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This is a Bill, not an Act. For current law, see the Acts databases.
2013-2014-2015
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Private Health Insurance (Prudential
Supervision) Bill 2015
No. , 2015
(Treasury)
A Bill for an Act to regulate private health
insurance, and for related purposes
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
i
Contents
Part 1--Introduction
1
Division 1--Preliminary
1
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 2
3
Simplified outline of this Act ............................................................. 2
4
Interpretation ...................................................................................... 3
5
General administration of Act ............................................................ 9
Division 2--Constitutional matters
10
6
Act binds the Crown ........................................................................ 10
7
Act not to apply to State insurance within that State ....................... 10
8
Compensation for acquisition of property ....................................... 10
Part 2--Registration of private health insurers
11
Division 1--Introduction
11
9
Simplified outline of this Part .......................................................... 11
Division 2--Prohibition of carrying on health insurance business
without registration
12
10
Carrying on health insurance business without registration ............. 12
11
Injunctions ....................................................................................... 12
Division 3--Registration
14
12
Applying for registration ................................................................. 14
13
Requiring further information .......................................................... 14
14
Criteria for registration .................................................................... 14
15
Deciding the application .................................................................. 14
16
Notifying the decision ...................................................................... 16
17
APRA can be taken to refuse application ........................................ 16
18
APRA to ensure that up-to-date record of information about
private health insurers is publicly available ..................................... 17
19
Changing registration status ............................................................. 17
20
Conversion to for profit status ......................................................... 19
21
Cancellation of registration .............................................................. 20
Part 3--Health benefits funds
21
Division 1--Introduction
21
22
Simplified outline of this Part .......................................................... 21
Division 2--The requirement to have health benefits funds
22
23
Private health insurers must have health benefits funds .................. 22
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Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
24
Notifying APRA when health benefits funds are established .......... 23
25
Inclusion of health-related businesses in health benefits
funds ................................................................................................ 23
Division 3--The operation of health benefits funds
25
26
Assets of health benefits funds ........................................................ 25
27
Payments to health benefits funds .................................................... 26
28
Expenditure and application of health benefits funds ...................... 27
29
Effect of non-compliance with section 28 ....................................... 28
30
Investment of health benefits funds ................................................. 30
Division 4--Restructure, merger and acquisition of health
benefits funds
31
31
Restriction on restructure, merger or acquisition of health
benefits funds ................................................................................... 31
32
Restructure of health benefits funds ................................................ 31
33
Merger and acquisition of health benefits funds .............................. 33
34
Consent of policy holders not required ............................................ 36
Division 5--Termination of health benefits funds
37
Subdivision A--Approving the termination of health benefits
funds
37
35
Applying for termination ................................................................. 37
36
Requiring further information .......................................................... 37
37
Deciding the application .................................................................. 37
38
APRA can be taken to have refused to approve termination ........... 38
Subdivision B--Conducting the termination of health benefits
funds
38
39
The basis of the law relating to termination ..................................... 38
40
Conduct of funds during termination process .................................. 39
41
Insurers etc. to give reports to APRA .............................................. 40
42
Terminating managers displace management of funds .................... 40
Subdivision C--Ending the termination of health benefits funds
40
43
Power to end termination ................................................................. 40
Subdivision D--Completing the termination of health benefits
funds
41
44
Completion of the termination process ............................................ 41
45
Distribution of remaining assets after completion of the
termination process .......................................................................... 41
46
Liability of officers of insurers for loss to terminated funds ............ 42
47
Reporting by terminating manager .................................................. 42
48
Applying for winding up .................................................................. 43
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
iii
Division 6--External management of health benefits funds
44
Subdivision A--Preliminary
44
49
Purpose of Division ......................................................................... 44
50
The basis of the law relating to external management ..................... 44
Subdivision B--Appointment of external managers
45
51
APRA may appoint external managers ............................................ 45
52
Preconditions for appointment of external managers ....................... 46
53
External managers to displace management of funds ...................... 46
Subdivision C--Duties and powers of external managers
46
54
Duties of external managers............................................................. 46
55
Additional powers of external managers ......................................... 47
56
Protection of property during external management ........................ 47
57
Rights of chargee, owner or lessor of property of fund under
external management ....................................................................... 48
Subdivision D--Procedure relating to voluntary deeds of
arrangement
48
58
Matters that may be included in APRA rules .................................. 48
Subdivision E--External managers' reports to APRA
49
59
External managers to give reports to APRA .................................... 49
60
Dealing with reports given to APRA ............................................... 51
61
Federal Court orders in respect of schemes of arrangement ............ 52
Subdivision F--Miscellaneous
53
62
When an external management begins and ends .............................. 53
63
Effect of things done during external management of health
benefits funds ................................................................................... 53
64
Disclaimer of onerous property ....................................................... 53
65
Application of provisions of Corporations Act ................................ 54
Division 7--Ordering the termination of health benefits funds
56
66
Applications by external managers to the Federal Court ................. 56
67
Orders made on applications for appointments of terminating
managers .......................................................................................... 56
68
Notice of appointments .................................................................... 56
69
Application of other provisions if Federal Court orders
appointment of a terminating manager ............................................ 56
Division 8--External managers and terminating managers
58
Subdivision A--Powers of managers
58
70
Powers of managers ......................................................................... 58
71
Officers etc. not to perform functions etc. while fund is
under management ........................................................................... 59
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Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
72
Managers act as agents of private health insurers ............................ 59
Subdivision B--Information concerning, and records and
property of, health benefits funds
60
73
Directors etc. to help managers ........................................................ 60
74
Managers' rights to certain records .................................................. 61
75
Only manager can deal with property of fund under
management ..................................................................................... 62
76
Order for compensation where officer involved in void
transaction ........................................................................................ 63
Subdivision C--Provisions incidental to appointment of managers
64
77
Remuneration and allowances of managers ..................................... 64
78
Directions to managers .................................................................... 64
79
Termination of appointments of managers ...................................... 65
80
Acts of managers valid etc. .............................................................. 66
81
Indemnity ......................................................................................... 67
82
Qualified privilege ........................................................................... 67
Subdivision D--Miscellaneous
67
83
Time for doing act does not run while act prevented by this
Division or other provisions ............................................................ 67
84
Continued application of other provisions of Act ............................ 68
85
Modifications of this Act in relation to health benefits funds
under management ........................................................................... 68
86
Order of Federal Court to be binding on all persons ........................ 69
87
APRA rules dealing with various matters ........................................ 69
Division 9--Duties and liabilities of directors etc.
70
88
Notices to remedy contraventions .................................................... 70
89
Liability of directors in relation to non-compliance with
notices .............................................................................................. 70
90
APRA may sue in the name of private health insurers .................... 71
Part 4--Prudential standards and directions
72
Division 1--Introduction
72
91
Simplified outline of this Part .......................................................... 72
Division 2--Prudential standards
73
92
Prudential standards ......................................................................... 73
93
Additional matters in relation to standards that are not
legislative instruments ..................................................................... 75
94
Compliance with prudential standards ............................................. 75
95
Notice of contravention of prudential standards or of other
matters that materially affect financial position ............................... 76
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
v
Division 3--Directions
77
96
APRA's power to give directions .................................................... 77
97
The kinds of direction that may be given ......................................... 78
98
Power to comply with a direction .................................................... 80
99
Varying or revoking a direction ....................................................... 80
100
When a direction ceases to have effect ............................................ 80
101
Direction not grounds for denial of obligations ............................... 80
102
Supply of information about directions ........................................... 81
103
Secrecy requirements ....................................................................... 82
104
Non-compliance with a direction ..................................................... 83
Part 5--Other obligations of private health insurers
85
Division 1--Introduction
85
105
Simplified outline of this Part .......................................................... 85
Division 2--Appointed actuaries
86
106
Appointment .................................................................................... 86
107
Terminating an appointment as actuary ........................................... 86
108
Notification of appointment etc. ...................................................... 87
109
Role of appointed actuary ................................................................ 88
110
Actuary's obligations to inform of matters etc. ............................... 88
111
Appointed actuary may give information or documents to
APRA ............................................................................................... 90
112
Duty of appointed actuary to give information or documents
when required .................................................................................. 91
113
Qualified privilege of appointed actuary ......................................... 92
114
Referring matters to professional associations for actuaries ............ 93
115
APRA may direct removal of actuary .............................................. 93
Division 3--Disqualified persons
96
116
Private health insurers not to allow disqualified persons to
act as officers or appointed actuaries ............................................... 96
117
Disqualified persons must not act for private health insurers .......... 96
118
Effect of non-compliance ................................................................. 97
119
Who is a disqualified person? .......................................................... 97
120
Court power of disqualification ....................................................... 98
121
Court power to revoke or vary a disqualification etc. ...................... 99
122
Privilege against exposure to penalty--disqualification under
section 120 ..................................................................................... 100
Division 4--Miscellaneous
102
123
Restrictions on payment of pecuniary penalties etc. ...................... 102
124
Giving APRA copies of reports made to policy holders ................ 102
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Private Health Insurance (Prudential Supervision) Bill 2015
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125
Notifying APRA of name and contact details of officers .............. 102
Part 6--Monitoring and investigation
103
Division 1--Introduction
103
126
Simplified outline of this Part ........................................................ 103
Division 2--Monitoring
104
127
Purposes for which powers may be exercised etc. ......................... 104
128
Power to require private health insurer to provide
information and reports .................................................................. 104
129
Power to require production of documents .................................... 104
Division 3--Investigation
106
130
Investigation of private health insurers by inspectors .................... 106
131
Identity cards for inspectors ........................................................... 106
132
Powers of inspectors ...................................................................... 107
133
Person may be represented by lawyer when being examined ........ 108
134
Access to premises ......................................................................... 108
135
General provisions relating to obtaining consent to enter
premises ......................................................................................... 109
136
Investigation warrants .................................................................... 110
137
Announcement before entry under investigation warrant .............. 111
138
Inspector to be in possession of investigation warrant ................... 111
139
Details of warrant etc. to be given to occupier............................... 111
140
Right to observe execution of warrant ........................................... 112
141
Responsibility to provide facilities and assistance ......................... 112
142
Concealing etc. documents ............................................................ 113
143
Reports of inspectors ..................................................................... 113
144
Dissemination of reports ................................................................ 114
145
Liability for publishing reports etc. ............................................... 114
146
Powers of magistrates .................................................................... 115
147
Delegation by inspectors ................................................................ 115
Division 4--Other matters
116
148
Refusing or failing to comply with requirements .......................... 116
149
Self-incrimination .......................................................................... 116
150
Protection from liability ................................................................. 117
Part 7--Enforceable undertakings
118
151
Simplified outline of this Part ........................................................ 118
152
Enforceable undertakings .............................................................. 118
Part 8--Remedies in the Federal Court
120
153
Simplified outline of this Part ........................................................ 120
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
vii
154
APRA may apply to the Federal Court .......................................... 120
155
Declarations of contravention ........................................................ 120
156
Civil penalty order ......................................................................... 121
157
Compensation order ....................................................................... 121
158
Other order ..................................................................................... 122
159
Civil evidence and procedure rules for declarations and
orders ............................................................................................. 122
160
Civil proceedings after criminal proceedings ................................ 122
161
Criminal proceedings during civil proceedings ............................. 122
162
Criminal proceedings after civil proceedings ................................ 123
163
Evidence given in proceedings for penalty not admissible in
criminal proceedings ...................................................................... 123
164
APRA may require person to assist ............................................... 123
Part 9--Miscellaneous
125
165
Simplified outline of this Part ........................................................ 125
166
Relief from liability ....................................................................... 125
167
Annual publication of information relating to health benefits
funds .............................................................................................. 126
168
Review of decisions ....................................................................... 126
169
Statements to accompany notification of decisions ....................... 129
170
Approvals, determinations etc. by APRA ...................................... 130
171
Powers of Federal Court ................................................................ 130
172
Approved forms, and giving documents not required to be in
approved forms .............................................................................. 130
173
Delegation by Minister .................................................................. 131
174
APRA rules .................................................................................... 131
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
1
A Bill for an Act to regulate private health
1
insurance, and for related purposes
2
The Parliament of Australia enacts:
3
Part 1--Introduction
4
Division 1--Preliminary
5
1 Short title
6
This Act may be cited as the Private Health Insurance (Prudential
7
Supervision) Act 2015.
