive insurance company, as applicable, in accordance with § 56-13-117 ;
(A) That is not in the corporate system of a parent and its affiliated companies in the case of a pure captive insurance company, or that is not in the corporate system of an industrial insured and its affiliated companies in the case of an industrial insured captive insurance company;
(B) That has an existing contractual relationship with a parent or one (1) of its affiliated companies in the case of a pure captive insurance company, or with an industrial insured or one (1) of its affiliated companies in the case of an industrial insured captive insurance company; and
(C) Whose risks are managed by a pure captive insurance company or an industrial insured captive insurance company, as applicable, in accordance with § 56-13-117 ;
(9) "Department" means the department of commerce and insurance;
(10) "Excess workers' compensation insurance" or "excess accident and health insurance" means, in the case of an employer that has insured or self-insured its workers' compensation or accident and health insurance risks in accordance with applicable state or federal law, insurance in excess of a specified per incident or aggregate limit established by the commissioner;
(11) "Incorporated cell" means a protected cell of an incorporated cell captive insurance company that is organized as a corporation or other legal entity separate from the incorporated cell captive insurance company;
(12) "Incorporated cell captive insurance company" means a protected cell captive insurance company that is established as a corporation or other legal entity separate from its incorporated cells that are also organized as separate legal entities;
(13) "Industrial insured" means an insured: (A) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer; (B) Whose aggregate annual premiums for insurance on all risks total at least twenty-five thousand dollars ($25,000); and (C) Who has at least twenty-five (25) full-time employees;
(A) Who procures the insurance of any risk or risks by use of the services of a full-time employee acting as an insurance manager or buyer;
(B) Whose aggregate annual premiums for insurance on all risks total at least twenty-five thousand dollars ($25,000); and
(C) Who has at least twenty-five (25) full-time employees;
(14) "Industrial insured captive insurance company" means any company that insures risks of the industrial insureds that comprise the industrial insured group, and that may insure the risks of the affiliated companies of the industrial insureds and the risks of the controlled unaffiliated business of an industrial insured or its affiliated companies;
(15) "Industrial insured group" means any group of industrial insureds that collectively: (A) Own, control, or hold with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer; (B) Have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; (C) Constitute all of the subscribers of an industrial insured captive insurance company formed as a reciprocal insurer; or (D) Have complete voting control over an industrial insured captive insurance company formed as a limited liability company;
(A) Own, control, or hold with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer;
(B) Have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer;
(C) Constitute all of the subscribers of an industrial insured captive insurance company formed as a reciprocal insurer; or
(D) Have complete voting control over an industrial insured captive insurance company formed as a limited liability company;
(16) "Member organization" means any individual, corporation, limited liability company, partnership, association, or other entity that belongs to an association;
(17) "Mutual corporation" means a corporation organized without stockholders and includes a nonprofit corporation with members;
(18) "Mutual insurer" means a company owned by its policyholders where no stock is available for purchase on the stock exchanges;
(19) "Organizational documents" means the documents that must be submitted pursuant to title 48 and title 61 in order to legally form a business in this state or to obtain a certificate of authority to transact business in this state;
(20) "Parametric insurance" means a type of insurance that does not indemnify the pure loss, but ex ante agrees to make a payment upon the occurrence of a triggering event;
(21) "Parent" means an individual, corporation, limited liability company, partnership, association, or other entity, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent (50%) of the outstanding voting: (A) Securities of a pure captive insurance company organized as a stock corporation; (B) Membership interests of a pure captive insurance company organized as a nonprofit corporation; or (C) Membership interests of a pure captive insurance company organized as a limited liability company;
(A) Securities of a pure captive insurance company organized as a stock corporation;
(B) Membership interests of a pure captive insurance company organized as a nonprofit corporation; or
(C) Membership interests of a pure captive insurance company organized as a limited liability company;
(22) "Pure captive insurance company" means any company that insures risks of its parent and affiliated companies or a controlled unaffiliated business or businesses; and
(23) "Risk retention group" means a captive insurance company organized under the laws of this state pursuant to the Liability Risk Retention Act of 1986, as amended, ( 15 U.S.C. § 3901 et seq.), as a stock or mutual corporation, a reciprocal or other limited liability entity. Risk retention groups formed under this chapter are subject to all applicable insurance laws including, but not limited to any applicable provisions in chapters 1, 2, 5, 6, 11, and 45 of this title.
Amended by 2024 Tenn. Acts, ch. 643,s 2, eff. 4/4/2024.
Amended by 2024 Tenn. Acts, ch. 643,s 1, eff. 4/4/2024.
Amended by 2021 Tenn. Acts, ch. 537, s 9, eff. 7/1/2021.
Acts 2011 , ch. 468, § 1.
Tenn. Code Ann. § 56-4-210 — TN Code / Title 56 / Chapter 4 / Section 56-4-210
"Tennessee securities" defined - Reduction in tax for investments in state
Status: in_force

(a) As used in this chapter, "Tennessee securities" means real estate owned by an insurance company described in subdivision (b)(1) in this state; bonds of the state of Tennessee; bonds or interest- bearing warrants of any county, city, town, school district, municipality or subdivision thereof which is now or may hereafter be constituted and authorized to issue bonds or warrants under the constitution and laws of this state; notes or bonds secured by mortgage or trust deed on property in this state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau thereof; the cash deposits in regular established national or state banks or trust companies in this state, and other short-term investments, on the basis of average daily balances throughout the preceding calendar year; and any other property or security in Tennessee or issued by Tennessee corporations in which by law such insurance company may invest its funds. (b) (1) Any insurance company writing the forms of insurance enumerated in § 56-4-201 , except life insurance companies, fraternal benefit associations, orders or societies, health and accident insurance companies, life and accident insurance companies and nonprofit group hospital service plans, meeting the conditions set forth in this section, shall be entitled to a reduction of or credit upon its gross premiums tax as provided under this part. Any company desiring to qualify for the credit or reduction shall report to the commissioner, on or before March 1 of each year, the amount that the company had invested on March 31, June 30, September 30, and December 31 of the year preceding in Tennessee securities, and the amount that it had invested on those dates in similar securities in the other state in which it had its highest percentage of admitted assets invested. (2) If the report of the insurance company shows that the company, as of March 31, June 30, September 30, and December 31 of the year preceding had invested in Tennessee securities, an amount that was not less than seventy percent (70%) nor more than eighty percent (80%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the insurance company's tax on its gross premiums shall be reduced by an amount equal to twenty-five percent (25%) of the tax. (3) If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of eighty percent (80%) but not more than ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to fifty percent (50%) of the tax. (4) If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to seventy-five percent (75%) of the tax. (5) Subdivisions (b)(1)-(4) shall only be applicable to a company having investments, as shown by the report, in Tennessee securities equal to at least twenty-five percent (25%) of its total admitted assets, extended at each quarterly statement value. (c) (1) For the purposes of this section, the securities of such insurance company invested in another state in which it then had the highest percentage of its admitted assets invested, as shown in the report, includes: (A) Bonds of the other state; (B) Bonds or interest bearing warrants of any county, city, town, school district, municipality or subdivision of any county, city, town, school district or municipality, valued at amortized or market value; notes or bonds secured by mortgage or trust deed on property in the other state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau of the federal government, valued at unpaid principal; (C) The cash deposits in regular established national or state banks or trust companies, and other short-term investments, in such other state on the basis of average daily balances throughout the preceding calendar year; and (D) Any other property or security in such other state or issued by corporations domiciled in such other state in which by law such insurance company may invest its funds. (2) Values of the property or security listed in subdivision (c)(1) are to be valued at market value for purposes of determining the percentage of investment between investments in this state and investments in the other state with the highest percentage of admitted assets invested. (d) The reduction or credit provided by this section shall not be applicable with respect to the gross premium tax on premiums paid under policies of insurance directly or indirectly reinsured with any affiliate or affiliates of the company that is the direct writer of the policies, unless the affiliates that actually bear the risk of loss under the reinsurance arrangements would, if considered on a consolidated basis, qualify for the reduction or credit were the affiliates the direct writer. (e) (1) If a workers' compensation self-insurance pool established in § 50-6-405(c) invests in excess of eighty percent (80%) of its assets, as determined by generally accepted accounting principles, as of December 31 of the preceding year, in Tennessee securities, the workers' compensation self-insurance pools' taxes on its gross premiums shall be reduced by an amount equal to fifty percent (50%) for the current year. (2) A workers' compensation self-insurance pool desiring to qualify for the credit or reduction shall report to the commissioner on or before March 1 of each year, the amount the pool had invested as of December 31 of the year preceding with cash and short-term investments based on average daily balances. (f) As used in this section: (1) "Affiliate" means any insurance company that controls, is controlled by, or is under common control with the insurer writing the policies; and (2) "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a company. "Control" is deemed to exist if any company, directly or indirectly, owns, controls, holds with power to vote, or holds proxies representing more than eighty percent (80%) of the voting securities of any other company. Amended by 2015 Tenn. Acts, ch. 155,Secs.s6, s7, s8, s9, s10 eff. 1/1/2016. Amended by 2015 Tenn. Acts, ch. 155,s 5, eff. 1/1/2016. Acts 1953, ch. 49, § 1 (Williams, § 1248.169); impl. am. Acts 1971, ch. 137, § 2; 1974, ch. 568, §§ 1, 2; T.C.A. (orig. ed.), § 56-414; Acts 1980, ch. 507, § 1; 1998, ch. 1015, § 1.
