648.45 Affiliates of permittee.

(1) Information. A permittee and a person attempting to acquire or having control of a permittee, shall report to the commissioner the information concerning the permittee, its affiliates, and the person attempting to acquire control of the permittee that the commissioner requires by rule. The commissioner may promulgate rules prescribing the timing of reports under this subsection, including requiring periodic reporting and the form and procedure for filing reports.

(2) Report for affiliates. The permittee may report on behalf of all affiliated entities if it provides all the information that would be required if each affiliate reported separately.

(3) Consent to jurisdiction. Every permittee shall promptly submit to the commissioner a statement from each of its affiliates that the affiliate agrees to be subject to the jurisdiction of the commissioner and the courts of this state for the purposes of this chapter. A governmental unit is not subject to this requirement. The commissioner may exempt other affiliates from this subsection.

(4) Information order. The commissioner may, by order, require any permittee or any person attempting to acquire or having control of the permittee, to report information under sub. (1) or other information to the commissioner.

(5) Transactions with affiliates. Neither a permittee nor an affiliate of the permittee may enter into a transaction between the permittee and affiliate unless all of the following apply:

(a) The transaction at the time it is entered into is reasonable and fair to the interests of the permittee.

(b) The books, accounts, and records of each party to the transaction are kept in a manner that clearly and accurately discloses the nature and details of the transaction and, in accordance with generally accepted accounting principles, permits ascertainment of charges relating to the transaction.

(c) The permittee's financial condition following any dividends or distributions to shareholders or a person having control of the permittee is reasonable in relation to the permittee's outstanding liabilities and is adequate to its financial needs.

(d) The transaction complies with any other standard that the commissioner, after consulting with the department, prescribes by rule.

(6) Transactions subject to disclosure.

(a) Affiliated transactions to be reported.

1. The commissioner, after consulting with the department, may promulgate rules requiring a permittee, a person attempting to acquire or having control of a permittee, and affiliates of a permittee to report a transaction or a group or series of transactions, if all of the following are satisfied:

a. The transaction is between a permittee and a person attempting to acquire or having control of the permittee or an affiliate of the permittee, or the transaction directly or indirectly benefits the person or affiliate.

b. The transaction is, or the group or series of transactions are, material to the permittee.

2. Transactions that are material to a permittee for the purposes of subd. 1. include management contracts, service contracts, and cost-sharing arrangements. The commissioner, after consulting with the department, may prescribe by rule standards for determining whether a transaction is material under this subsection.

3. No permittee, person attempting to acquire or having control of a permittee, or affiliate of the permittee may enter into a transaction required to be reported to the commissioner under this subsection unless the permittee, person, and affiliate report the transaction to the commissioner in the form and by the date before the effective date of the transaction that are prescribed by the commissioner by rule, after consulting with the department. The commissioner may not require the transaction to be reported earlier than 30 days before the effective date of the transaction.

(b) Disapproval. The commissioner may, within the period prescribed in par. (a) 3., disapprove any transaction reported under par. (a) if the commissioner finds, after consulting with the department, that it would violate the law or would be contrary to the interests of enrollees of the permittee, the department, or the public.

(c) Transactions prohibited. No permittee, person attempting to acquire or having control of the permittee, or affiliate of the permittee may enter into a transaction that is not reported as required under par. (a) or that is disapproved by the commissioner under par. (b).

(d) Voidable transactions. If a permittee, person attempting to acquire or having control of the permittee, or affiliate enters into a transaction in violation of this section, the permittee may void the transaction, obtain an injunction, and recover from the person or affiliate the amount necessary to restore the permittee to its condition had the transaction not occurred. The commissioner may order a permittee to void the transaction, to commence an action against the person or affiliate, or to take other action.

(e) Required financial conditions. The commissioner, after consulting with the department, may promulgate rules for determining adequacy of financial condition under this section.

(f) Exemption if permittee reports. Paragraph (a) does not apply to a person attempting to acquire or having control of, or an affiliate of, a permittee, if the permittee reports on behalf of the person or on behalf of the affiliate, and the transaction is not disapproved by the commissioner under par. (b).

(7) Dividends and distributions.

(a) A permittee may not pay a dividend or distribution, and an affiliate of a permittee may not accept a dividend or distribution, unless the permittee reports the dividend or distribution to the commissioner at least 30 days before payment and the commissioner does not disapprove the dividend or distribution within that period.

(b) The commissioner, after consulting with the department, may promulgate rules under this section that do any of the following:

1. Prescribe the form and content of and procedure for filing reports under this subsection.

2. Exempt dividends or distributions from the reporting requirement under par. (a) under conditions that the commissioner determines will not jeopardize the financial condition of the permittee.

(c) A permittee may declare a dividend or distribution that is conditioned upon the permittee's compliance with this subsection. A declaration of a dividend or distribution under this subsection does not confer rights to the proposed recipient of the dividend or distribution unless this subsection is complied with and is void if the dividend or distribution is disapproved by the commissioner under par. (a).

(d) In addition to any other remedies available, a permittee may recover from the recipient any dividend or distribution paid in violation of this subsection.

(8) Duties of officers and directors.

(a) No director or officer of a permittee or of an affiliate of a permittee may permit, participate in, or assent to a transaction or payment or acceptance of a dividend or distribution prohibited under this chapter.

(b) An officer or director of a permittee or of an affiliate of a permittee who knows, or reasonably should know, that the permittee or affiliate has entered into a transaction or paid a dividend or distribution that violates this chapter shall report the transaction, dividend, or distribution to the commissioner in writing within 30 days after attaining that knowledge. Section 648.15 (6) applies to a report under this section, and the report is confidential unless the commissioner finds it necessary to disclose the report for the purpose of enforcing this chapter.

History: 2009 a. 28; 2011 a. 257 s. 56.