8
Part 1 Introduction
Division 1 Preliminary
Section 2
2
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
2 Commencement
1
(1) Each provision of this Act specified in column 1 of the table
2
commences, or is taken to have commenced, in accordance with
3
column 2 of the table. Any other statement in column 2 has effect
4
according to its terms.
5
6
Commencement information
Column 1
Column 2
Column 3
Provisions
Commencement
Date/Details
1. The whole of
this Act
As follows:
(a) if this Act receives the Royal Assent
before 1 July 2015--1 July 2015;
(b) if this Act receives the Royal Assent on
or after 1 July 2015--a single day to be
fixed by Proclamation.
However, if this Act receives the Royal
Assent on or after 1 July 2015, and the
provisions do not commence within the
period of 6 months beginning on the day this
Act receives the Royal Assent, they
commence on the day after the end of that
period.
Note:
This table relates only to the provisions of this Act as originally
7
enacted. It will not be amended to deal with any later amendments of
8
this Act.
9
(2) Any information in column 3 of the table is not part of this Act.
10
Information may be inserted in this column, or information in it
11
may be edited, in any published version of this Act.
12
3 Simplified outline of this Act
13
Only a private health insurer may carry on health insurance
14
business. A private health insurer is a company that is registered
15
under Division 3 of Part 2.
16
Introduction Part 1
Preliminary Division 1
Section 4
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
3
A private health insurer must have at least one health benefits fund.
1
There are regimes governing:
2
(a)
how health benefits funds are operated; and
3
(b)
changing the health benefits fund to which a policy of
4
insurance is referable; and
5
(c)
terminating health benefits funds; and
6
(d)
external management of health benefits funds.
7
Private health insurers must comply with prudential standards
8
made by APRA, and with directions given by APRA.
9
Private health insurers and their appointed actuaries also have
10
various other obligations.
11
APRA has monitoring and investigative powers in relation to
12
private health insurers.
13
APRA may accept enforceable undertakings, and may seek
14
remedies in the Federal Court in relation to contraventions of
15
enforceable obligations.
16
Note:
The Private Health Insurance Act 2007 defines the key concepts of
17
health insurance business and health benefits funds as well as other
18
concepts that relate to health benefits funds. That Act also sets out rules
19
governing private health insurance products and provides incentives to
20
encourage people to have private health insurance.
21
4 Interpretation
22
(1) In this Act:
23
ADI means an authorised deposit-taking institution within the
24
meaning of the Banking Act 1959.
25
application provision: see subsection 65(2).
26
applied Corporations Act provision: see subsection 65(3).
27
appointed actuary of a private health insurer means the person
28
appointed as the actuary of the insurer in accordance with
29
Division 2 of Part 5.
30
Part 1 Introduction
Division 1 Preliminary
Section 4
4
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
approved form: see section 172.
1
APRA means the Australian Prudential Regulation Authority.
2
APRA rules: see subsection 174(1).
3
APRA staff member has the same meaning as in the Australian
4
Prudential Regulation Authority Act 1998.
5
assets of a health benefits fund: see section 26.
6
chief executive officer of a private health insurer means the person
7
who is primarily and directly responsible to the directors of the
8
insurer for the general and overall management of the insurer.
9
civil penalty order: see subsection 156(2).
10
complying health insurance policy has the same meaning as in the
11
Private Health Insurance Act 2007.
12
complying health insurance product has the same meaning as in
13
the Private Health Insurance Act 2007.
14
constitutional corporation means a corporation to which
15
paragraph 51(xx) of the Constitution applies.
16
cover, in relation to an insurance policy, has the same meaning as
17
in the Private Health Insurance Act 2007.
18
declaration of contravention means a declaration under
19
subsection 155(1).
20
dependent child has the same meaning as in the Private Health
21
Insurance Act 2007.
22
director has the same meaning as in the Corporations Act 2001.
23
disqualified person: see sections 119 and 121.
24
enforceable obligation means any of the following:
25
(a) a provision of this Act;
26
(b) a direction given under this Act;
27
(c) a provision of the risk equalisation levy legislation;
28
Introduction Part 1
Preliminary Division 1
Section 4
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
5
(d) if the registration of a private health insurer is subject to
1
terms and conditions (see subsection 15(1))--those terms and
2
conditions;
3
(e) in the case of a restricted access insurer--a provision
4
included in the insurer's constitution or rules in order to
5
comply with subsection 15(3).
6
Note:
References to this Act include prudential standards and APRA rules
7
(see the definition of this Act in this subsection).
8
external administration means administration or control (however
9
described) by an external administrator.
10
external administrator means:
11
(a) any of the following, within the meaning of the Corporations
12
Act 2001:
13
(i) a liquidator or provisional liquidator;
14
(ii) a receiver, manager, managing controller, receiver and
15
manager or other controller;
16
(iii) an administrator or a scheme manager; or
17
(b) a person who performs a similar role to a person referred to
18
in subparagraph (a)(i), (ii) or (iii), whether under a law of the
19
Commonwealth, or of a State or Territory, or otherwise;
20
but does not include an external manager or terminating manager.
21
external management means management, by an external
22
manager, under Divisions 6 and 8 of Part 3.
23
external manager, in relation to a health benefits fund, means a
24
person appointed under section 51 as the external manager of the
25
fund.
26
Federal Court means the Federal Court of Australia.
27
for profit insurer means a private health insurer that is registered
28
under Division 3 of Part 2 as a for profit insurer.
29
health benefits fund has the same meaning as in the Private
30
Health Insurance Act 2007.
31
Health Department means the Department administered by the
32
Health Minister.
33
Part 1 Introduction
Division 1 Preliminary
Section 4
6
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
health insurance business has the same meaning as in the Private
1
Health Insurance Act 2007.
2
Health Minister means the Minister administering the Private
3
Health Insurance Act 2007.
4
health-related business has the same meaning as in the Private
5
Health Insurance Act 2007.
6
Health Secretary means the Secretary of the Health Department.
7
improper discrimination has the same meaning as in the Private
8
Health Insurance Act 2007.
9
inspector means a person appointed under section 130 to be an
10
inspector.
11
insurance has the same meaning as in paragraph 51(xiv) of the
12
Constitution.
13
investigation warrant: see subsection 136(1).
14
lawyer means a duly qualified legal practitioner and, in relation to
15
a person, means such a practitioner acting for the person.
16
makes a permitted capital payment: see subsection 27(3).
17
manager, in relation to a health benefits fund, means an external
18
manager or
terminating manager of the fund.
19
net asset position of a health benefits fund means the difference
20
between:
21
(a) the assets of the fund; and
22
(b) the policy liabilities and other liabilities of the fund that the
23
private health insurer conducting the fund has incurred for
24
the purposes of the fund.
25
officer of a private health insurer means:
26
(a) a director of the insurer; or
27
(b) a chief executive officer of the insurer; or
28
Introduction Part 1
Preliminary Division 1
Section 4
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
7
(c) any other person who has or exercises senior management
1
responsibilities (within the meaning of prudential standards)
2
for the insurer.
3
penalty includes forfeiture or punishment.
4
personal information has the same meaning as in the Privacy Act
5
1988.
6
policy group of a health benefits fund: see subsection 32(7).
7
policy holder of a health benefits fund has the same meaning as in
8
the Private Health Insurance Act 2007.
9
policy liability of a private health insurer means:
10
(a) a liability that has arisen under an insurance policy; or
11
(b) a liability that, subject to the terms and conditions of an
12
insurance policy, will arise on the happening of an event, or
13
at a time, specified in the policy.
14
premises includes the following:
15
(a) a structure, building, vehicle, vessel or aircraft;
16
(b) a place (whether or not enclosed or built on);
17
(c) a part of a thing referred to in paragraph (a) or (b).
18
Private Health Insurance Ombudsman has the same meaning as
19
in the Private Health Insurance Act 2007.
20
private health insurer means a body that is registered under
21
Division 3 of Part 2.
22
proceeding means:
23
(a) a proceeding in a court; or
24
(b) a proceeding or hearing before, or an examination by or
25
before, a tribunal;
26
whether the proceeding, hearing or examination is of a civil,
27
administrative, criminal, disciplinary or other nature.
28
prudential matters: see subsection 92(2).
29
prudential standards: see subsection 92(1).
30
Part 1 Introduction
Division 1 Preliminary
Section 4
8
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
referable has the same meaning as in the Private Health Insurance
1
Act 2007.
2
responsible insurer means:
3
(a) for a health benefits fund that is under external
4
management--the private health insurer that was conducting
5
the fund prior to the appointment of the external manager of
6
the fund; or
7
(b) for a health benefits fund that is under terminating
8
management--the private health insurer that was conducting
9
the fund prior to the appointment of the terminating manager
10
of the fund.
11
restricted access group: see subsection 15(4).
12
restricted access insurer means a private health insurer that is
13
registered under Division 3 of Part 2 as a restricted access insurer.
14
risk equalisation jurisdiction has the same meaning as in the
15
Private Health Insurance Act 2007.
16
risk equalisation levy legislation means any of the following:
17
(a) the Private Health Insurance (Risk Equalisation Levy) Act
18
2003;
19
(b) the provisions of the Private Health Insurance Act 2007, as
20
they apply in relation to:
21
(i) levy imposed under the Private Health Insurance (Risk
22
Equalisation Levy) Act 2003; or
23
(ii) the Risk Equalisation Special Account.
24
Risk Equalisation Special Account has the same meaning as in the
25
Private Health Insurance Act 2007.
26
rules of a private health insurer has the same meaning as in the
27
Private Health Insurance Act 2007.
28
search powers means powers to search for, inspect, take extracts
29
from, and make copies of, documents.
30
State insurance has the same meaning as in paragraph 51(xiv) of
31
the Constitution.
32
Introduction Part 1
Preliminary Division 1
Section 5
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
9
statutory functions and duties of an actuary of a private health
1
insurer: see subsection 107(2).
2
terminating management means management, by a terminating
3
manager, under Divisions 5 and 8 of Part 3.
4
terminating manager, in relation to the health benefits funds of a
5
private health insurer, means a person appointed under Division 5
6
or 7 of Part 3 as the terminating manager of the funds.
7
termination day, in relation to the health benefits funds of a private
8
health insurer: see subsection 40(2).
9
this Act includes prudential standards and APRA rules.
10
voluntary deed of arrangement means:
11
(a) a deed of arrangement agreed on at a meeting of a kind
12
referred to in section 58; or
13
(b) such a deed as varied in accordance with APRA rules made
14
for the purpose of this paragraph.