(a) As used in this chapter, "Tennessee securities" means real estate owned by an insurance company described in subdivision (b)(1) in this state; bonds of the state of Tennessee; bonds or interest- bearing warrants of any county, city, town, school district, municipality or subdivision thereof which is now or may hereafter be constituted and authorized to issue bonds or warrants under the constitution and laws of this state; notes or bonds secured by mortgage or trust deed on property in this state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau thereof; the cash deposits in regular established national or state banks or trust companies in this state, and other short-term investments, on the basis of average daily balances throughout the preceding calendar year; and any other property or security in Tennessee or issued by Tennessee corporations in which by law such insurance company may invest its funds.
(b) (1) Any insurance company writing the forms of insurance enumerated in § 56-4-201 , except life insurance companies, fraternal benefit associations, orders or societies, health and accident insurance companies, life and accident insurance companies and nonprofit group hospital service plans, meeting the conditions set forth in this section, shall be entitled to a reduction of or credit upon its gross premiums tax as provided under this part. Any company desiring to qualify for the credit or reduction shall report to the commissioner, on or before March 1 of each year, the amount that the company had invested on March 31, June 30, September 30, and December 31 of the year preceding in Tennessee securities, and the amount that it had invested on those dates in similar securities in the other state in which it had its highest percentage of admitted assets invested. (2) If the report of the insurance company shows that the company, as of March 31, June 30, September 30, and December 31 of the year preceding had invested in Tennessee securities, an amount that was not less than seventy percent (70%) nor more than eighty percent (80%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the insurance company's tax on its gross premiums shall be reduced by an amount equal to twenty-five percent (25%) of the tax. (3) If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of eighty percent (80%) but not more than ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to fifty percent (50%) of the tax. (4) If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to seventy-five percent (75%) of the tax. (5) Subdivisions (b)(1)-(4) shall only be applicable to a company having investments, as shown by the report, in Tennessee securities equal to at least twenty-five percent (25%) of its total admitted assets, extended at each quarterly statement value.
(1) Any insurance company writing the forms of insurance enumerated in § 56-4-201 , except life insurance companies, fraternal benefit associations, orders or societies, health and accident insurance companies, life and accident insurance companies and nonprofit group hospital service plans, meeting the conditions set forth in this section, shall be entitled to a reduction of or credit upon its gross premiums tax as provided under this part. Any company desiring to qualify for the credit or reduction shall report to the commissioner, on or before March 1 of each year, the amount that the company had invested on March 31, June 30, September 30, and December 31 of the year preceding in Tennessee securities, and the amount that it had invested on those dates in similar securities in the other state in which it had its highest percentage of admitted assets invested.
(2) If the report of the insurance company shows that the company, as of March 31, June 30, September 30, and December 31 of the year preceding had invested in Tennessee securities, an amount that was not less than seventy percent (70%) nor more than eighty percent (80%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the insurance company's tax on its gross premiums shall be reduced by an amount equal to twenty-five percent (25%) of the tax.
(3) If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of eighty percent (80%) but not more than ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to fifty percent (50%) of the tax.
(4) If the report shows the insurance company had invested in the Tennessee securities on the date specified in subdivision (a)(1), an amount that was in excess of ninety percent (90%) of the amount it had invested in similar securities in the other state in which it then had the highest percentage of its admitted assets invested, the company's tax on its gross premiums shall be reduced by an amount equal to seventy-five percent (75%) of the tax.
(5) Subdivisions (b)(1)-(4) shall only be applicable to a company having investments, as shown by the report, in Tennessee securities equal to at least twenty-five percent (25%) of its total admitted assets, extended at each quarterly statement value.
(c) (1) For the purposes of this section, the securities of such insurance company invested in another state in which it then had the highest percentage of its admitted assets invested, as shown in the report, includes: (A) Bonds of the other state; (B) Bonds or interest bearing warrants of any county, city, town, school district, municipality or subdivision of any county, city, town, school district or municipality, valued at amortized or market value; notes or bonds secured by mortgage or trust deed on property in the other state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau of the federal government, valued at unpaid principal; (C) The cash deposits in regular established national or state banks or trust companies, and other short-term investments, in such other state on the basis of average daily balances throughout the preceding calendar year; and (D) Any other property or security in such other state or issued by corporations domiciled in such other state in which by law such insurance company may invest its funds. (2) Values of the property or security listed in subdivision (c)(1) are to be valued at market value for purposes of determining the percentage of investment between investments in this state and investments in the other state with the highest percentage of admitted assets invested.
(1) For the purposes of this section, the securities of such insurance company invested in another state in which it then had the highest percentage of its admitted assets invested, as shown in the report, includes: (A) Bonds of the other state; (B) Bonds or interest bearing warrants of any county, city, town, school district, municipality or subdivision of any county, city, town, school district or municipality, valued at amortized or market value; notes or bonds secured by mortgage or trust deed on property in the other state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau of the federal government, valued at unpaid principal; (C) The cash deposits in regular established national or state banks or trust companies, and other short-term investments, in such other state on the basis of average daily balances throughout the preceding calendar year; and (D) Any other property or security in such other state or issued by corporations domiciled in such other state in which by law such insurance company may invest its funds.
(A) Bonds of the other state;
(B) Bonds or interest bearing warrants of any county, city, town, school district, municipality or subdivision of any county, city, town, school district or municipality, valued at amortized or market value; notes or bonds secured by mortgage or trust deed on property in the other state, including those insured by the federal housing administration, the farm home administration, the federal government or any branch agency, department or bureau of the federal government, valued at unpaid principal;
(C) The cash deposits in regular established national or state banks or trust companies, and other short-term investments, in such other state on the basis of average daily balances throughout the preceding calendar year; and
(D) Any other property or security in such other state or issued by corporations domiciled in such other state in which by law such insurance company may invest its funds.
(2) Values of the property or security listed in subdivision (c)(1) are to be valued at market value for purposes of determining the percentage of investment between investments in this state and investments in the other state with the highest percentage of admitted assets invested.
(d) The reduction or credit provided by this section shall not be applicable with respect to the gross premium tax on premiums paid under policies of insurance directly or indirectly reinsured with any affiliate or affiliates of the company that is the direct writer of the policies, unless the affiliates that actually bear the risk of loss under the reinsurance arrangements would, if considered on a consolidated basis, qualify for the reduction or credit were the affiliates the direct writer.
(e) (1) If a workers' compensation self-insurance pool established in § 50-6-405(c) invests in excess of eighty percent (80%) of its assets, as determined by generally accepted accounting principles, as of December 31 of the preceding year, in Tennessee securities, the workers' compensation self-insurance pools' taxes on its gross premiums shall be reduced by an amount equal to fifty percent (50%) for the current year. (2) A workers' compensation self-insurance pool desiring to qualify for the credit or reduction shall report to the commissioner on or before March 1 of each year, the amount the pool had invested as of December 31 of the year preceding with cash and short-term investments based on average daily balances.
(1) If a workers' compensation self-insurance pool established in § 50-6-405(c) invests in excess of eighty percent (80%) of its assets, as determined by generally accepted accounting principles, as of December 31 of the preceding year, in Tennessee securities, the workers' compensation self-insurance pools' taxes on its gross premiums shall be reduced by an amount equal to fifty percent (50%) for the current year.
