(a) Before doing business in this state as a medical discount plan organization, an entity shall:

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(1) Be a corporation, limited liability company, limited liability partnership, or other legal entity organized under the laws of this state or, if a foreign corporation or other foreign entity, authorized to transact business in this state; and

(2) Obtain a license as a medical discount plan organization from the Insurance Commissioner in accordance with this section. The entity shall file an application for a license to operate as a medical discount plan organization with the commissioner on such form as the commissioner prescribes. Such application shall be sworn to by an officer or authorized representative of the applicant, under penalty of false statement, and be accompanied by (A) a copy of the applicant’s articles of incorporation, including all amendments; (B) a copy of the applicant’s bylaws; (C) a list of the names, addresses, official positions and biographical information of the medical discount plan organization and the individuals who are responsible for conducting the applicant’s affairs, including, but not limited to, all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the officers, contracted management company personnel, and any person or entity owning or having the right to acquire ten per cent or more of the voting securities of the applicant, which listing shall fully disclose the extent and nature of any contracts or arrangements between the applicant and any individual who is responsible for conducting the applicant’s affairs, including any possible conflicts of interest; (D) for each individual listed in subparagraph (C) of this subdivision as being responsible for conducting the applicant’s affairs, a complete biographical statement on forms prescribed by the commissioner; (E) a statement generally describing the applicant, its personnel and the health care services to be offered; (F) a copy of the form of all contracts made or to be made between the applicant and any providers or provider networks regarding the provision of health care services to members; (G) a copy of the form of any contract made or to be made between the applicant and any person listed in subparagraph (C) of this subdivision; (H) a copy of the form of any contract made or to be made between the applicant and any person for the performance on the applicant’s behalf of any function, including, but not limited to, marketing, administration, enrollment and subcontracting for the provision of health care services to members; (I) a copy of the applicant’s most recent financial statements audited by an independent certified public accountant, or, in the case of an applicant that is a subsidiary of a person or parent corporation that prepares audited financial statements reflecting the consolidated operations of the person or parent corporation, a copy of the person’s or parent corporation’s most recent financial statements audited by an independent certified public accountant, provided the person or parent corporation also issues a written guarantee that the minimum capital requirements of the applicant required by this section will be met; (J) a description of the proposed method of marketing; (K) a description of the subscriber complaint procedures to be established and maintained; (L) the fee for a medical discount plan organization license set forth in section 38a-11; and (M) a list of the names, addresses and telephone numbers of the marketers the applicant has authorized to market a medical discount plan in this state under a name that is different from the name of the applicant. For purposes of this subdivision, a “contract to be made” shall be determined based on the information known to the applicant on the date the information is filed with the commissioner.

(b) (1) A current and accurate list of authorized marketers, specified in subparagraph (M) of subdivision (2) of subsection (a) of this section, shall be submitted to the commissioner with each renewal fee, as set forth in subsection (c) of this section.

(2) Any change made to the list of authorized marketers, specified in subparagraph (M) of subdivision (2) of subsection (a) of this section, shall be electronically filed with the commissioner. If such change is to add a marketer to a medical discount plan organization’s list of authorized marketers, such change shall be electronically filed by such organization prior to the marketer doing business in the state for such organization.

(3) The commissioner may adopt regulations, in accordance with chapter 54, to establish the procedure and format of the electronic filing set forth in this subsection.

(c) If the commissioner finds that the applicant is in compliance with the requirements of this section the commissioner shall issue the applicant a license as a medical discount plan organization which shall expire one year after the date of issue. The commissioner shall renew the license if the commissioner finds that the licensee is in compliance with the requirements of this section and the licensee has paid the renewal fee set forth in section 38a-11.

(d) Prior to applying for a license from the commissioner, a medical discount plan organization shall establish an Internet web site that contains the information described in subsection (s) of this section.

(e) Any license or renewal fee received pursuant to this section shall be deposited in the Insurance Fund established in section 38a-52a.

(f) Nothing in this section shall require a provider who provides discounts to the provider’s own patients to obtain or maintain a license as a medical discount plan organization.

(g) Each provider who offers health care services to members under a medical discount plan shall provide such services pursuant to a written agreement. The agreement may be entered into directly by the provider or by a provider network to which the provider belongs.

(h) A provider agreement shall include: (1) A list of the services and products to be provided at a discount; (2) the amount of the discounts or, alternatively, a fee schedule that reflects the provider’s discounted rates; and (3) a requirement that the provider will not charge members more than the discounted rates.

(i) A provider agreement between a medical discount plan organization and a provider network shall require that the provider network have written agreements with its providers that: (1) Contain the terms set forth in subsection (h) of this section; (2) authorize the provider network to contract with the medical discount plan organization on behalf of the provider; and (3) require the network to maintain an up-to-date list of its contracted providers and to provide that list on a quarterly basis to the medical discount plan organization. No medical discount plan organization may enter into or renew a contractual relationship with a provider network that is not licensed in accordance with section 38a-479aa.

(j) The medical discount plan organization shall maintain a copy of each active agreement that it has entered into with a provider or provider network.