15
(2) To avoid doubt, a reference in this Act to another Act includes a
16
reference to any regulations, rules, standards or other instruments
17
made, and to any conditions imposed, under that other Act.
18
Note:
For example:
19
(a) a reference to the Private Health Insurance Act 2007 includes a
20
reference to rules made under that Act; and
21
(b) a reference to the Financial Sector (Collection of Data) Act 2001
22
includes a reference to reporting standards made under that Act.
23
5 General administration of Act
24
APRA has the general administration of this Act.
25
Part 1 Introduction
Division 2 Constitutional matters
Section 6
10
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 2--Constitutional matters
1
6 Act binds the Crown
2
Subject to section 7, this Act binds the Crown in each of its
3
capacities.
4
7 Act not to apply to State insurance within that State
5
This Act does not apply with respect to State insurance that does
6
not extend beyond the limits of the State concerned.
7
8 Compensation for acquisition of property
8
(1) If the operation of this Act would result in an acquisition of
9
property (within the meaning of paragraph 51(xxxi) of the
10
Constitution) from a person otherwise than on just terms (within
11
the meaning of that paragraph), the Commonwealth is liable to pay
12
a reasonable amount of compensation to the person.
13
(2) If the Commonwealth and the person do not agree on the amount
14
of the compensation, the person may institute proceedings in the
15
Federal Court for the recovery from the Commonwealth of such
16
reasonable amount of compensation as the Court determines.
17
Registration of private health insurers Part 2
Introduction Division 1
Section 9
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
11
Part 2--Registration of private health insurers
1
Division 1--Introduction
2
9 Simplified outline of this Part
3
Only a private health insurer may carry on health insurance
4
business. A private health insurer is a company that is registered
5
under Division 3 of this Part.
6
Note:
Part 4-2 of the Private Health Insurance Act 2007 defines the concept of
7
health insurance business.
8
There are 2 kinds of special status that some private health insurers
9
may have. They are:
10
(a)
a for profit insurer; and
11
(b)
a restricted access insurer.
12
Part 2 Registration of private health insurers
Division 2 Prohibition of carrying on health insurance business without registration
Section 10
12
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 2--Prohibition of carrying on health insurance
1
business without registration
2
10 Carrying on health insurance business without registration
3
(1) A person commits an offence if:
4
(a) the person carries on health insurance business; and
5
(b) the person is not a private health insurer.
6
Penalty: Imprisonment for 2 years or 120 penalty units, or both.
7
Note:
If a body corporate is convicted of an offence against this subsection,
8
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
9
fine of up to 5 times the penalty stated above.
10
(2) A person who contravenes subsection (1) commits a separate
11
offence in respect of each day (including the day of conviction for
12
any such offence or any later day) during which the contravention
13
continues.
14
Note:
This subsection is not intended to imply that section 4K of the Crimes
15
Act 1914 does not apply to offences against this Act.
16
11 Injunctions
17
(1) The Federal Court may grant an injunction in such terms as it
18
determines to be appropriate if, on the application of APRA, the
19
Court is satisfied that a person has engaged, or is proposing to
20
engage, in conduct that constitutes or would constitute a
21
contravention of section 10.
22
(2) The Federal Court may grant an interim injunction pending
23
determination of an application under subsection (1).
24
(3) The Federal Court must not require an applicant for an injunction
25
to give an undertaking as to damages as a condition of granting an
26
interim injunction.
27
(4) The Federal Court may discharge or vary an injunction granted
28
under subsection (1) or (2).
29
Registration of private health insurers Part 2
Prohibition of carrying on health insurance business without registration Division 2
Section 11
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
13
(5) The power of the Federal Court to grant an injunction restraining a
1
person from engaging in conduct may be exercised:
2
(a) whether or not it appears to the Court that the person intends
3
to engage again, or to continue to engage, in conduct of that
4
kind; and
5
(b) whether or not the person has previously engaged in conduct
6
of that kind.
7
(6) The power of the Federal Court to grant an injunction requiring a
8
person to do an act or thing may be exercised:
9
(a) whether or not it appears to the Court that the person intends
10
to refuse or fail again, or to continue to refuse or fail, to do
11
that act or thing; and
12
(b) whether or not the person has previously refused or failed to
13
do that act or thing.
14
Part 2 Registration of private health insurers
Division 3 Registration
Section 12
14
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 3--Registration
1
12 Applying for registration
2
(1) A body that is:
3
(a) a company within the meaning of the Corporations Act 2001;
4
and
5
(b) a constitutional corporation;
6
may apply to APRA for registration as a private health insurer.
7
(2) The application:
8
(a) must be in the approved form; and
9
(b) must be accompanied by a copy of the applicant's proposed
10
rules; and
11
(c) if the applicant is seeking to be registered as a for profit
12
insurer--must state that fact; and
13
(d) if the applicant is seeking to be registered as a restricted
14
access insurer--must state that fact.
15
13 Requiring further information
16
Within 90 days after the application is made, APRA may, by
17
written notice to the applicant, require the applicant to give APRA
18
such further information relating to the application as is specified
19
in the notice.
20
14 Criteria for registration
21
APRA rules may set out criteria for the registration of bodies as
22
private health insurers.
23
15 Deciding the application
24
(1) APRA may, in writing, grant the application, subject to such terms
25
and conditions as APRA considers appropriate.
26
Note:
Refusals of applications, and granting of applications subject to terms
27
and conditions, are reviewable under section 168.
28
Registration of private health insurers Part 2
Registration Division 3
Section 15
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
15
(2) If APRA grants the application:
1
(a) the applicant is taken to be, or have been, registered as a
2
private health insurer under this Division from the date of
3
effect specified in the instrument granting the application
4
(which may be a date that occurred before the application
5
was made); and
6
(b) if the grant is subject to terms and conditions--the
7
registration is taken to be subject to those terms and
8
conditions from the day on which the applicant is notified of
9
the granting of the application; and
10
(c) if the applicant sought to be registered as a for profit
11
insurer--the registration is taken to be registration of the
12
applicant as a for profit insurer; and
13
(d) if the applicant sought to be registered as a restricted access
14
insurer and the applicant's constitution or rules satisfy
15
subsection (3)--the registration is taken to be registration of
16
the applicant as a restricted access insurer.
17
Note:
An insurer's registration status as being (or not being) a for profit
18
insurer or a restricted access insurer may change after the insurer's
19
initial registration, but only as provided for in section 19.
20
(3) For the registration to be taken to be as a restricted access insurer,
21
the applicant's constitution or rules must:
22
(a) describe the restricted access group to whom the applicant's
23
complying health insurance products are, or will be,
24
available; and
25
(b) prohibit the applicant from issuing a complying health
26
insurance policy to a person who does not belong to the
27
group; and
28
(c) prohibit the applicant from ceasing to insure a person for the
29
reason that the person has ceased to belong to the group.
30
(4) A restricted access group is a group of people who all belong to a
31
particular group, based on whether they:
32
(a) are or were employed in a particular profession, trade,
33
industry or calling; or
34
(b) are or were employed by a particular employer or by an
35
employer who belongs to a particular class of employers; or
36
Part 2 Registration of private health insurers
Division 3 Registration
Section 16
16
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(c) are or were members of a particular profession, professional
1
association or union; or
2
(d) are or were members of the Defence Force or part of the
3
Defence Force; or
4
(e) are or were part of any group described in APRA rules made
5
for the purpose of this paragraph.
6
The partners and dependent children of people who belong to such
7
a group are also taken to belong to that group.
8
(5) APRA rules made for the purpose of paragraph (4)(e) may describe
9
a group as consisting of one or more classes of people (whether or
10
not the class or classes are described by reference to matters of a
11
kind referred to in paragraphs (4)(a) to (d)).
12
16 Notifying the decision
13
(1) If APRA grants the application, APRA must:
14
(a) give the applicant written notice of the grant, and of the terms
15
and conditions (if any) to which the grant is subject; and
16
(b) within one month after granting the application, publish in
17
the Gazette a notification of the grant setting out:
18
(i) the applicant's name; and
19
(ii) the date of effect of the applicant's registration; and
20
(iii) the terms and conditions (if any) to which the grant is
21
subject.
22
(2) If APRA refuses the application, APRA must give the applicant
23
written notice of the refusal.
24
17 APRA can be taken to refuse application
25
APRA is taken, for the purposes of section 168, to have refused the
26
application if APRA does not give the applicant written notice of
27
its decision on the application:
28
(a) within 90 days after the application was made; or
29
Registration of private health insurers Part 2
Registration Division 3
Section 18
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
17
(b) if APRA has given the applicant a notice under section 13
1
requiring the applicant to give further information relating to
2
the application--within 90 days after the applicant gives that
3
information to APRA;
4
whichever is later.
5
18 APRA to ensure that up-to-date record of information about
6
private health insurers is publicly available
7
An up-to-date record of the following must be publicly available
8
on APRA's website:
9
(a) the names of all private health insurers;
10
(b) in relation to each private health insurer:
11
(i) its address, telephone number and website address; and
12
(ii) the States and Territories in which it operates; and
13
(iii) if the insurer is registered as a restricted access
14
insurer--the restricted access group to whom the
15
insurer's complying health insurance products are, or
16
will be, available.
17
19 Changing registration status
18
For profit insurer
19
(1) A private health insurer that:
20
(a) because of subsection (2) or otherwise, is registered as a for
21
profit insurer; and
22
(b) notifies APRA in the approved form, that it does not wish to
23
be registered as a for profit insurer;
24
is taken, from the day after the day on which APRA receives the
25
notice, not to be registered as a for profit insurer.
26
(2) If:
27
(a) because of subsection (1) or otherwise, a private health
28
insurer is not registered as a for profit insurer; and
29
(b) APRA approves under section 20 an application by the
30
insurer for the insurer to convert to being registered as a for
31
profit insurer;
32
Part 2 Registration of private health insurers
Division 3 Registration
Section 19
18
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
the insurer is taken, from the day specified in APRA's approval, to
1
be registered as a for profit insurer.
2
(3) If a private health insurer is taken under this section to be, or not to
3
be, registered as a for profit insurer, APRA must, as soon as
4
practicable, given written notice of that fact to:
5
(a) the Health Secretary; and
6
(b) the Private Health Insurance Ombudsman; and
7
(c) the Commissioner of Taxation.
8
Restricted access insurer
9
(4) A private health insurer that:
10
(a) because of subsection (5) or otherwise, is registered as a
11
restricted access insurer; and
12
(b) notifies APRA, in the approved form, that it does not wish to
13
be registered as a restricted access insurer;
14
is taken, from the day after the day on which APRA receives the
15
notice, not to be registered as a restricted access insurer.
16
(5) Subject to subsection 15(3), a private health insurer that:
17
(a) because of subsection (4) of this section or otherwise, is not
18
registered as a restricted access insurer; and
19
(b) notifies APRA, in the approved form, that it wishes to be
20
registered as a restricted access insurer;
21
is taken, from the day after the day on which APRA receives the
22
notice, to be registered as a restricted access insurer.
23
(6) If a private health insurer is taken under this section to be, or not to
24
be, registered as a restricted access insurer, APRA must, as soon as
25
practicable, give written notice of that fact to:
26
(a) the Health Secretary; and
27
(b) the Private Health Insurance Ombudsman.
28
Registration of private health insurers Part 2
Registration Division 3
Section 20
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
19
20 Conversion to for profit status
1
Application for conversion to for profit status
2
(1) A private health insurer may apply to APRA for approval to
3
convert to being registered as a for profit insurer.