(2) A workers' compensation self-insurance pool desiring to qualify for the credit or reduction shall report to the commissioner on or before March 1 of each year, the amount the pool had invested as of December 31 of the year preceding with cash and short-term investments based on average daily balances.
(f) As used in this section: (1) "Affiliate" means any insurance company that controls, is controlled by, or is under common control with the insurer writing the policies; and (2) "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a company. "Control" is deemed to exist if any company, directly or indirectly, owns, controls, holds with power to vote, or holds proxies representing more than eighty percent (80%) of the voting securities of any other company.
(1) "Affiliate" means any insurance company that controls, is controlled by, or is under common control with the insurer writing the policies; and
(2) "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a company. "Control" is deemed to exist if any company, directly or indirectly, owns, controls, holds with power to vote, or holds proxies representing more than eighty percent (80%) of the voting securities of any other company.
Amended by 2015 Tenn. Acts, ch. 155,Secs.s6, s7, s8, s9, s10 eff. 1/1/2016.
Amended by 2015 Tenn. Acts, ch. 155,s 5, eff. 1/1/2016.
Acts 1953, ch. 49, § 1 (Williams, § 1248.169); impl. am. Acts 1971, ch. 137, § 2; 1974, ch. 568, §§ 1, 2; T.C.A. (orig. ed.), § 56-414; Acts 1980, ch. 507, § 1; 1998, ch. 1015, § 1.
Tenn. Code Ann. § 56-9-505 — TN Code / Title 56 / Chapter 9 / Section 56-9-505
Acts the commissioner may prohibit during period of supervision
Status: in_force

During the period of supervision, the commissioner or the commissioner's designated appointee shall serve as the administrative supervisor. The commissioner may provide that the insurer may not do any of the following things during the period of supervision, without the prior approval of the commissioner or the commissioner's appointed supervisor: (1) Dispose of, convey or encumber any of its assets or its business in force; (2) Withdraw any of its bank accounts; (3) Lend any of its funds; (4) Invest any of its funds; (5) Transfer any of its property; (6) Incur any debt, obligation or liability; (7) Merge or consolidate with another company; (8) Approve new premiums or renew any policies; (9) Enter into any new reinsurance contract or treaty; (10) Terminate, surrender, forfeit, convert or lapse any insurance policy, certificate or contract, except for nonpayment of premiums due; (11) Release, pay or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on any insurance policy, certificate or contract; (12) Make any material change in management; or (13) Increase salaries and benefits of officers or directors or the preferential payment of bonuses, dividends or other payments deemed preferential. Acts 1991, ch. 142, § 4.
During the period of supervision, the commissioner or the commissioner's designated appointee shall serve as the administrative supervisor. The commissioner may provide that the insurer may not do any of the following things during the period of supervision, without the prior approval of the commissioner or the commissioner's appointed supervisor:
(1) Dispose of, convey or encumber any of its assets or its business in force;
(2) Withdraw any of its bank accounts;
(3) Lend any of its funds;
(4) Invest any of its funds;
(5) Transfer any of its property;
(6) Incur any debt, obligation or liability;
(7) Merge or consolidate with another company;
(8) Approve new premiums or renew any policies;
(9) Enter into any new reinsurance contract or treaty;
(10) Terminate, surrender, forfeit, convert or lapse any insurance policy, certificate or contract, except for nonpayment of premiums due;
(11) Release, pay or refund premium deposits, accrued cash or loan values, unearned premiums, or other reserves on any insurance policy, certificate or contract;
(12) Make any material change in management; or
(13) Increase salaries and benefits of officers or directors or the preferential payment of bonuses, dividends or other payments deemed preferential.
Acts 1991, ch. 142, § 4.
Tenn. Code Ann. § 56-11-106 — TN Code / Title 56 / Chapter 11 / Section 56-11-106
Transactions within a holding company system - Standards - Dividends - Management of domestic insurers and health maintenance organizations
Status: in_force

(a) Transactions Within a Holding Company System. (1) Transactions within an insurance or health maintenance organization holding company system, to which an insurer or health maintenance organization subject to registration is a party, shall be subject to the following standards: (A) The terms shall be fair and reasonable; (B) Agreements for cost sharing services and management shall include such provisions as required by rule and regulation issued by the commissioner; (C) Charges or fees for services performed shall be reasonable; (D) Expenses incurred and payment received shall be allocated to the insurer or health maintenance organization in conformity with customary insurance accounting practices, or, in the case of health maintenance organizations, customary accounting practices applicable to health maintenance organizations, consistently applied; (E) The books, accounts and records of each party to all the transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including the accounting information necessary to support the reasonableness of the charges or fees to the respective parties; (F) The insurer's surplus as regards policyholders, or the health maintenance organization's net worth, following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's, or health maintenance organization's, outstanding liabilities and adequate to meet the insurer's or health maintenance organization's financial needs; (G) If an insurer subject to this part is deemed by the commissioner to be in a hazardous financial condition, as set out in Tenn. Comp. R. Reg. 0780-01-66, as amended, or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, then the commissioner may require the insurer to secure and maintain either a deposit, to be held by the commissioner, or a bond, as determined by the insurer at the insurer's discretion, for the protection of the insurer for the duration of the contracts or agreements, or the existence of the condition for which the commissioner required the deposit or the bond. In determining whether a deposit or a bond is required, the commissioner should consider whether concerns exist with respect to the affiliated person's ability to fulfill the contracts or agreements if the insurer were to be put into liquidation. Once the insurer is deemed to be in a hazardous financial condition or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, and a deposit or bond is necessary, the commissioner may determine the amount of the deposit or bond, not to exceed the value of the contracts or agreements in any one (1) year, and whether such deposit or bond should be required for a single contract, multiple contracts, or a contract only with a specific person or persons; (H) All records and data of the insurer held by an affiliate are and remain the property of the insurer, are subject to the control of the insurer, are identifiable, and are segregated or readily capable of segregation, at no additional cost to the insurer, from all other persons' records and data. This includes all records and data that are otherwise the property of the insurer, in whatever form maintained, including claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records, or similar records within the possession, custody, or control of the affiliate. At the request of the insurer, the affiliate shall authorize the receiver to obtain a complete set of all records that pertain to the insurer's business, to obtain access to the operating systems in which the data is maintained, and to obtain the software that runs those systems either through assumption of licensing agreements or otherwise. The insurer shall restrict the use of the data by the affiliate if it is not operating the insurer's business. The affiliate shall provide a waiver, if applicable, of a landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate's default under a lease or other agreement; and (I) Premiums or other funds belonging to the insurer that are collected by or held by an affiliate are the exclusive property of the insurer and are subject to the control of the insurer. A right of offset in the event an insurer is placed into receivership is subject to chapter 9 of this title. (2) The following transactions involving a domestic insurer or a health maintenance organization and any person in its insurance or health maintenance organization holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, which are subject to any materiality standards contained in subdivisions (a)(2)(A)-(G), may not be entered into unless the insurer or health maintenance organization has notified the commissioner in writing of its intention to enter into the transaction at least thirty (30) days prior thereto, or a shorter period that the commissioner may permit, and the commissioner has not disapproved it within the period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported, within thirty (30) days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any: (A) Sales, purchases, exchanges, loans, extensions of credit, or investments; provided, that exchanges, loans, extensions of credit, or investments the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets, each as of December 31 next preceding; (B) Loans or extensions of credit to any person who is not an affiliate, where the insurer or health maintenance organization makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer or health maintenance organization making the loans or extensions of credit; provided, that the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets as of December 31 next preceding; (C) Reinsurance agreements or modifications thereto, including: (i) All reinsurance pooling agreements; (ii) Agreements in which the reinsurance premium or a change in the insurer's or health maintenance organization's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding, including those agreements that may require as consideration the transfer of assets from an insurer or health maintenance organization to a non-affiliate, if an agreement or understanding exists between the insurer or health maintenance organization and non-affiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer or health maintenance organization; (D) All management agreements, service contracts, tax allocation agreements, guarantees and all cost-sharing arrangements; (E) Guarantees when made by a domestic insurer or health maintenance organization; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this paragraph unless it exceeds the lesser of one-half of one percent (0.5%) of the insurer's or health maintenance organization's admitted assets, or ten percent (10%) of surplus as regards policyholders, or with respect to health maintenance organizations, net worth, as of December 31 next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this subdivision (a)(2)(E); (F) Direct or indirect acquisitions or investments in a person that controls the insurer or health maintenance organization or in an affiliate of the insurer or health maintenance organization in an amount which, together with its present holdings in such investments, exceeds two and one-half percent (2.5%) of the insurer's surplus to policyholders, or, with respect to health maintenance organizations, net worth. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to § 56-11-102 (or authorized under any other section of this title), or in non-subsidiary insurance affiliates that are subject to this part, are exempt from this requirement; and (G) Any material transactions, specified by regulation, which the commissioner determines may adversely affect the interests of the insurer's policyholders or the health maintenance organization's enrollees or providers. Nothing in this subdivision (a)(2) shall be deemed to authorize or permit any transactions that, in the case of an insurer or health maintenance organization that is not a member of the same insurance or health maintenance organization holding company system, would be otherwise contrary to law. (3) A domestic insurer or a health maintenance organization may not enter into transactions that are part of a plan or series of like transactions with persons within the insurance or health maintenance organization holding company system, if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the commissioner determines that the separate transactions were entered into over any twelve-month period for this purpose, the commissioner may exercise the authority under § 56-11-111 . (4) The commissioner, in reviewing transactions pursuant to subdivision (a)(2), shall consider whether the transactions comply with the standards set forth in subdivision (a)(1), and whether they may adversely affect the interests of policyholders, or, in the case of health maintenance organizations, enrollees or providers. (5) The commissioner shall be notified within thirty (30) days of any investment of the domestic insurer or health maintenance organization in any one (1) corporation if the total investment in the corporation by the insurance holding company system or health maintenance organization holding company system exceeds ten percent (10%) of the corporation's voting securities. (6) (A) An affiliate that is party to an agreement or contract with a domestic insurer that is subject to subdivision (a)(2)(D) is subject to the jurisdiction of a supervision, seizure, conservatorship, or receivership proceeding against the insurer and to the authority of a supervisor, conservator, rehabilitator, or liquidator for the insurer appointed pursuant to chapter 9 of this title for the purpose of interpreting, enforcing, and overseeing the affiliate's obligations under the agreement or contract to perform services for the insurer that: (i) Are an integral part of the insurer's operations, including management, administrative, accounting, data processing, marketing, underwriting, claims handling, investment, or other similar functions; or (ii) Are essential to the insurer's ability to fulfill its obligations under insurance policies. (B) The commissioner may require that an agreement or contract identified in subdivision (a)(2)(D) for the provision of services described in subdivisions (a)(6)(A)(i) and (ii) specify that the affiliate consents to the jurisdiction as set forth in subdivision (a)(6)(A). (b) Dividends and Other Distributions. (1) No domestic insurer and no health maintenance organization shall pay an extraordinary dividend or make any other extraordinary distribution to its shareholders until: (A) Thirty (30) days after the commissioner has received notice of the declaration thereof and has not within the period disapproved the payment; or (B) The commissioner shall have approved the payment within the thirty-day period. (2) For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve (12) months exceeds the greater of: (A) Ten percent (10%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding; or (B) The net gain from operations of the insurer, if the insurer is a life insurer, or of the net income, if the insurer is not a life insurer, or a health maintenance organization, not including realized capital gains, for the twelve-month period ending December 31 next preceding, but shall not include pro rata distributions of any class of the insurer's or health maintenance organization's own securities. (3) Notwithstanding any other law in this title, an insurer or health maintenance organization may declare an extraordinary dividend or distribution that is conditional upon the commissioner's approval thereof, and such a declaration shall confer no rights upon shareholders until: (A) The commissioner has approved the payment of such a dividend or distribution; or (B) The commissioner has not disapproved the payment within the thirty-day period referred to in subdivision (b)(1). (4) (A) A domestic insurer or health maintenance organization shall pay a dividend or make a distribution to its shareholders only from the insurer's or health maintenance organization's earned surplus; provided, that the insurer or health maintenance organization may pay a dividend or make a distribution not from earned surplus if the commissioner's approval is first received. (B) As used in this subdivision (b)(4), "earned surplus" means unassigned surplus as reported in the insurer's or health maintenance organization's most recent financial statement. (c) Management of Domestic Insurers and Health Maintenance Organizations Subject to Registration. (1) Notwithstanding the control of a domestic insurer or any licensed health maintenance organization by any person, the officers and directors of the insurer or health maintenance organization shall not thereby be relieved of any obligation or liability to which they would otherwise be subject to by law, and the insurer or health maintenance organization shall be managed so as to assure its separate operating identity consistent with this part. (2) Nothing in this section shall preclude a domestic insurer or any licensed health maintenance organization from having or sharing a common management or cooperative or joint use of personnel, property or services with one (1) or more other persons under arrangements meeting the standards of subdivision (a)(1). (3) Not less than one-third (1/3) of the directors of a domestic insurer or any licensed health maintenance organization, and not less than one-third (1/3) of the members of each committee of the board of directors of any domestic insurer or health maintenance organization shall be persons who are not officers or employees of the insurer or health maintenance organization or of any entity controlling, controlled by, or under common control with the insurer or health maintenance organization and who are not beneficial owners of a controlling interest in the voting stock of the insurer or health maintenance organization or entity. At least one (1) such person must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof. (4) The board of directors of a domestic insurer or any licensed health maintenance organization shall establish one (1) or more committees comprised solely of directors who are not officers or employees of the insurer or health maintenance organization or of any entity controlling, controlled by, or under common control with the insurer or health maintenance organization and who are not beneficial owners of a controlling interest in the voting stock of the insurer or health maintenance organization or any such entity. The committee or committees shall have responsibility for nominating candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be principal officers of the insurer or health maintenance organization and recommending to the board of directors the selection and compensation of the principal officers. (5) Subdivisions (c)(3) and (4) shall not apply to a domestic insurer or any licensed health maintenance organization if the person controlling the insurer or health maintenance organization, such as an insurer, a health maintenance organization, a mutual insurance holding company, or a publicly held corporation, has a board of directors and committees thereof that meet the requirements of subdivisions (c)(3) and (4) with respect to such controlling entity. (6) An insurer or health maintenance organization may make application to the commissioner for a waiver from the requirements of this subsection (c), if the insurer's or health maintenance organization's annual direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, is less than three hundred million ($300,000,000). An insurer or health maintenance organization may also make application to the commissioner for a waiver from the requirements of this subsection (c) based upon unique circumstances. The commissioner may consider various factors including, but not limited to, the type of business entity, volume of business written, availability of qualified board members, or the ownership or organizational structure of the entity. (d) Adequacy of Surplus. (1) For purposes of this part, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs, the following factors, among others, shall be considered: (A) The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; (B) The extent to which the insurer's business is diversified among the several lines of insurance; (C) The number and size of risks insured in each line of business; (D) The extent of the geographical dispersion of the insurer's insured risks; (E) The nature and extent of the insurer's reinsurance program; (F) The quality, diversification and liquidity of the insurer's investment portfolio; (G) The recent past and projected future trend in the size of the insurer's investment portfolio; (H) The surplus as regards policyholders maintained by other comparable insurers; (I) The adequacy of the insurer's reserves; and (J) The quality and liquidity of investments in affiliates. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the commissioner's judgment the investment so warrants. (2) Subdivisions (d)(1)(A)-(J) shall also apply to health maintenance organizations, to the extent appropriate. Amended by 2023 Tenn. Acts, ch. 23, s 5, eff. 7/1/2023. Amended by 2023 Tenn. Acts, ch. 23, s 4, eff. 7/1/2023. Amended by 2018 Tenn. Acts, ch. 873, s 15, eff. 5/3/2018. Amended by 2014 Tenn. Acts, ch. 583, s 14, eff. 3/28/2014. Acts 1986, ch. 572, § 6; 1993, ch. 253, §§ 18, 22; 2000, ch. 708, § 3e; T.C.A. § 56-11-206 .