(k) Each medical discount plan organization shall at all times (1) maintain a net worth of at least two hundred fifty thousand dollars, or (2) post a surety bond in the amount of one hundred thousand dollars.

(l) The commissioner shall not issue or renew a license under this section unless the medical discount plan organization has (1) a net worth of at least two hundred fifty thousand dollars, or (2) posted a surety bond in the amount of one hundred thousand dollars.

(m) The commissioner may suspend the authority of a medical discount plan organization to enroll new members, revoke any license issued to a medical discount plan organization, refuse to renew a license of a medical discount plan organization or order compliance if the commissioner finds that any of the following conditions exist:

(1) The organization is not operating in compliance with this section or section 38a-479qq;

(2) The organization does not have the minimum net worth required by this section;

(3) The organization has advertised, sold or attempted to sell its services in such a manner as to misrepresent its services or capacity for service or has engaged in deceptive, misleading or unfair practices with respect to advertising or sales;

(4) The organization is not fulfilling its obligations as a medical discount plan organization; or

(5) The continued operation of the medical discount plan organization would be hazardous to its members.

(n) If the commissioner has reasonable cause to believe that grounds for the suspension, nonrenewal or revocation of a license exist, the commissioner shall notify the medical discount plan organization in writing specifically stating the grounds for suspension, nonrenewal or revocation.

(o) When the license of a medical discount plan organization is surrendered, nonrenewed or revoked, the organization shall, immediately following the effective date of the order, wind up and settle the affairs transacted under the license. The organization shall not engage in any further marketing, advertising, sales, collection of fees or renewal of contracts as a medical discount plan organization, and its authorized marketers shall not engage in any further marketing, advertising or sales on behalf of such medical discount plan organization.

(p) The commissioner shall, in any order suspending the authority of a medical discount plan organization to enroll new members, specify the period during which the suspension is to be in effect and the conditions, if any, that shall be met by the medical discount plan organization prior to reinstatement of its license to enroll new members. The commissioner may rescind or modify the order of suspension prior to the expiration of the suspension period.

(q) The commissioner shall not reinstate a license: (1) Unless reinstatement is requested by the medical discount plan organization, and (2) if the commissioner finds that the circumstances which led to the suspension still exist or are likely to recur.

(r) Each medical discount plan organization shall provide the commissioner at least thirty days’ advance written notice of any change in the medical discount plan organization’s name, address, principal business address or mailing address.

(s) Each medical discount plan organization shall maintain an up-to-date list of the names and addresses of the providers with which it has contracted on an Internet web site, the address of which shall be prominently displayed on all its marketing materials, advertisements, brochures and member discount cards. The list shall include providers with whom the medical discount plan organization has contracted directly as well as providers who will provide services to the organization’s members as part of a provider network with which the medical discount plan organization has contracted.

(t) Each medical discount plan organization shall (1) prominently display on any member discount card the names or identifying logos or trademarks of any provider networks with whom the medical discount plan organization has a contract, and (2) provide the names of such provider networks to members upon request.

(u) No marketer shall market, advertise or sell to a resident of this state a medical discount plan under a name that is different than the medical discount plan organization’s name unless: (1) The medical discount plan organization has obtained a license from the Insurance Commissioner in accordance with this section; (2) the marketer is listed on such medical discount plan organization’s list of authorized marketers as set forth in subparagraph (M) of subdivision (2) of subsection (a) or subsection (b) of this section; (3) the name, address and telephone number of the medical discount plan organization appears on the plan materials; and (4) the marketer does not contract directly with providers or provider networks. A marketer shall not be required to obtain a license from the commissioner.

(v) (1) A medical discount plan organization may market directly or contract with marketers for the distribution of a medical discount plan. The medical discount plan organization shall execute a written agreement with a marketer and comply with the requirements set forth in subparagraph (M) of subdivision (2) of subsection (a) or subsection (b) of this section, as applicable, prior to the marketing, advertising or selling of such medical discount plan by such marketer. Such written agreement shall prohibit the marketer from using any advertising and marketing materials, including, but not limited to, brochures and medical discount plan cards, without the written approval of the medical discount plan organization prior to the usage of such advertising and marketing materials.

(2) If a marketer uses any marketing or advertising materials that are in violation of subsection (b) of section 38a-479qq, the commissioner may order a medical discount plan organization to immediately remove such marketer from such medical discount plan organization’s list of authorized marketers specified in subparagraph (M) of subdivision (2) of subsection (a) of this section. In addition, the commissioner may order the medical discount plan organization to return membership fees paid by residents of the state who were harmed by such violation.

(3) During an investigation by the commissioner of an alleged violation set forth in subdivision (2) of this subsection, a medical discount plan organization shall make available to the commissioner, upon request, a copy of such organization’s contract with such marketer, and any marketing and advertising materials of such marketer.

(w) Each medical discount plan organization that contracts with a marketer shall be bound by and responsible for the activities of such marketer, within the scope of the marketer’s agency relationship, and shall cooperate in any investigation of the activities of such contracted marketer as ordered by the commissioner.

(x) The commissioner may adopt regulations, in accordance with chapter 54, to implement the provisions of this section.

(y) Any person who violates any provision of this section shall be fined not more than three thousand dollars.