4
(2) The application:
5
(a) must be in the approved form and must contain, or be
6
accompanied by, a conversion scheme as required by the
7
approved form; and
8
(b) must be given to APRA at least 90 days before the day
9
specified in the application as the day on which the insurer
10
proposes that it become registered as a for profit insurer.
11
How APRA decides an application
12
(3) APRA must, in writing, approve the application if APRA is
13
satisfied, within 30 days after the application was made, that:
14
(a) the application complies with subsection (2); and
15
(b) the conversion scheme would not in substance involve the
16
demutualisation of the insurer.
17
(4) If subsection (3) does not apply:
18
(a) APRA must, at least 45 days before the day specified in the
19
application, cause a notice of the application to be published
20
in a national newspaper, or in a newspaper circulating in each
21
jurisdiction where the insurer has its registered office or
22
carries on business; and
23
(b) within 90 days after the application is made, APRA may, by
24
written notice to the insurer, require the insurer to give
25
APRA such further information relating to the application as
26
is specified in the notice.
27
(5) If subsection (3) does not apply, APRA must, in writing, approve
28
the application if:
29
(a) APRA is satisfied that the application complies with
30
subsection (2); and
31
(b) the insurer has given APRA such further information (if any)
32
as APRA has required under paragraph (4)(b); and
33
Part 2 Registration of private health insurers
Division 3 Registration
Section 21
20
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(c) APRA is satisfied that the conversion scheme would not
1
result in a financial benefit to any person who is not a policy
2
holder of, or another person insured through, a health benefits
3
fund conducted by the insurer; and
4
(d) APRA is satisfied that the conversion scheme would not
5
result in financial benefits from the scheme being distributed
6
inequitably between such policy holders and insured persons.
7
(6) APRA rules may set out criteria for deciding, for the purposes of
8
subsection (3), whether a conversion scheme would not in
9
substance involve the demutualisation of the insurer.
10
(7) An approval under this section is not a legislative instrument.
11
Notification of APRA's decision
12
(8) APRA must notify the insurer in writing of APRA's decision on
13
the application.
14
Note:
Refusals of applications are reviewable under section 168.
15
21 Cancellation of registration
16
(1) APRA must, in writing, cancel the registration of a private health
17
insurer if:
18
(a) the insurer has not conducted health insurance business
19
during the preceding 12 months; or
20
(b) the insurer's health benefits funds have been terminated
21
under Division 5 of Part 3; or
22
(c) the insurer ceases to be a company within the meaning of the
23
Corporations Act 2001.
24
(2) APRA must:
25
(a) give the insurer written notice of the cancellation; and
26
(b) within one month after the cancellation, publish in the
27
Gazette a notification of the cancellation.
28
Health benefits funds Part 3
Introduction Division 1
Section 22
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
21
Part 3--Health benefits funds
1
Division 1--Introduction
2
22 Simplified outline of this Part
3
A private health insurer must have at least one health benefits fund.
4
Note:
Part 4-4 of the Private Health Insurance Act 2007 defines the concept of
5
a health benefits fund as well as other key concepts related to health
6
benefits funds.
7
There are regimes governing:
8
(a)
how health benefits funds are operated; and
9
(b)
changing the health benefits fund to which a policy of
10
insurance is referable; and
11
(c)
terminating health benefits funds; and
12
(d)
external management of health benefits funds.
13
APRA may require private health insurers to remedy
14
contraventions of this Part.
15
Part 3 Health benefits funds
Division 2 The requirement to have health benefits funds
Section 23
22
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 2--The requirement to have health benefits funds
1
23 Private health insurers must have health benefits funds
2
(1) A private health insurer must at all times have at least one health
3
benefits fund in respect of:
4
(a) its health insurance business; or
5
(b) its health insurance business and some or all of its
6
health-related businesses.
7
(2) A private health insurer may have more than one health benefits
8
fund, but must not have more than one in respect of a particular
9
risk equalisation jurisdiction.
10
(3) Despite subsection (2), a private health insurer may have more than
11
one health benefits fund in respect of a particular risk equalisation
12
jurisdiction if:
13
(a) each of those funds is a fund (a pre-1 April 2007 fund):
14
(i) that existed on 1 April 2007; and
15
(ii) that, immediately before that day, was conducted by a
16
registered organization (within the meaning of the
17
National Health Act 1953 as in force before that day); or
18
(b) each of those funds, other than one of them, is a pre-1 April
19
2007 fund and that one other fund was established in
20
connection with a restructure of funds approved under:
21
(i) Division 4 of this Part; or
22
(ii) Division 146 of the Private Health Insurance Act 2007
23
as in force before the commencement of this section.
24
(4) Despite subsection (2), a private health insurer may have more than
25
one health benefits fund in respect of a particular risk equalisation
26
jurisdiction in circumstances specified in Private Health Insurance
27
(Health Benefits Fund Policy) Rules made for the purpose of
28
subsection 131-20(2) of the Private Health Insurance Act 2007.
29
Health benefits funds Part 3
The requirement to have health benefits funds Division 2
Section 24
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
23
24 Notifying APRA when health benefits funds are established
1
(1) If a private health insurer establishes a health benefits fund, the
2
insurer must give APRA written notice of:
3
(a) the establishment of the fund; and
4
(b) the day on which the fund was established; and
5
(c) such other matters as are specified in APRA rules made for
6
the purpose of this paragraph.
7
(2) The notice must be in the approved form.
8
(3) This section does not apply if the fund is established in accordance
9
with a restructure or arrangement approved under Division 4.
10
25 Inclusion of health-related businesses in health benefits funds
11
(1) If a private health insurer has a health benefits fund in respect of its
12
health insurance business and some or all of its health-related
13
businesses, the dominant purpose of the fund must relate to its
14
health insurance business.
15
(2) If APRA is satisfied that a private health insurer is contravening
16
subsection (1):
17
(a) APRA may, by written notice to the insurer, give the insurer
18
such directions relating to divesting the fund of health-related
19
businesses as APRA considers necessary to ensure the
20
insurer's compliance with subsection (1); and
21
(b) the insurer must comply with those directions.
22
(3) APRA may, by written notice to a private health insurer, vary or
23
revoke a direction given to the insurer under subsection (2).
24
(4) A direction under subsection (2) ceases to have effect if APRA
25
revokes the direction.
26
(5) Sections 98, 101, 102 and 103 apply in relation to a direction under
27
subsection (2) as if:
28
(a) a reference in those sections to a direction under section 96
29
were a reference to a direction under subsection (2) of this
30
section; and
31
Part 3 Health benefits funds
Division 2 The requirement to have health benefits funds
Section 25
24
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(b) the reference in subsection 101(3) to a direction of a kind
1
referred to in paragraph 97(1)(l) were omitted.
2
Note:
The matters dealt with in the sections applied by this subsection are as
3
follows:
4
(a) section 98--power to comply with a direction;
5
(b) section 101--a direction is not grounds for denial of obligations;
6
(c) section 102--supply of information about directions;
7
(d) section 103--secrecy requirements.
8
Health benefits funds Part 3
The operation of health benefits funds Division 3
Section 26
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
25
Division 3--The operation of health benefits funds
1
26 Assets of health benefits funds
2
Assets of a health benefits fund to be kept separate from other
3
assets
4
(1) A private health insurer must keep assets of a health benefits fund
5
distinct and separate from assets of other health benefits funds and
6
from all other money, assets or investments of the insurer.
7
(2) A private health insurer must maintain a separate account with an
8
ADI for each health benefits fund that it conducts.
9
What are the assets of a health benefits fund?
10
(3) The assets of a health benefits fund at a particular time are the
11
following:
12
(a) the balance of money represented by amounts credited to the
13
fund in accordance with section 27;
14
(b) assets of the insurer obtained as a result of the expenditure or
15
application of money credited to the fund;
16
(c) investments held by the insurer as a result of the expenditure
17
or application of money credited to the fund;
18
(d) other money, assets or investments of the insurer transferred
19
to the fund, whether under this Act or otherwise.
20
(4) Assets or investments obtained by the application of assets of a
21
health benefits fund are themselves assets of the fund.
22
(5) The assets of a health benefits fund:
23
(a) include assets that, in accordance with a restructure or
24
arrangement approved under Division 4, are to be assets of
25
the fund; but
26
(b) do not include assets that, in accordance with such a
27
restructure or arrangement, are no longer to be assets of the
28
fund.
29
Part 3 Health benefits funds
Division 3 The operation of health benefits funds
Section 27
26
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(6) Despite paragraphs (3)(b) and (c) and subsection (4), assets or
1
investments obtained by the expenditure of money of, or the
2
application of other assets of, a health benefits fund are not assets
3
of the fund if:
4
(a) the private health insurer conducting the fund is a for profit
5
insurer; and
6
(b) the expenditure or application was not done for the purposes
7
of the fund.
8
Act does not have effect of making insurer etc. a trustee of assets of
9
a health benefits fund
10
(7) To avoid doubt, nothing in this Act is intended to have the effect of
11
making a private health insurer or its directors a trustee or trustees
12
of the assets of the health benefits funds of the insurer.
13
27 Payments to health benefits funds
14
(1) A private health insurer must credit the following amounts to a
15
health benefits fund:
16
(a) premiums payable under policies of insurance that are
17
referable to the fund;
18
(b) amounts paid to the insurer in relation to a liability under
19
Division 9 in relation to the fund;
20
(c) income from the investment of assets of the fund;
21
(d) money paid to or by the insurer under a judgment of a court
22
relating to any matter concerning the business of the fund or
23
any failure to comply with this Part in relation to the fund;
24
(e) any other money received by the insurer in connection with
25
its conduct of the business of the fund;
26
(f) any other amounts specified in APRA rules made for the
27
purpose of this paragraph.
28
(2) This Act does not prevent a private health insurer from making a
29
permitted capital payment to a health benefits fund.
30
(3) A private health insurer makes a permitted capital payment to a
31
health benefits fund if it credits to the fund an amount that:
32
Health benefits funds Part 3
The operation of health benefits funds Division 3
Section 28
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
27
(a) is not required to be credited to the fund under subsection (1);
1
and
2
(b) either:
3
(i) does not represent any part of the assets of another
4
health benefits fund; or
5
(ii) is credited to the fund with APRA's written approval.
6
Note:
Refusals to approve the crediting of an amount to a fund are
7
reviewable under section 168.
8
(4) An approval under subparagraph (3)(b)(ii) is not a legislative
9
instrument.
10
28 Expenditure and application of health benefits funds
11
Assets of health benefits funds not to be applied or dealt with
12
except in accordance with this Division
13
(1) A private health insurer must not apply, or deal with, assets of a
14
health benefits fund, whether directly or indirectly, except in
15
accordance with this Division.
16
Application of assets: general rules
17
(2) The assets of a health benefits fund must not be applied:
18
(a) for any purpose other than:
19
(i) meeting policy liabilities and other liabilities, or
20
expenses, incurred for the purposes of the business of
21
the fund including policy liabilities and other liabilities
22
that are treated, in accordance with a restructure or
23
arrangement approved under Division 4, as policy
24
liabilities and other liabilities incurred for the purposes
25
of the fund; or
26
(ii) making investments in accordance with section 30; or
27
(iii) making a distribution under Division 5; or
28
(iv) a purpose specified in APRA rules made for the purpose
29
of this subparagraph; or
30
(b) for a purpose specified in APRA rules made for the purpose
31
of this paragraph.