(a) Transactions Within a Holding Company System. (1) Transactions within an insurance or health maintenance organization holding company system, to which an insurer or health maintenance organization subject to registration is a party, shall be subject to the following standards: (A) The terms shall be fair and reasonable; (B) Agreements for cost sharing services and management shall include such provisions as required by rule and regulation issued by the commissioner; (C) Charges or fees for services performed shall be reasonable; (D) Expenses incurred and payment received shall be allocated to the insurer or health maintenance organization in conformity with customary insurance accounting practices, or, in the case of health maintenance organizations, customary accounting practices applicable to health maintenance organizations, consistently applied; (E) The books, accounts and records of each party to all the transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including the accounting information necessary to support the reasonableness of the charges or fees to the respective parties; (F) The insurer's surplus as regards policyholders, or the health maintenance organization's net worth, following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's, or health maintenance organization's, outstanding liabilities and adequate to meet the insurer's or health maintenance organization's financial needs; (G) If an insurer subject to this part is deemed by the commissioner to be in a hazardous financial condition, as set out in Tenn. Comp. R. Reg. 0780-01-66, as amended, or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, then the commissioner may require the insurer to secure and maintain either a deposit, to be held by the commissioner, or a bond, as determined by the insurer at the insurer's discretion, for the protection of the insurer for the duration of the contracts or agreements, or the existence of the condition for which the commissioner required the deposit or the bond. In determining whether a deposit or a bond is required, the commissioner should consider whether concerns exist with respect to the affiliated person's ability to fulfill the contracts or agreements if the insurer were to be put into liquidation. Once the insurer is deemed to be in a hazardous financial condition or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, and a deposit or bond is necessary, the commissioner may determine the amount of the deposit or bond, not to exceed the value of the contracts or agreements in any one (1) year, and whether such deposit or bond should be required for a single contract, multiple contracts, or a contract only with a specific person or persons; (H) All records and data of the insurer held by an affiliate are and remain the property of the insurer, are subject to the control of the insurer, are identifiable, and are segregated or readily capable of segregation, at no additional cost to the insurer, from all other persons' records and data. This includes all records and data that are otherwise the property of the insurer, in whatever form maintained, including claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records, or similar records within the possession, custody, or control of the affiliate. At the request of the insurer, the affiliate shall authorize the receiver to obtain a complete set of all records that pertain to the insurer's business, to obtain access to the operating systems in which the data is maintained, and to obtain the software that runs those systems either through assumption of licensing agreements or otherwise. The insurer shall restrict the use of the data by the affiliate if it is not operating the insurer's business. The affiliate shall provide a waiver, if applicable, of a landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate's default under a lease or other agreement; and (I) Premiums or other funds belonging to the insurer that are collected by or held by an affiliate are the exclusive property of the insurer and are subject to the control of the insurer. A right of offset in the event an insurer is placed into receivership is subject to chapter 9 of this title. (2) The following transactions involving a domestic insurer or a health maintenance organization and any person in its insurance or health maintenance organization holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, which are subject to any materiality standards contained in subdivisions (a)(2)(A)-(G), may not be entered into unless the insurer or health maintenance organization has notified the commissioner in writing of its intention to enter into the transaction at least thirty (30) days prior thereto, or a shorter period that the commissioner may permit, and the commissioner has not disapproved it within the period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported, within thirty (30) days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any: (A) Sales, purchases, exchanges, loans, extensions of credit, or investments; provided, that exchanges, loans, extensions of credit, or investments the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets, each as of December 31 next preceding; (B) Loans or extensions of credit to any person who is not an affiliate, where the insurer or health maintenance organization makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer or health maintenance organization making the loans or extensions of credit; provided, that the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets as of December 31 next preceding; (C) Reinsurance agreements or modifications thereto, including: (i) All reinsurance pooling agreements; (ii) Agreements in which the reinsurance premium or a change in the insurer's or health maintenance organization's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding, including those agreements that may require as consideration the transfer of assets from an insurer or health maintenance organization to a non-affiliate, if an agreement or understanding exists between the insurer or health maintenance organization and non-affiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer or health maintenance organization; (D) All management agreements, service contracts, tax allocation agreements, guarantees and all cost-sharing arrangements; (E) Guarantees when made by a domestic insurer or health maintenance organization; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this paragraph unless it exceeds the lesser of one-half of one percent (0.5%) of the insurer's or health maintenance organization's admitted assets, or ten percent (10%) of surplus as regards policyholders, or with respect to health maintenance organizations, net worth, as of December 31 next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this subdivision (a)(2)(E); (F) Direct or indirect acquisitions or investments in a person that controls the insurer or health maintenance organization or in an affiliate of the insurer or health maintenance organization in an amount which, together with its present holdings in such investments, exceeds two and one-half percent (2.5%) of the insurer's surplus to policyholders, or, with respect to health maintenance organizations, net worth. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to § 56-11-102 (or authorized under any other section of this title), or in non-subsidiary insurance affiliates that are subject to this part, are exempt from this requirement; and (G) Any material transactions, specified by regulation, which the commissioner determines may adversely affect the interests of the insurer's policyholders or the health maintenance organization's enrollees or providers. Nothing in this subdivision (a)(2) shall be deemed to authorize or permit any transactions that, in the case of an insurer or health maintenance organization that is not a member of the same insurance or health maintenance organization holding company system, would be otherwise contrary to law. (3) A domestic insurer or a health maintenance organization may not enter into transactions that are part of a plan or series of like transactions with persons within the insurance or health maintenance organization holding company system, if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the commissioner determines that the separate transactions were entered into over any twelve-month period for this purpose, the commissioner may exercise the authority under § 56-11-111 . (4) The commissioner, in reviewing transactions pursuant to subdivision (a)(2), shall consider whether the transactions comply with the standards set forth in subdivision (a)(1), and whether they may adversely affect the interests of policyholders, or, in the case of health maintenance organizations, enrollees or providers. (5) The commissioner shall be notified within thirty (30) days of any investment of the domestic insurer or health maintenance organization in any one (1) corporation if the total investment in the corporation by the insurance holding company system or health maintenance organization holding company system exceeds ten percent (10%) of the corporation's voting securities. (6) (A) An affiliate that is party to an agreement or contract with a domestic insurer that is subject to subdivision (a)(2)(D) is subject to the jurisdiction of a supervision, seizure, conservatorship, or receivership proceeding against the insurer and to the authority of a supervisor, conservator, rehabilitator, or liquidator for the insurer appointed pursuant to chapter 9 of this title for the purpose of interpreting, enforcing, and overseeing the affiliate's obligations under the agreement or contract to perform services for the insurer that: (i) Are an integral part of the insurer's operations, including management, administrative, accounting, data processing, marketing, underwriting, claims handling, investment, or other similar functions; or (ii) Are essential to the insurer's ability to fulfill its obligations under insurance policies. (B) The commissioner may require that an agreement or contract identified in subdivision (a)(2)(D) for the provision of services described in subdivisions (a)(6)(A)(i) and (ii) specify that the affiliate consents to the jurisdiction as set forth in subdivision (a)(6)(A).
(1) Transactions within an insurance or health maintenance organization holding company system, to which an insurer or health maintenance organization subject to registration is a party, shall be subject to the following standards: (A) The terms shall be fair and reasonable; (B) Agreements for cost sharing services and management shall include such provisions as required by rule and regulation issued by the commissioner; (C) Charges or fees for services performed shall be reasonable; (D) Expenses incurred and payment received shall be allocated to the insurer or health maintenance organization in conformity with customary insurance accounting practices, or, in the case of health maintenance organizations, customary accounting practices applicable to health maintenance organizations, consistently applied; (E) The books, accounts and records of each party to all the transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including the accounting information necessary to support the reasonableness of the charges or fees to the respective parties; (F) The insurer's surplus as regards policyholders, or the health maintenance organization's net worth, following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's, or health maintenance organization's, outstanding liabilities and adequate to meet the insurer's or health maintenance organization's financial needs; (G) If an insurer subject to this part is deemed by the commissioner to be in a hazardous financial condition, as set out in Tenn. Comp. R. Reg. 0780-01-66, as amended, or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, then the commissioner may require the insurer to secure and maintain either a deposit, to be held by the commissioner, or a bond, as determined by the insurer at the insurer's discretion, for the protection of the insurer for the duration of the contracts or agreements, or the existence of the condition for which the commissioner required the deposit or the bond. In determining whether a deposit or a bond is required, the commissioner should consider whether concerns exist with respect to the affiliated person's ability to fulfill the contracts or agreements if the insurer were to be put into liquidation. Once the insurer is deemed to be in a hazardous financial condition or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, and a deposit or bond is necessary, the commissioner may determine the amount of the deposit or bond, not to exceed the value of the contracts or agreements in any one (1) year, and whether such deposit or bond should be required for a single contract, multiple contracts, or a contract only with a specific person or persons; (H) All records and data of the insurer held by an affiliate are and remain the property of the insurer, are subject to the control of the insurer, are identifiable, and are segregated or readily capable of segregation, at no additional cost to the insurer, from all other persons' records and data. This includes all records and data that are otherwise the property of the insurer, in whatever form maintained, including claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records, or similar records within the possession, custody, or control of the affiliate. At the request of the insurer, the affiliate shall authorize the receiver to obtain a complete set of all records that pertain to the insurer's business, to obtain access to the operating systems in which the data is maintained, and to obtain the software that runs those systems either through assumption of licensing agreements or otherwise. The insurer shall restrict the use of the data by the affiliate if it is not operating the insurer's business. The affiliate shall provide a waiver, if applicable, of a landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate's default under a lease or other agreement; and (I) Premiums or other funds belonging to the insurer that are collected by or held by an affiliate are the exclusive property of the insurer and are subject to the control of the insurer. A right of offset in the event an insurer is placed into receivership is subject to chapter 9 of this title.
(A) The terms shall be fair and reasonable;
(B) Agreements for cost sharing services and management shall include such provisions as required by rule and regulation issued by the commissioner;
(C) Charges or fees for services performed shall be reasonable;
(D) Expenses incurred and payment received shall be allocated to the insurer or health maintenance organization in conformity with customary insurance accounting practices, or, in the case of health maintenance organizations, customary accounting practices applicable to health maintenance organizations, consistently applied;
(E) The books, accounts and records of each party to all the transactions shall be so maintained as to clearly and accurately disclose the nature and details of the transactions, including the accounting information necessary to support the reasonableness of the charges or fees to the respective parties;
(F) The insurer's surplus as regards policyholders, or the health maintenance organization's net worth, following any dividends or distributions to shareholder affiliates shall be reasonable in relation to the insurer's, or health maintenance organization's, outstanding liabilities and adequate to meet the insurer's or health maintenance organization's financial needs;
(G) If an insurer subject to this part is deemed by the commissioner to be in a hazardous financial condition, as set out in Tenn. Comp. R. Reg. 0780-01-66, as amended, or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, then the commissioner may require the insurer to secure and maintain either a deposit, to be held by the commissioner, or a bond, as determined by the insurer at the insurer's discretion, for the protection of the insurer for the duration of the contracts or agreements, or the existence of the condition for which the commissioner required the deposit or the bond. In determining whether a deposit or a bond is required, the commissioner should consider whether concerns exist with respect to the affiliated person's ability to fulfill the contracts or agreements if the insurer were to be put into liquidation. Once the insurer is deemed to be in a hazardous financial condition or a condition that would be grounds for supervision, conservation, or a delinquency proceeding, and a deposit or bond is necessary, the commissioner may determine the amount of the deposit or bond, not to exceed the value of the contracts or agreements in any one (1) year, and whether such deposit or bond should be required for a single contract, multiple contracts, or a contract only with a specific person or persons;
(H) All records and data of the insurer held by an affiliate are and remain the property of the insurer, are subject to the control of the insurer, are identifiable, and are segregated or readily capable of segregation, at no additional cost to the insurer, from all other persons' records and data. This includes all records and data that are otherwise the property of the insurer, in whatever form maintained, including claims and claim files, policyholder lists, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, financial records, or similar records within the possession, custody, or control of the affiliate. At the request of the insurer, the affiliate shall authorize the receiver to obtain a complete set of all records that pertain to the insurer's business, to obtain access to the operating systems in which the data is maintained, and to obtain the software that runs those systems either through assumption of licensing agreements or otherwise. The insurer shall restrict the use of the data by the affiliate if it is not operating the insurer's business. The affiliate shall provide a waiver, if applicable, of a landlord lien or other encumbrance to give the insurer access to all records and data in the event of the affiliate's default under a lease or other agreement; and
(I) Premiums or other funds belonging to the insurer that are collected by or held by an affiliate are the exclusive property of the insurer and are subject to the control of the insurer. A right of offset in the event an insurer is placed into receivership is subject to chapter 9 of this title.
(2) The following transactions involving a domestic insurer or a health maintenance organization and any person in its insurance or health maintenance organization holding company system, including amendments or modifications of affiliate agreements previously filed pursuant to this section, which are subject to any materiality standards contained in subdivisions (a)(2)(A)-(G), may not be entered into unless the insurer or health maintenance organization has notified the commissioner in writing of its intention to enter into the transaction at least thirty (30) days prior thereto, or a shorter period that the commissioner may permit, and the commissioner has not disapproved it within the period. The notice for amendments or modifications shall include the reasons for the change and the financial impact on the domestic insurer. Informal notice shall be reported, within thirty (30) days after a termination of a previously filed agreement, to the commissioner for determination of the type of filing required, if any: (A) Sales, purchases, exchanges, loans, extensions of credit, or investments; provided, that exchanges, loans, extensions of credit, or investments the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets, each as of December 31 next preceding; (B) Loans or extensions of credit to any person who is not an affiliate, where the insurer or health maintenance organization makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer or health maintenance organization making the loans or extensions of credit; provided, that the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets as of December 31 next preceding; (C) Reinsurance agreements or modifications thereto, including: (i) All reinsurance pooling agreements; (ii) Agreements in which the reinsurance premium or a change in the insurer's or health maintenance organization's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding, including those agreements that may require as consideration the transfer of assets from an insurer or health maintenance organization to a non-affiliate, if an agreement or understanding exists between the insurer or health maintenance organization and non-affiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer or health maintenance organization; (D) All management agreements, service contracts, tax allocation agreements, guarantees and all cost-sharing arrangements; (E) Guarantees when made by a domestic insurer or health maintenance organization; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this paragraph unless it exceeds the lesser of one-half of one percent (0.5%) of the insurer's or health maintenance organization's admitted assets, or ten percent (10%) of surplus as regards policyholders, or with respect to health maintenance organizations, net worth, as of December 31 next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this subdivision (a)(2)(E); (F) Direct or indirect acquisitions or investments in a person that controls the insurer or health maintenance organization or in an affiliate of the insurer or health maintenance organization in an amount which, together with its present holdings in such investments, exceeds two and one-half percent (2.5%) of the insurer's surplus to policyholders, or, with respect to health maintenance organizations, net worth. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to § 56-11-102 (or authorized under any other section of this title), or in non-subsidiary insurance affiliates that are subject to this part, are exempt from this requirement; and (G) Any material transactions, specified by regulation, which the commissioner determines may adversely affect the interests of the insurer's policyholders or the health maintenance organization's enrollees or providers. Nothing in this subdivision (a)(2) shall be deemed to authorize or permit any transactions that, in the case of an insurer or health maintenance organization that is not a member of the same insurance or health maintenance organization holding company system, would be otherwise contrary to law.