32
Part 3 Health benefits funds
Division 3 The operation of health benefits funds
Section 29
28
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Mortgaging or charging assets
1
(3) A private health insurer must not mortgage or charge any of the
2
assets of a health benefits fund except:
3
(a) to secure an overdraft from an ADI; or
4
(b) for such other purposes, and subject to such conditions, as are
5
specified in APRA rules made for the purpose of this
6
paragraph.
7
Borrowing money
8
(4) A private health insurer must not borrow money for the purposes
9
of the business of a health benefits fund except in accordance with
10
APRA rules made for the purpose of this subsection.
11
Application of assets: for profit insurers
12
(5) Despite subsection (2), if a private health insurer is a for profit
13
insurer, the assets of a health benefits fund conducted by the
14
insurer may be applied for any purpose, except an application of
15
the assets that is inconsistent with:
16
(a) prudential standards relating to capital adequacy or solvency
17
that apply in relation to the fund; or
18
(b) a direction given to the insurer under section 96 that relates to
19
the fund.
20
Section does not apply to certain transfers of assets
21
(6) This section does not apply to the transfer of assets:
22
(a) from one health benefits fund to another in accordance with a
23
restructure or arrangement approved under Division 4; or
24
(b) in accordance with a direction under subsection 25(2).
25
29 Effect of non-compliance with section 28
26
General principle
27
(1) A transaction entered into in contravention of section 28 is of no
28
effect unless:
29
(a) the Federal Court makes an order under subsection (2); or
30
Health benefits funds Part 3
The operation of health benefits funds Division 3
Section 29
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
29
(b) it is included in a class of transactions specified in APRA
1
rules, made for the purpose of this paragraph, to be
2
transactions to which this section applies, and the Court has
3
not made an order under subsection (6).
4
Order declaring the transaction to be effective
5
(2) The Federal Court, on application by a party to the transaction,
6
may make an order declaring that the transaction is effective, and is
7
to be taken always to have been effective, for all purposes.
8
(3) The Federal Court must not make an order under subsection (2)
9
unless it is satisfied that the applicant entered into the transaction
10
in good faith and without knowledge of the contravention.
11
(4) In deciding whether to make an order under subsection (2), the
12
Federal Court may have regard to any hardship that would be
13
caused to the applicant if the order were not made.
14
(5) Subsection (4) is not intended to limit the matters to which the
15
Federal Court may have regard on an application under
16
subsection (2).
17
Order declaring the transaction to be of no effect
18
(6) The Federal Court, on application by APRA, may make an order
19
declaring that a particular transaction that:
20
(a) was entered into in contravention of section 28; and
21
(b) is included in a class of transactions of a kind referred to in
22
paragraph (1)(b) of this section;
23
is, and is to be taken always to have been, of no effect for any
24
purpose.
25
(7) The Federal Court must not make an order under subsection (6) if
26
it is satisfied that the effect of the order (if made) would be to
27
cause hardship to a person who entered into the transaction in good
28
faith and without knowledge of the contravention.
29
Part 3 Health benefits funds
Division 3 The operation of health benefits funds
Section 30
30
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
30 Investment of health benefits funds
1
(1) A private health insurer may invest assets of a health benefits fund
2
in any way that is likely to further the business of the fund.
3
(2) However:
4
(a) nothing in this Act authorises a private health insurer to make
5
an investment the insurer would otherwise be prohibited from
6
making; and
7
(b) nothing in this Act authorises a private health insurer to make
8
an investment the insurer would not otherwise have power to
9
make; and
10
(c) a private health insurer must not invest assets of a health
11
benefits fund, or keep such assets invested, if the investment,
12
or the retention of the investment, as the case requires, is
13
prohibited by APRA rules made for the purpose of this
14
paragraph, or by prudential standards.
15
(3) A transaction is not ineffective merely because it involves a
16
contravention of paragraph (2)(c).
17
Health benefits funds Part 3
Restructure, merger and acquisition of health benefits funds Division 4
Section 31
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
31
Division 4--Restructure, merger and acquisition of health
1
benefits funds
2
31 Restriction on restructure, merger or acquisition of health
3
benefits funds
4
A private health insurer must not change the health benefits fund to
5
which a policy of insurance is referable unless the change is made
6
in accordance with this Division.
7
32 Restructure of health benefits funds
8
When an insurer may restructure its health benefits funds
9
(1) A private health insurer may restructure its health benefits funds so
10
that insurance policies that are referable to a health benefits fund (a
11
transferring fund) of the insurer become referable to one or more
12
other health benefits funds (receiving funds) of the insurer
13
(whether existing or proposed) if:
14
(a) the insurance policies concerned are all of the policies that,
15
immediately before the restructure, were referable to the
16
transferring fund and belonged to one or more policy groups
17
of that fund; and
18
(b) the insurer applies to APRA, in the approved form, for
19
approval of the restructure; and
20
(c) APRA approves the restructure in writing; and
21
(d) the insurer complies with any requirements imposed on the
22
insurer in relation to the restructure by APRA rules made for
23
the purpose of this paragraph.
24
How APRA decides whether to approve the restructure
25
(2) Subject to subsection (4), APRA must approve the restructure if it
26
is satisfied that:
27
(a) the assets and liabilities that would be transferred to the
28
receiving fund or funds represent a reasonable estimate of
29
what would, immediately before the restructure, be the net
30
asset position of the transferring fund; and
31
Part 3 Health benefits funds
Division 4 Restructure, merger and acquisition of health benefits funds
Section 32
32
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(b) if there is more than one receiving fund--those assets and
1
liabilities would be fairly distributed between the receiving
2
funds; and
3
(c) the restructure will not result in any contravention of
4
prudential standards.
5
(3) For the purposes of paragraph (2)(a), in working out the net asset
6
position of the transferring fund, disregard the net asset position of
7
the fund to the extent that it relates to insurance policies that do not
8
belong to a policy group referred to in paragraph (1)(a).
9
(4) APRA must not approve the restructure if:
10
(a) it considers that the restructure will result in unfairness to the
11
policy holders of a health benefits fund of the insurer as that
12
fund exists immediately before the restructure, when those
13
policy holders are viewed as a group; or
14
(b) it considers that the restructure will result in unfairness to the
15
persons who would be policy holders of a health benefits
16
fund of the insurer as that fund would exist immediately after
17
the restructure, when those persons are viewed as a group; or
18
(c) the insurer is being wound up when the application is made.
19
Note:
Refusals to approve restructures are reviewable under section 168.
20
APRA rules may provide for various matters
21
(5) APRA rules may provide for the following:
22
(a) criteria for the approval of applications under subsection (1);
23
(b) how to work out reasonable estimates of the kind referred to
24
in paragraph (2)(a);
25
(c) criteria for deciding under paragraph (2)(b) whether assets
26
and liabilities would be fairly distributed;
27
(d) requirements to notify interested persons of the outcomes of
28
such applications;
29
(e) matters connected with how restructures take place, including
30
the following:
31
(i) insurance policies becoming referable to a receiving
32
fund or funds;
33
Health benefits funds Part 3
Restructure, merger and acquisition of health benefits funds Division 4
Section 33
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
33
(ii) policy liabilities and other liabilities incurred for the
1
purposes of a transferring fund becoming treated as
2
policy liabilities and other liabilities incurred for the
3
purposes of a receiving fund or funds;
4
(iii) assets of a transferring fund becoming assets of a
5
receiving fund or funds;
6
(iv) the timing of restructures;
7
(v) if a receiving fund is a proposed new health benefits
8
fund--the establishment of that fund;
9
(f) requirements for private health insurers to give APRA
10
information following restructures.
11
Approval is not a legislative instrument
12
(6) An approval under this section is not a legislative instrument.
13
Definition
14
(7) A policy group of a health benefits fund, is all of the insurance
15
policies:
16
(a) that are referable to the fund; and
17
(b) the addresses of the policy holders of which, as known to the
18
private health insurer conducting the fund, are located in the
19
same risk equalisation jurisdiction.
20
APRA rules may provide for how to work out the policy group for
21
a policy that has 2 or more holders whose addresses are not all
22
located in the same risk equalisation jurisdiction.
23
33 Merger and acquisition of health benefits funds
24
When an arrangement may be entered into
25
(1) A private health insurer (the transferee insurer) may enter into an
26
arrangement with one or more other private health insurers
27
(transferor insurers) under which:
28
(a) insurance policies that are referable to a health benefits fund
29
or funds (transferring funds) of the transferor insurer or
30
transferor insurers become referable to a health benefits fund
31
or funds (receiving funds) of the transferee insurer; and
32
Part 3 Health benefits funds
Division 4 Restructure, merger and acquisition of health benefits funds
Section 33
34
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(b) in relation to each of the transferring funds, the insurance
1
policies concerned are:
2
(i) all of the insurance policies that are referable to the
3
transferring fund; or
4
(ii) all of the insurance policies that are referable to the
5
transferring fund and that belong to one or more
policy
6
groups of the fund.
7
(2) However, the arrangement must not take effect unless:
8
(a) the insurers referred to in subsection (1) apply jointly to
9
APRA, in the approved form, for approval of the
10
arrangement; and
11
(b) APRA approves the arrangement in writing; and
12
(c) the insurers comply with any requirements imposed on the
13
insurers in relation to the arrangement by APRA rules made
14
for the purpose of this paragraph.
15
How APRA decides whether to approve the arrangement
16
(3) APRA must approve the arrangement if it is satisfied that:
17
(a) the assets and liabilities that would be transferred, under the
18
arrangement, to the receiving fund or funds represent a
19
reasonable estimate of what would, immediately before the
20
restructure, be:
21
(i) if there is only one transferring fund--the net asset
22
position of the fund; or
23
(ii) if there is more than one transferring fund--the sum of
24
the net asset positions of each of the funds; and
25
(b) if, under the arrangement, there would be more than one
26
receiving fund--those assets and liabilities would be fairly
27
distributed between the receiving funds; and
28
(c) if subparagraph (1)(b)(i) applies to any transferring fund--
29
the net asset position of the fund immediately after the
30
arrangement takes effect will not be greater than zero; and
31
(d) the arrangement will not result in any contravention of
32
prudential standards if it takes effect.
33
Note:
Refusals to approve transfers are reviewable under section 168.
34
Health benefits funds Part 3
Restructure, merger and acquisition of health benefits funds Division 4
Section 33
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
35
(4) For the purposes of paragraph (3)(a), in working out the net asset
1
position of a transferring fund to which subparagraph (1)(b)(ii)
2
applies, disregard the net asset position of the fund to the extent
3
that it relates to insurance policies that do not belong to a policy
4
group referred to in that subparagraph.
5
APRA rules may provide for various matters
6
(5) APRA rules may provide for the following:
7
(a) criteria for the approval of applications under subsection (2);
8
(b) how to work out reasonable estimates of the kind referred to
9
in paragraph (3)(a);
10
(c) criteria for deciding under paragraph (3)(b) whether assets
11
and liabilities would be fairly distributed;
12
(d) requirements to notify interested persons of the outcomes of
13
such applications;
14
(e) matters connected with how arrangements take effect,
15
including the following:
16
(i) insurance policies becoming referable to a health
17
benefits fund or funds of the transferee insurer;
18
(ii) policy liabilities and other liabilities incurred for the
19
purposes of a health benefits fund or funds of a
20
transferor insurer becoming treated as policy liabilities
21
and other liabilities incurred for the purposes of a health
22
benefits fund or funds of the transferee insurer;
23
(iii) assets of a health benefits fund or funds of a transferor
24
insurer becoming assets of a health benefits fund or
25
funds of the transferee insurer;
26
(iv) the timing of arrangements;
27
(f) requirements for private health insurers to give APRA
28
information following arrangements taking effect.