(A) Sales, purchases, exchanges, loans, extensions of credit, or investments; provided, that exchanges, loans, extensions of credit, or investments the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets, each as of December 31 next preceding;
(i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and
(ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets, each as of December 31 next preceding;
(B) Loans or extensions of credit to any person who is not an affiliate, where the insurer or health maintenance organization makes the loans or extensions of credit with the agreement or understanding that the proceeds of the transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the insurer or health maintenance organization making the loans or extensions of credit; provided, that the transactions are equal to or exceed: (i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and (ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets as of December 31 next preceding;
(i) With respect to nonlife insurers and health maintenance organizations, the lesser of three percent (3%) of the insurer's or health maintenance organization's admitted assets, or twenty-five percent (25%) of surplus as regards policyholders, or, with respect to health maintenance organizations, net worth as of December 31 next preceding; and
(ii) With respect to life insurers, three percent (3%) of the insurer's admitted assets as of December 31 next preceding;
(C) Reinsurance agreements or modifications thereto, including: (i) All reinsurance pooling agreements; (ii) Agreements in which the reinsurance premium or a change in the insurer's or health maintenance organization's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding, including those agreements that may require as consideration the transfer of assets from an insurer or health maintenance organization to a non-affiliate, if an agreement or understanding exists between the insurer or health maintenance organization and non-affiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer or health maintenance organization;
(i) All reinsurance pooling agreements;
(ii) Agreements in which the reinsurance premium or a change in the insurer's or health maintenance organization's liabilities, or the projected reinsurance premium or a change in the insurer's liabilities in any of the next three (3) years, equals or exceeds five percent (5%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding, including those agreements that may require as consideration the transfer of assets from an insurer or health maintenance organization to a non-affiliate, if an agreement or understanding exists between the insurer or health maintenance organization and non-affiliate that any portion of the assets will be transferred to one (1) or more affiliates of the insurer or health maintenance organization;
(D) All management agreements, service contracts, tax allocation agreements, guarantees and all cost-sharing arrangements;
(E) Guarantees when made by a domestic insurer or health maintenance organization; provided, however, that a guarantee which is quantifiable as to amount is not subject to the notice requirements of this paragraph unless it exceeds the lesser of one-half of one percent (0.5%) of the insurer's or health maintenance organization's admitted assets, or ten percent (10%) of surplus as regards policyholders, or with respect to health maintenance organizations, net worth, as of December 31 next preceding. Further, all guarantees which are not quantifiable as to amount are subject to the notice requirements of this subdivision (a)(2)(E);
(F) Direct or indirect acquisitions or investments in a person that controls the insurer or health maintenance organization or in an affiliate of the insurer or health maintenance organization in an amount which, together with its present holdings in such investments, exceeds two and one-half percent (2.5%) of the insurer's surplus to policyholders, or, with respect to health maintenance organizations, net worth. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to § 56-11-102 (or authorized under any other section of this title), or in non-subsidiary insurance affiliates that are subject to this part, are exempt from this requirement; and
(G) Any material transactions, specified by regulation, which the commissioner determines may adversely affect the interests of the insurer's policyholders or the health maintenance organization's enrollees or providers. Nothing in this subdivision (a)(2) shall be deemed to authorize or permit any transactions that, in the case of an insurer or health maintenance organization that is not a member of the same insurance or health maintenance organization holding company system, would be otherwise contrary to law.
(3) A domestic insurer or a health maintenance organization may not enter into transactions that are part of a plan or series of like transactions with persons within the insurance or health maintenance organization holding company system, if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the commissioner determines that the separate transactions were entered into over any twelve-month period for this purpose, the commissioner may exercise the authority under § 56-11-111 .
(4) The commissioner, in reviewing transactions pursuant to subdivision (a)(2), shall consider whether the transactions comply with the standards set forth in subdivision (a)(1), and whether they may adversely affect the interests of policyholders, or, in the case of health maintenance organizations, enrollees or providers.
(5) The commissioner shall be notified within thirty (30) days of any investment of the domestic insurer or health maintenance organization in any one (1) corporation if the total investment in the corporation by the insurance holding company system or health maintenance organization holding company system exceeds ten percent (10%) of the corporation's voting securities.
(6) (A) An affiliate that is party to an agreement or contract with a domestic insurer that is subject to subdivision (a)(2)(D) is subject to the jurisdiction of a supervision, seizure, conservatorship, or receivership proceeding against the insurer and to the authority of a supervisor, conservator, rehabilitator, or liquidator for the insurer appointed pursuant to chapter 9 of this title for the purpose of interpreting, enforcing, and overseeing the affiliate's obligations under the agreement or contract to perform services for the insurer that: (i) Are an integral part of the insurer's operations, including management, administrative, accounting, data processing, marketing, underwriting, claims handling, investment, or other similar functions; or (ii) Are essential to the insurer's ability to fulfill its obligations under insurance policies. (B) The commissioner may require that an agreement or contract identified in subdivision (a)(2)(D) for the provision of services described in subdivisions (a)(6)(A)(i) and (ii) specify that the affiliate consents to the jurisdiction as set forth in subdivision (a)(6)(A).
(A) An affiliate that is party to an agreement or contract with a domestic insurer that is subject to subdivision (a)(2)(D) is subject to the jurisdiction of a supervision, seizure, conservatorship, or receivership proceeding against the insurer and to the authority of a supervisor, conservator, rehabilitator, or liquidator for the insurer appointed pursuant to chapter 9 of this title for the purpose of interpreting, enforcing, and overseeing the affiliate's obligations under the agreement or contract to perform services for the insurer that: (i) Are an integral part of the insurer's operations, including management, administrative, accounting, data processing, marketing, underwriting, claims handling, investment, or other similar functions; or (ii) Are essential to the insurer's ability to fulfill its obligations under insurance policies.
(i) Are an integral part of the insurer's operations, including management, administrative, accounting, data processing, marketing, underwriting, claims handling, investment, or other similar functions; or
(ii) Are essential to the insurer's ability to fulfill its obligations under insurance policies.
(B) The commissioner may require that an agreement or contract identified in subdivision (a)(2)(D) for the provision of services described in subdivisions (a)(6)(A)(i) and (ii) specify that the affiliate consents to the jurisdiction as set forth in subdivision (a)(6)(A).
(b) Dividends and Other Distributions. (1) No domestic insurer and no health maintenance organization shall pay an extraordinary dividend or make any other extraordinary distribution to its shareholders until: (A) Thirty (30) days after the commissioner has received notice of the declaration thereof and has not within the period disapproved the payment; or (B) The commissioner shall have approved the payment within the thirty-day period. (2) For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve (12) months exceeds the greater of: (A) Ten percent (10%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding; or (B) The net gain from operations of the insurer, if the insurer is a life insurer, or of the net income, if the insurer is not a life insurer, or a health maintenance organization, not including realized capital gains, for the twelve-month period ending December 31 next preceding, but shall not include pro rata distributions of any class of the insurer's or health maintenance organization's own securities. (3) Notwithstanding any other law in this title, an insurer or health maintenance organization may declare an extraordinary dividend or distribution that is conditional upon the commissioner's approval thereof, and such a declaration shall confer no rights upon shareholders until: (A) The commissioner has approved the payment of such a dividend or distribution; or (B) The commissioner has not disapproved the payment within the thirty-day period referred to in subdivision (b)(1). (4) (A) A domestic insurer or health maintenance organization shall pay a dividend or make a distribution to its shareholders only from the insurer's or health maintenance organization's earned surplus; provided, that the insurer or health maintenance organization may pay a dividend or make a distribution not from earned surplus if the commissioner's approval is first received. (B) As used in this subdivision (b)(4), "earned surplus" means unassigned surplus as reported in the insurer's or health maintenance organization's most recent financial statement.
(1) No domestic insurer and no health maintenance organization shall pay an extraordinary dividend or make any other extraordinary distribution to its shareholders until: (A) Thirty (30) days after the commissioner has received notice of the declaration thereof and has not within the period disapproved the payment; or (B) The commissioner shall have approved the payment within the thirty-day period.
(A) Thirty (30) days after the commissioner has received notice of the declaration thereof and has not within the period disapproved the payment; or
(B) The commissioner shall have approved the payment within the thirty-day period.
(2) For purposes of this section, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding twelve (12) months exceeds the greater of: (A) Ten percent (10%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding; or (B) The net gain from operations of the insurer, if the insurer is a life insurer, or of the net income, if the insurer is not a life insurer, or a health maintenance organization, not including realized capital gains, for the twelve-month period ending December 31 next preceding, but shall not include pro rata distributions of any class of the insurer's or health maintenance organization's own securities.
(A) Ten percent (10%) of the insurer's surplus as regards policyholders, or, with respect to health maintenance organizations, net worth, as of December 31 next preceding; or
(B) The net gain from operations of the insurer, if the insurer is a life insurer, or of the net income, if the insurer is not a life insurer, or a health maintenance organization, not including realized capital gains, for the twelve-month period ending December 31 next preceding, but shall not include pro rata distributions of any class of the insurer's or health maintenance organization's own securities.
(3) Notwithstanding any other law in this title, an insurer or health maintenance organization may declare an extraordinary dividend or distribution that is conditional upon the commissioner's approval thereof, and such a declaration shall confer no rights upon shareholders until: (A) The commissioner has approved the payment of such a dividend or distribution; or (B) The commissioner has not disapproved the payment within the thirty-day period referred to in subdivision (b)(1).
(A) The commissioner has approved the payment of such a dividend or distribution; or
(B) The commissioner has not disapproved the payment within the thirty-day period referred to in subdivision (b)(1).
(4) (A) A domestic insurer or health maintenance organization shall pay a dividend or make a distribution to its shareholders only from the insurer's or health maintenance organization's earned surplus; provided, that the insurer or health maintenance organization may pay a dividend or make a distribution not from earned surplus if the commissioner's approval is first received. (B) As used in this subdivision (b)(4), "earned surplus" means unassigned surplus as reported in the insurer's or health maintenance organization's most recent financial statement.
(A) A domestic insurer or health maintenance organization shall pay a dividend or make a distribution to its shareholders only from the insurer's or health maintenance organization's earned surplus; provided, that the insurer or health maintenance organization may pay a dividend or make a distribution not from earned surplus if the commissioner's approval is first received.
(B) As used in this subdivision (b)(4), "earned surplus" means unassigned surplus as reported in the insurer's or health maintenance organization's most recent financial statement.
(c) Management of Domestic Insurers and Health Maintenance Organizations Subject to Registration. (1) Notwithstanding the control of a domestic insurer or any licensed health maintenance organization by any person, the officers and directors of the insurer or health maintenance organization shall not thereby be relieved of any obligation or liability to which they would otherwise be subject to by law, and the insurer or health maintenance organization shall be managed so as to assure its separate operating identity consistent with this part. (2) Nothing in this section shall preclude a domestic insurer or any licensed health maintenance organization from having or sharing a common management or cooperative or joint use of personnel, property or services with one (1) or more other persons under arrangements meeting the standards of subdivision (a)(1). (3) Not less than one-third (1/3) of the directors of a domestic insurer or any licensed health maintenance organization, and not less than one-third (1/3) of the members of each committee of the board of directors of any domestic insurer or health maintenance organization shall be persons who are not officers or employees of the insurer or health maintenance organization or of any entity controlling, controlled by, or under common control with the insurer or health maintenance organization and who are not beneficial owners of a controlling interest in the voting stock of the insurer or health maintenance organization or entity. At least one (1) such person must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof. (4) The board of directors of a domestic insurer or any licensed health maintenance organization shall establish one (1) or more committees comprised solely of directors who are not officers or employees of the insurer or health maintenance organization or of any entity controlling, controlled by, or under common control with the insurer or health maintenance organization and who are not beneficial owners of a controlling interest in the voting stock of the insurer or health maintenance organization or any such entity. The committee or committees shall have responsibility for nominating candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be principal officers of the insurer or health maintenance organization and recommending to the board of directors the selection and compensation of the principal officers. (5) Subdivisions (c)(3) and (4) shall not apply to a domestic insurer or any licensed health maintenance organization if the person controlling the insurer or health maintenance organization, such as an insurer, a health maintenance organization, a mutual insurance holding company, or a publicly held corporation, has a board of directors and committees thereof that meet the requirements of subdivisions (c)(3) and (4) with respect to such controlling entity. (6) An insurer or health maintenance organization may make application to the commissioner for a waiver from the requirements of this subsection (c), if the insurer's or health maintenance organization's annual direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, is less than three hundred million ($300,000,000). An insurer or health maintenance organization may also make application to the commissioner for a waiver from the requirements of this subsection (c) based upon unique circumstances. The commissioner may consider various factors including, but not limited to, the type of business entity, volume of business written, availability of qualified board members, or the ownership or organizational structure of the entity.
(1) Notwithstanding the control of a domestic insurer or any licensed health maintenance organization by any person, the officers and directors of the insurer or health maintenance organization shall not thereby be relieved of any obligation or liability to which they would otherwise be subject to by law, and the insurer or health maintenance organization shall be managed so as to assure its separate operating identity consistent with this part.
(2) Nothing in this section shall preclude a domestic insurer or any licensed health maintenance organization from having or sharing a common management or cooperative or joint use of personnel, property or services with one (1) or more other persons under arrangements meeting the standards of subdivision (a)(1).
(3) Not less than one-third (1/3) of the directors of a domestic insurer or any licensed health maintenance organization, and not less than one-third (1/3) of the members of each committee of the board of directors of any domestic insurer or health maintenance organization shall be persons who are not officers or employees of the insurer or health maintenance organization or of any entity controlling, controlled by, or under common control with the insurer or health maintenance organization and who are not beneficial owners of a controlling interest in the voting stock of the insurer or health maintenance organization or entity. At least one (1) such person must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof.
(4) The board of directors of a domestic insurer or any licensed health maintenance organization shall establish one (1) or more committees comprised solely of directors who are not officers or employees of the insurer or health maintenance organization or of any entity controlling, controlled by, or under common control with the insurer or health maintenance organization and who are not beneficial owners of a controlling interest in the voting stock of the insurer or health maintenance organization or any such entity. The committee or committees shall have responsibility for nominating candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be principal officers of the insurer or health maintenance organization and recommending to the board of directors the selection and compensation of the principal officers.
(5) Subdivisions (c)(3) and (4) shall not apply to a domestic insurer or any licensed health maintenance organization if the person controlling the insurer or health maintenance organization, such as an insurer, a health maintenance organization, a mutual insurance holding company, or a publicly held corporation, has a board of directors and committees thereof that meet the requirements of subdivisions (c)(3) and (4) with respect to such controlling entity.
(6) An insurer or health maintenance organization may make application to the commissioner for a waiver from the requirements of this subsection (c), if the insurer's or health maintenance organization's annual direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, is less than three hundred million ($300,000,000). An insurer or health maintenance organization may also make application to the commissioner for a waiver from the requirements of this subsection (c) based upon unique circumstances. The commissioner may consider various factors including, but not limited to, the type of business entity, volume of business written, availability of qualified board members, or the ownership or organizational structure of the entity.
(d) Adequacy of Surplus. (1) For purposes of this part, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs, the following factors, among others, shall be considered: (A) The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; (B) The extent to which the insurer's business is diversified among the several lines of insurance; (C) The number and size of risks insured in each line of business; (D) The extent of the geographical dispersion of the insurer's insured risks; (E) The nature and extent of the insurer's reinsurance program; (F) The quality, diversification and liquidity of the insurer's investment portfolio; (G) The recent past and projected future trend in the size of the insurer's investment portfolio; (H) The surplus as regards policyholders maintained by other comparable insurers; (I) The adequacy of the insurer's reserves; and (J) The quality and liquidity of investments in affiliates. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the commissioner's judgment the investment so warrants. (2) Subdivisions (d)(1)(A)-(J) shall also apply to health maintenance organizations, to the extent appropriate.
(1) For purposes of this part, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to meet its financial needs, the following factors, among others, shall be considered: (A) The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria; (B) The extent to which the insurer's business is diversified among the several lines of insurance; (C) The number and size of risks insured in each line of business; (D) The extent of the geographical dispersion of the insurer's insured risks; (E) The nature and extent of the insurer's reinsurance program; (F) The quality, diversification and liquidity of the insurer's investment portfolio; (G) The recent past and projected future trend in the size of the insurer's investment portfolio; (H) The surplus as regards policyholders maintained by other comparable insurers; (I) The adequacy of the insurer's reserves; and (J) The quality and liquidity of investments in affiliates. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the commissioner's judgment the investment so warrants.
(A) The size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;
(B) The extent to which the insurer's business is diversified among the several lines of insurance;
(C) The number and size of risks insured in each line of business;
(D) The extent of the geographical dispersion of the insurer's insured risks;
(E) The nature and extent of the insurer's reinsurance program;
(F) The quality, diversification and liquidity of the insurer's investment portfolio;
(G) The recent past and projected future trend in the size of the insurer's investment portfolio;
(H) The surplus as regards policyholders maintained by other comparable insurers;
(I) The adequacy of the insurer's reserves; and
(J) The quality and liquidity of investments in affiliates. The commissioner may treat any such investment as a disallowed asset for purposes of determining the adequacy of surplus as regards policyholders whenever in the commissioner's judgment the investment so warrants.
(2) Subdivisions (d)(1)(A)-(J) shall also apply to health maintenance organizations, to the extent appropriate.
Amended by 2023 Tenn. Acts, ch. 23, s 5, eff. 7/1/2023.
Amended by 2023 Tenn. Acts, ch. 23, s 4, eff. 7/1/2023.
Amended by 2018 Tenn. Acts, ch. 873, s 15, eff. 5/3/2018.
Amended by 2014 Tenn. Acts, ch. 583, s 14, eff. 3/28/2014.
Acts 1986, ch. 572, § 6; 1993, ch. 253, §§ 18, 22; 2000, ch. 708, § 3e; T.C.A. § 56-11-206 .