29
Notice to be given if arrangement takes effect
30
(6) The transferee insurer must, within 28 days after the arrangement
31
takes effect, notify APRA of the arrangement. The notice must
32
comply with any requirements specified in APRA rules made for
33
the purpose of this subsection.
34
Part 3 Health benefits funds
Division 4 Restructure, merger and acquisition of health benefits funds
Section 34
36
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Effect of arrangement
1
(7) For the purposes of this Act and the Private Health Insurance Act
2
2007, an insurance policy that becomes referable to a health
3
benefits fund of the transferee insurer as a result of the
4
arrangement is treated, after the arrangement takes effect, as if it
5
were an insurance policy issued by the transferee insurer.
6
Approval is not a legislative instrument
7
(8) An approval under this section is not a legislative instrument.
8
34 Consent of policy holders not required
9
The consent of the policy holders of a health benefits fund is not
10
required for any:
11
(a) restructuring health benefits funds as provided for in
12
section 32; or
13
(b) entering into arrangements of a kind referred to in section 33,
14
or implementing such arrangements;
15
unless the constitution of the private health insurer conducting the
16
fund provides otherwise.
17
Health benefits funds Part 3
Termination of health benefits funds Division 5
Section 35
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
37
Division 5--Termination of health benefits funds
1
Subdivision A--Approving the termination of health benefits
2
funds
3
35 Applying for termination
4
A private health insurer may apply to APRA, in the approved form,
5
for approval of the termination of each of its health benefits funds.
6
Note:
Termination of health benefits funds may also occur if the Federal
7
Court orders the appointment of a terminating manager under
8
Division 7.
9
36 Requiring further information
10
Within 28 days after the application is made, APRA may, by
11
written notice to the applicant, require the applicant to give APRA
12
such further information relating to the application as is specified
13
in the notice.
14
37 Deciding the application
15
(1) APRA must, in writing, approve the termination if it is satisfied
16
that:
17
(a) the insurer is not in the process of being wound up; and
18
(b) each of its health benefits funds complies with prudential
19
standards relating to capital adequacy or solvency that apply
20
in relation to the funds; and
21
(c) in relation to each of the funds, termination of the fund will
22
not result in unfairness to the policy holders of the fund,
23
when those policy holders are viewed as a group;
24
and is satisfied as to such other matters as are specified in APRA
25
rules made for the purpose of this subsection.
26
(2) If APRA approves the termination, APRA:
27
(a) may, in writing, appoint a person other than the applicant as
28
the terminating manager of the funds; and
29
(b) must give the insurer written notice:
30
Part 3 Health benefits funds
Division 5 Termination of health benefits funds
Section 38
38
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(i) of the approval of the termination; and
1
(ii) if paragraph (a) applies--of the appointment of the
2
terminating manager.
3
(3) If APRA refuses to approve the termination, APRA must give the
4
insurer written notice of the refusal.
5
Note:
Refusals to approve terminations are reviewable under section 168.
6
(4) An approval under this section is not a legislative instrument.
7
38 APRA can be taken to have refused to approve termination
8
APRA is taken, for the purposes of section 168, to have refused to
9
approve the termination if APRA does not notify the applicant of
10
its decision on the application:
11
(a) within 90 days after the application was made; or
12
(b) if APRA has given the applicant a notice under section 36
13
requiring the applicant to give further information relating to
14
the application--within 90 days after the applicant gives that
15
information to APRA;
16
whichever is later.
17
Subdivision B--Conducting the termination of health benefits
18
funds
19
39 The basis of the law relating to termination
20
(1) A health benefits fund cannot be wound up or otherwise terminated
21
except in accordance with this Part.
22
(2) Subject to this Part, any provisions of a law of the Commonwealth,
23
or of a State or Territory, that, but for this section, would relate to
24
the winding up or termination of such a fund cease, by force of this
25
section, to apply in relation to the fund.
26
Health benefits funds Part 3
Termination of health benefits funds Division 5
Section 40
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
39
40 Conduct of funds during termination process
1
(1) A private health insurer must not, after being notified under
2
subsection 37(2) that termination of its health benefits funds has
3
been approved:
4
(a) enter into an insurance policy that is referable to any of its
5
funds with a person who is not already a holder of such a
6
policy; or
7
(b) if the insurer is a for profit insurer--apply the assets of any
8
of the funds except in accordance with subsection 28(2)
9
(unless this paragraph has ceased to apply to the insurer
10
because of section 45); or
11
(c) if the insurer is not a for profit insurer--become a for profit
12
insurer.
13
(2) The insurer must, within 60 days after being notified under
14
subsection 37(2) that termination of its health benefits funds has
15
been approved:
16
(a) give a written notice, stating the day (the termination day)
17
from which it will not renew insurance policies that are
18
referable to any of its funds, to:
19
(i) each policy holder of any of its funds; and
20
(ii) APRA; and
21
(b) notify the termination day in a national newspaper, or in a
22
newspaper circulating in each jurisdiction where the insurer
23
has its registered office or carries on business.
24
The termination day must not be earlier than 90 days after the
25
insurer finishes giving notices under this subsection.
26
(3) The insurer must not, on or after the termination day, renew any
27
insurance policies that are referable to any of those funds.
28
(4) The insurer must accept any valid claim for benefits under an
29
insurance policy that is or was referable to any of those funds if the
30
claim is made before the end of the period of 12 months following
31
the expiry of the last policy that was referable to any of those
32
funds.
33
Part 3 Health benefits funds
Division 5 Termination of health benefits funds
Section 41
40
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
41 Insurers etc. to give reports to APRA
1
If APRA has approved the termination of the health benefits funds
2
of a private health insurer:
3
(a) the terminating manager; or
4
(b) the insurer (if there is no terminating manager);
5
must, within 28 days after the end of the termination day, make a
6
written report to APRA setting out details of the assets and
7
liabilities of each of the funds as at that day.
8
42 Terminating managers displace management of funds
9
If a terminating manager of the health benefits funds of a private
10
health insurer has been appointed, then, for so long as the
11
appointment is in force and until the termination is completed:
12
(a) the management of the fund vests in the terminating
13
manager; and
14
(b) any officer of the responsible insurer for the fund who was
15
vested with the management of the fund immediately before
16
the appointment is, by force of this section, divested of that
17
management.
18
Subdivision C--Ending the termination of health benefits funds
19
43 Power to end termination
20
(1) At any time during the termination of the health benefits funds of a
21
private health insurer, the Federal Court may, on application, make
22
an order ending the termination on a day specified in the order.
23
(2) An application may be made by:
24
(a) APRA; or
25
(b) a terminating manager of the funds.
26
(3) On such an application, the Federal Court may, before making an
27
order, direct the terminating manager, or the private health insurer
28
(if there is no terminating manager), to give a report with respect to
29
a relevant fact or matter.
30
Health benefits funds Part 3
Termination of health benefits funds Division 5
Section 44
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
41
(4) If the Federal Court has made an order ending the termination, the
1
Court may give such directions as it considers appropriate for the
2
resumption of the management and control of the health benefits
3
funds of the private health insurer by its officers.
4
Subdivision D--Completing the termination of health benefits
5
funds
6
44 Completion of the termination process
7
The termination of the health benefits funds of a private health
8
insurer is completed if:
9
(a) the period of 12 months referred to in subsection 40(4) has
10
come to an end; and
11
(b) so far as possible having regard to the extent of the assets of
12
the funds:
13
(i) the liabilities of the funds to the policy holders of the
14
funds have been discharged; and
15
(ii) any collapsed insurer assistance payments (within the
16
meaning of section 54H of the Australian Prudential
17
Regulation Authority Act 1998) made by APRA, for the
18
purposes of any of the funds, have been repaid to
19
APRA; and
20
(iii) any other liabilities of the funds have been discharged.
21
45 Distribution of remaining assets after completion of the
22
termination process
23
If the termination of the funds is completed and, on the completion,
24
there are assets of those funds, then:
25
(a) if the insurer is a for profit insurer--paragraph 40(1)(b)
26
ceases to apply to the insurer; or
27
(b) if the insurer is not a for profit insurer--the insurer is liable
28
to pay to APRA an amount equal to the value of those assets.
29
Note:
Amounts received by APRA under paragraph (b) are required to be
30
credited to the Risk Equalisation Special Account (see section 318-5
31
of the Private Health Insurance Act 2007).
32
Part 3 Health benefits funds
Division 5 Termination of health benefits funds
Section 46
42
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
46 Liability of officers of insurers for loss to terminated funds
1
(1) If:
2
(a) a private health insurer contravenes this Act in relation to a
3
health benefits fund that it conducts; and
4
(b) the contravention results in a loss to the fund; and
5
(c) the termination of the fund is completed;
6
the persons who were officers of the insurer when the
7
contravention occurred are jointly and severally liable to pay to
8
APRA an amount equal to the amount of the loss.
9
Note:
For relief from liability, see section 166.
10
(2) A person is not liable under subsection (1) if the person proves that
11
he or she used due diligence to prevent the occurrence of such a
12
contravention.
13
(3) On application by APRA, the Federal Court may order any person
14
liable under subsection (1) to pay to APRA the whole or any part
15
of the loss.
16
Note:
Amounts received by APRA under this section are required to be
17
credited to the Risk Equalisation Special Account (see section 318-5
18
of the Private Health Insurance Act 2007).
19
47 Reporting by terminating manager
20
(1) A terminating manager:
21
(a) must make a written report to APRA relating to the
22
termination of the health benefits funds of a private health
23
insurer as soon as practicable after the completion of the
24
termination of the funds; and
25
(b) may, at any earlier time, make a written report to APRA
26
relating to the termination of the funds.
27
(2) A report under paragraph (1)(a) may include a recommendation
28
that an application be made under section 48 for the winding up of
29
the insurer.
30
Health benefits funds Part 3
Termination of health benefits funds Division 5
Section 48
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
43
48 Applying for winding up
1
(1) If a report by a terminating manager under section 47 includes a
2
recommendation that an application be made under this section for
3
the winding up of a private health insurer, APRA, or the
4
terminating manager, may apply to the Federal Court for an order
5
that the insurer be wound up.
6
(2) However, the terminating manager must not apply unless directed
7
by APRA to apply.
8
(3) On an application under subsection (1), the Federal Court may
9
make an order that the insurer be wound up if the Court is satisfied
10
that it is in the financial interests of the policy holders of the health
11
benefits funds conducted by the insurer that such an order be made.
12
(4) The winding up of the insurer is to be conducted in accordance
13
with the Corporations Act 2001.
14
Part 3 Health benefits funds
Division 6 External management of health benefits funds
Section 49
44
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 6--External management of health benefits funds
1
Subdivision A--Preliminary
2
49 Purpose of Division
3
The purpose of this Division is to permit the business, affairs and
4
property of a health benefits fund under external management to be
5
managed in a way:
6
(a) that maximises the chance that the policy holders of the fund
7
continue to be covered for health insurance either by that
8
fund or by another fund to which the business of that fund is
9
transferred; or
10
(b) if it is not possible for that coverage to be maintained--that,
11
to the extent possible, safeguards the financial interests of
12
those policy holders if the fund is terminated.
13
50 The basis of the law relating to external management
14
(1) The external management of a health benefits fund is regulated:
15
(a) by the provisions of this Division; and
16
(b) by the provisions of Divisions 6, 7, 8, 10, 11, 13 and 16 of
17
Part 5.3A of Chapter 5 of the Corporations Act 2001 and of
18
Division 7A of Part 5.6 of that Chapter, all applying, so far as
19
they are capable of so doing, subject to such modifications as
20
are set out in:
21
(i) this Act; or
22
(ii) APRA rules made for the purpose of this subparagraph.
23
(2) A health benefits fund cannot be placed under external
24
administration, or dealt with as a fund under external
25
administration, except in accordance with this Part.
26
(3) Subject to this Part, any provisions of a law of the Commonwealth,
27
or of a State or Territory, that, but for this section, would relate to
28
the external administration of such a fund cease, by force of this
29
section, to apply in relation to the fund.
30
Health benefits funds Part 3
External management of health benefits funds Division 6
Section 51
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
45
(4) In the application of the provisions of the Corporations Act 2001
1
referred to in subsection (1) in relation to the external management
2
of a health benefits fund, those provisions apply as if:
3
(a) a reference to the company were a reference to the fund; and
4
(b) a reference to the administrator were a reference to the
5
external manager of the fund appointed under this Act; and
6
(c) a reference to the Court were a reference to the Federal
7
Court.
8
(5) APRA rules referred to in subparagraph (1)(b)(ii) may provide for
9
different modifications according to the nature of the health
10
benefits fund that is to be, or that is being, administered.
11
Subdivision B--Appointment of external managers
12
51 APRA may appoint external managers
13
(1) APRA may, in writing, appoint a person as the external manager of
14
a health benefits fund if the requirements of subsections 52(1) and
15
(2) are satisfied.
16
(2) However, the person:
17
(a) must be registered, or taken to be registered, as an official
18
liquidator under the Corporations Act 2001; and
19
(b) must not be a person who is:
20
(i) a policy holder of the fund; or
21
(ii) an appointed actuary of the fund; or
22
(iii) an auditor of the fund; or
23
(iv) a chargee of property of the fund; or
24
(v) an officer of a body corporate that is a chargee of
25
property of the fund; or
26
(vi) a person who is otherwise related to the fund.
27
(3) The appointment takes effect from the day specified in the
28
instrument of appointment.
29
Part 3 Health benefits funds
Division 6 External management of health benefits funds
Section 52
46
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
52 Preconditions for appointment of external managers
1
(1) APRA must not appoint an external manager to a health benefits
2
fund unless APRA considers that the appointment of an external
3
manager to the fund is, in the circumstances, in the interests of the
4
policy holders of the fund.
5
(2) In addition to subsection (1) being satisfied, APRA must not
6
appoint an external manager to a health benefits fund unless:
7
(a) APRA is satisfied that the private health insurer conducting
8
the fund has contravened:
9
(i) a prudential standard relating to capital adequacy or
10
solvency that applies in relation to the fund; or
11
(ii) a direction given to the insurer under section 96 that
12
relates to the fund; or
13
(b) a request for external management of the fund is made to
14
APRA by a resolution of the directors of the insurer; or
15
(c) a ground specified in APRA rules, made for the purpose of
16
this paragraph, applies in respect of the fund.
17
53 External managers to displace management of funds
18
If a person is appointed as external manager of a health benefits
19
fund, then, for so long as the fund is under external management:
20
(a) the management of the fund vests in the external manager;
21
and
22
(b) any officer of the responsible insurer for the fund who was
23
vested with the management of the fund immediately before
24
the appointment of the external manager is, by force of this
25
section, divested of that management.
26
Subdivision C--Duties and powers of external managers
27
54 Duties of external managers
28
(1) The main duties of the external manager of a health benefits fund
29
are:
30
(a) to examine the business, affairs and property of the fund; and
31
(b) to ascertain the assets and liabilities of the fund; and
32
Health benefits funds Part 3
External management of health benefits funds Division 6
Section 55
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
47
(c) if the business of the fund has been mixed with other
1
business of the private health insurer concerned--to
2
apportion the assets and liabilities as between the fund and
3
that other business; and
4
(d) to form an opinion as to which course of action maximises
5
the chance that the policy holders of the fund continue to be
6
covered for health insurance either by that fund or by another
7
fund to which the business of that fund is transferred; and
8
(e) to make a final written report to APRA, in accordance with
9
Subdivision E, recommending that course of action.
10
(2) In the day-to-day administration of a health benefits fund, it is the
11
duty of the external manager to administer the fund as efficiently
12
and economically as possible.
13
55 Additional powers of external managers
14
(1) In the application of the provisions of Division 8 of Part 5.3A of
15
Chapter 5 of the Corporations Act 2001, for the purpose of:
16
(a) conferring further powers on the external manager of a health
17
benefits fund; and
18
(b) where appropriate, qualifying the exercise of those powers;
19
the provisions of that Division are taken not to include
20
section 442A or subsection 442D(1).
21
(2) For the purposes of section 442F of the Corporations Act 2001 as
22
so applying, sections 128 and 129 of that Act are also taken to
23
apply, subject to such modifications as are specified in APRA rules
24
made for the purpose of this subsection.
25
56 Protection of property during external management
26
(1) In the application of the provisions of Division 6 of Part 5.3A of
27
Chapter 5 of the Corporations Act 2001 in relation to the
28
protection, during the
external management of a health benefits
29
fund, of the property of the fund, the provisions of that Division are
30
taken not to include section 440A.
31
(2) In determining, for the purposes of section 440D of the
32
Corporations Act 2001 as so applying, whether the external
33
Part 3 Health benefits funds
Division 6 External management of health benefits funds
Section 57
48
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
manager should consent to, or the court should give leave for, a
1
person's beginning or continuing legal proceedings, the external
2
manager or the court must have regard to whether:
3
(a) the proceedings do, or do not, relate to any property of the
4
fund under external management; and
5
(b) the proceedings would, or would not, be materially
6
detrimental to the interests of the policy holders of the fund.
7
57 Rights of chargee, owner or lessor of property of fund under
8
external management
9
(1) In the application of the provisions of Division 7 of Part 5.3A of
10
Chapter 5 of the Corporations Act 2001 in relation to the property
11
of a health benefits fund under external management:
12
(a) the provisions of that Division are taken not to include
13
section 441A; and
14
(b) subsection 441D(1) is taken not to include the words
15
following paragraph 441D(1)(b).
16
(2) Nothing in that Division as so applying prevents:
17
(a) the
external manager of a health benefits fund giving written
18
consent; or
19
(b) the court giving leave;
20
for the enforcement of a charge, subject to any condition specified
21
by the external manager or by the court, as the case requires, if the
22
external manager or the court is satisfied:
23
(c) that the charge does not relate to the property of the fund
24
under external management; and
25
(d) that the enforcement of the charge will not be materially
26
detrimental to the interests of the policy holders of the fund.
27
Subdivision D--Procedure relating to voluntary deeds of
28
arrangement
29
58 Matters that may be included in APRA rules
30
(1) APRA rules may provide for all or any of the following:
31
Health benefits funds Part 3
External management of health benefits funds Division 6
Section 59
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
49
(a) the convening by external managers of health benefits funds
1
of meetings of creditors of those funds, and the policy
2
holders of the funds, to consider the possibility of the
3
responsible insurers for those funds executing voluntary
4
deeds of arrangement;
5
(b) the procedure for convening such meetings (including the
6
giving of notices);
7
(c) the conduct of such meetings;
8
(d) the matters that may be decided at such meetings;
9
(e) the circumstances in which the external managers must
10
include in their reports to APRA under section 59,
11
recommendations arising out of decisions taken at such
12
meetings;
13
(f) the kinds of such recommendations that may be included in
14
those reports;
15
(g) the actions that APRA may take if such recommendations are
16
included in those reports.
17
(2) This section does not limit the matters that may be included in
18
APRA rules for the purposes of any other provision of this Part.
19
Subdivision E--External managers' reports to APRA
20
59 External managers to give reports to APRA
21
(1) As soon as practicable after being appointed as external manager of
22
a health benefits fund, and in any case within the period under
23
subsection (2), the external manager must:
24
(a) conclude the examination of the business, affairs and
25
property of the fund; and
26
(b) make a final written report to APRA.
27
(2) The period is:
28
(a) the 3 months after being appointed as external manager; or
29
(b) such longer period as APRA determines in writing.
30
(3) The external manager must, in the report to APRA:
31
(a) recommend a course of action that, in the external manager's
32
opinion, maximises, in the circumstances, the chance that the
33
Part 3 Health benefits funds
Division 6 External management of health benefits funds
Section 59
50
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
policy holders of the fund continue to be covered for health
1
insurance either by that fund or by another fund to which the
2
business of that fund is transferred; and
3
(b) set out the reasons for that recommendation.
4
(4) Without limiting subsection (3), the external manager may
5
recommend:
6
(a) subject to the Federal Court's making an order or orders in
7
relation to the matter, that the responsible insurer for the fund
8
implement a scheme of arrangement concerning the business
9
of the fund; or
10
(b) subject to the Court's making an order or orders in relation to
11
the matter, that a terminating manager of the health benefits
12
funds of the responsible insurer be appointed; or
13
(c) that the external management cease and that the business of
14
the fund be resumed by the responsible insurer for the fund.
15
(5) However, if APRA rules made for the purpose of this subsection so
16
provide, the external manager must recommend that APRA
17
approve the execution of a voluntary deed of arrangement.
18
(6) Without limiting the matters that may be dealt with in a scheme of
19
arrangement referred to in paragraph (4)(a), such a scheme may
20
provide for:
21
(a) the continuance, on terms or conditions set out in the scheme,
22
of the business of the fund; or
23
(b) the transfer of the fund, on terms set out in the scheme, to a
24
private health insurer other than the responsible insurer for
25
the fund; or
26
(c) the execution of a deed in the same terms as a proposed
27
voluntary deed of arrangement rejected at a meeting of a kind
28
referred to in section 58.
29
Health benefits funds Part 3
External management of health benefits funds Division 6
Section 60
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
51
60 Dealing with reports given to APRA
1
Deciding what to do in relation to a recommendation
2
(1) For the purpose of deciding what to do in relation to a
3
recommendation under subsection 59(3), APRA may:
4
(a) request the external manager to provide further information
5
on any matter; and
6
(b) engage any person to assist it in evaluating assessments
7
made, or projections relied on, by the external manager in
8
relation to matters dealt with in the report.
9
APRA must have regard to the external manager's report, and to
10
any additional information provided by the external manager or by
11
any person engaged to assist APRA, in reaching its decision.
12
APRA to inform external manager if satisfied with a recommended
13
course of action
14
(2) If APRA is satisfied that a course of action recommended by the
15
external manager under subsection 59(3) will, in the circumstances,
16
be in the interests of the policy holders of the fund, APRA must, by
17
written notice, inform the external manager to that effect.
18
Note:
If APRA is satisfied with a recommendation that the external
19
management cease, then the external management ends when notice is
20
given under this subsection (see paragraph 62(2)(c)).
21
Additional steps to be taken by APRA if satisfied with certain kinds
22
of recommended course of action
23
(3) If the course of action in relation to which APRA is satisfied as
24
mentioned in subsection (2) is a course of action specified in
25
paragraph 59(4)(a), APRA must, in writing, direct the external
26
manager to apply under subsection 61(1) to give effect to the
27
course of action.
28
(4) If the course of action in relation to which APRA is satisfied as
29
mentioned in subsection (2) is termination of the funds of the
30
private health insurer in question, APRA must, in writing, direct
31
the external manager to apply under subsection 66(1) for the
32
appointment of a terminating manager of the funds.
33
Part 3 Health benefits funds
Division 6 External management of health benefits funds
Section 61
52
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(5) APRA rules may provide for what is to be done if the course of
1
action in relation to which APRA is satisfied as mentioned in
2
subsection (2) is a course of action that is not of a kind specified in
3
subsection 59(4) or (5).
4
If APRA is not satisfied with a recommended course of action
5
(6) If APRA is not satisfied as mentioned in subsection (2), APRA
6
may take a different course of action that APRA is satisfied will, in
7
the circumstances, be in the interests of policy holders of the fund.
8
(7) The courses of action that APRA may take under subsection (6)
9
include:
10
(a) APRA applying to the Federal Court for an order or orders in
11
relation to the responsible insurer for the fund implementing
12
a scheme of arrangement concerning the business of the fund;
13
and
14
(b) APRA applying to the Court for an order or orders for the
15
appointment of a terminating manager of the health benefits
16
funds of the responsible insurer.
17
61 Federal Court orders in respect of schemes of arrangement
18
(1) If, under subsection 60(3), APRA directs the external manager to
19
apply under this subsection to give effect to a course of action
20
specified in paragraph 59(4)(a), the external manager must apply to
21
the Federal Court for an order or orders to give effect to the course
22
of action.
23
Note:
For what is to happen if the course of action is to be termination of a
24
fund, see subsection 66(1).
25
(2) On an application to the Federal Court under subsection (1) of this
26
section, or under paragraph 60(7)(a):
27
(a) APRA and any other person interested are entitled to be
28
heard; and
29
(b) the Federal Court may make such order or orders in respect
30
of the course of action the subject of the application as it
31
considers to be, in all the circumstances, in the interests of
32
the policy holders of the health benefits fund concerned.
33
Health benefits funds Part 3
External management of health benefits funds Division 6
Section 62
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
53
Subdivision F--Miscellaneous
1
62 When an external management begins and ends
2
(1) The external management of a health benefits fund begins when an
3
external manager is appointed under section 51 to administer the
4
fund.
5
(2) The external management of a health benefits fund ends when:
6
(a) APRA terminates the appointment of the external manager
7
and does not appoint a replacement external manager; or
8
(b) a voluntary deed of arrangement relating to the fund is
9
executed; or
10
(c) APRA notifies the external manager, under subsection 60(2),
11
that it has accepted the external manager's recommendation,
12
made under subsection 59(3), that the external management
13
cease; or
14
(d) the Federal Court makes an order or orders under section 61
15
for a course of action approved by APRA and incorporated in
16
a scheme of arrangement; or
17
(e) a terminating manager of the fund is appointed.
18
63 Effect of things done during external management of health
19
benefits funds
20
A payment made, transaction entered into, or other act or thing
21
done, in good faith, by, or with the consent of, the external
22
manager of a health benefits fund:
23
(a) is valid and effectual for the purposes of this Act and the
24
Private Health Insurance Act 2007, and for the purposes of
25
the Corporations Act 2001 as it applies in relation to the
26
fund; and
27
(b) is not liable to be set aside in a termination of the fund.
28
64 Disclaimer of onerous property
29
(1) In the application of the provisions of Division 7A of Part 5.6 of
30
Chapter 5 of the Corporations Act 2001 for the purpose of
31
determining the power of an external manager of a health benefits
32
Part 3 Health benefits funds
Division 6 External management of health benefits funds
Section 65
54
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
fund to disclaim property of the fund, those provisions have effect
1
as if:
2
(a) the external manager were the liquidator of the company that
3
the fund is taken to constitute; and
4
(b) the references in subsections 568B(3) and 568E(5) of that
5
Act to the company's creditors were references to the policy
6
holders of the fund.
7
(2) A disclaimer by an external manager of a health benefits fund has
8
the same effect, and the external manager is under the same
9
obligations, for the purposes of this Act, as if the disclaimer had
10
been made under Division 7A of Part 5.6 of Chapter 5 of the
11
Corporations Act 2001.
12
65 Application of provisions of Corporations Act
13
Regulations etc. under the Corporations Act
14
(1) A reference in an application provision to an applied Corporations
15
Act provision includes (unless the contrary intention appears) a
16
reference to any regulations or other instruments in force for the
17
purposes of that provision, or any of those provisions, of the
18
Corporations Act 2001.
19
Note:
So, for example, a provision of this Act that applies a particular
20
provision of the Corporations Act 2001 also applies any regulations
21
that have effect for the purposes of that provision (unless a contrary
22
intention appears).
23
(2) An application provision is a provision of this Division that:
24
(a) provides for the application of a provision, or a group of
25
provisions (including a Chapter, Part, Division or
26
Subdivision), of the Corporations Act 2001; or
27
(b) refers to a provision, or group of provisions, of the
28
Corporations Act 2001 as so applied.
29
(3) An applied Corporations Act provision is a provision, or a
30
provision in a group of provisions, of the Corporations Act 2001
31
that is applied as mentioned in paragraph (2)(a).
32
Health benefits funds Part 3
External management of health benefits funds Division 6
Section 65
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
55
Modifications under APRA rules
1
(4) If an application provision contains a power for APRA rules to
2
modify an applied Corporations Act provision the power extends to
3
modifying any regulations or other instruments, in force for the
4
purposes of that provision of the Corporations Act 2001, that are
5
applied as a result of subsection (1).
6
(5) The fact that provision is made in this Act for a specific
7
modification of one or more applied Corporations Act provisions
8
does not imply that further modifications of that provision, or any
9
of those provisions, consistent with that specific modification,
10
should not be made by APRA rules.
11
Corporations Act definitions and interpretation principles
12
(6) The definitions and interpretation principles that have effect in or
13
under the Corporations Act 2001 have the same effect in relation
14
to:
15
(a) an applied Corporations Act provision; or
16
(b) a provision of regulations or another instrument that is
17
applied as a result of subsection (1);
18
as that provision applies for the purposes of a provision of this
19
Division, unless a contrary intention appears in an application
20
provision or in a modification made by APRA rules.
21
Things that may be done under regulations under the Corporations
22
Act
23
(7) If an applied Corporations Act provision allows something to be
24
done in or by regulations, then:
25
(a) APRA rules may do that thing for the purposes of the applied
26
Corporations Act provision; and
27
(b) if they do, any regulations or instruments that are applied as a
28
result of subsection (1) are ineffective, for the purposes of
29
this Division, to the extent that they are inconsistent with the
30
provisions of APRA rules that do that thing.
31
Part 3 Health benefits funds
Division 7 Ordering the termination of health benefits funds
Section 66
56
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 7--Ordering the termination of health benefits
1
funds
2
66 Applications by external managers to the Federal Court
3
(1) If, under subsection 60(4), APRA directs the external manager to
4
apply under this subsection for the appointment of a terminating
5
manager of the health benefits funds of a private health insurer, the
6
external manager must apply to the Federal Court for an order or
7
orders to give effect to such an appointment.
8
(2) APRA and any other person likely to be affected by the
9
termination of the funds are entitled to be heard on the application.
10
67 Orders made on applications for appointments of terminating
11
managers
12
(1) On an application under subsection 66(1), or under
13
paragraph 60(7)(b), the Federal Court may make an order for the
14
appointment of a terminating manager of the health benefits funds
15
of a private health insurer, and any related orders.
16
(2) However, the Federal Court must not make an order for the
17
appointment of a terminating manager unless it is satisfied that
18
doing so will, in the circumstances, be in the interests of the policy
19
holders of the funds.
20
68 Notice of appointments
21
If the Federal Court orders the appointment of a terminating
22
manager of the health benefits funds of a private health insurer,
23
APRA must give the insurer written notice of the person appointed
24
as the terminating manager.
25
69 Application of other provisions if Federal Court orders
26
appointment of a terminating manager
27
If the Federal Court orders the appointment of a terminating
28
manager of the health benefits funds of a private health insurer,
29
Health benefits funds Part 3
Ordering the termination of health benefits funds Division 7
Section 69
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
57
then, subject to any other orders made by the Court, Subdivisions
1
B, C and D of Division 5 apply as if APRA had approved the
2
termination of the health benefits funds, and as if the notice given
3
under section 68 were a notification under subsection 37(2).
4
Part 3 Health benefits funds
Division 8 External managers and terminating managers
Section 70
58
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 8--External managers and terminating managers
1
Subdivision A--Powers of managers
2
70 Powers of managers
3
(1) While a health benefits fund is under external management or
4
terminating management, the manager has power, in the interests
5
of the policy holders of the fund:
6
(a) to control the business, affairs and property of the fund; and
7
(b) to carry on the business of the fund, and to manage the affairs
8
and property of the fund; and
9
(c) to terminate or dispose of all or any part of the business, and
10
to dispose of all or any part of the property, of the fund; and
11
(d) to execute a document, bring or defend proceedings, or do
12
any other thing, in the name of the
responsible insurer for the
13
fund, for the purposes of the business of the fund; and
14
(e) to appoint a lawyer to assist him or her in his or her duties;
15
and
16
(f) to appoint an agent to do any business that the manager is
17
unable to do, or that it is unreasonable to expect the manager
18
to do, in person; and
19
(g) to perform or exercise any other function or power that the
20
insurer or any of its officers or employees could perform or
21
exercise in relation to the conduct of the fund if the fund
22
were not under external management or terminating
23
management.
24
(2) The rights of the following:
25
(a) the insurer;
26
(b) any of the insurer's officers or employees;
27
(c) an external administrator of any of the assets of the fund;
28
to perform or exercise any of the functions or powers mentioned in
29
subsection (1) in relation to the fund are suspended while the fund
30
is under external management or terminating management.
31
However, such a person may exercise powers or functions with the
32
manager's written approval.
33
Health benefits funds Part 3
External managers and terminating managers Division 8
Section 71
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
59
(3) Nothing in this Division or in section 42 or 53 is taken to imply
1
that an officer or employee of the insurer, or an external
2
administrator, ceases to be an officer or employee, or an external
3
administrator.
4
71 Officers etc. not to perform functions etc. while fund is under
5
management
6
A person commits an offence if:
7
(a) a health benefits fund is under external management or
8
terminating management; and
9
(b) the person is not the manager of the fund; and
10
(c) the person performs or exercises in relation to the fund, or
11
purports to perform or exercise in relation to the fund, a
12
function or power as:
13
(i) an officer of the responsible insurer for the fund; or
14
(ii) an external administrator of any of the assets of the
15
fund; and
16
(d) the person does so without the manager's written approval;
17
and
18
(e) the function or power is one that the manager has power to
19
exercise or perform.
20
Penalty: Imprisonment for 12 months or 60 penalty units, or both.
21
Note:
If a body corporate is convicted of an offence against this section,
22
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
23
fine of up to 5 times the penalty stated above.
24
72 Managers act as agents of private health insurers
25
(1) When exercising a power as manager of a health benefits fund, the
26
manager is taken to be acting as the agent of the responsible insurer
27
for the fund.
28
(2) To avoid doubt, subsection (1) does not confer on the responsible
29
insurer for the fund power to direct the manager in the exercise of
30
his or her powers.
31
Part 3 Health benefits funds
Division 8 External managers and terminating managers
Section 73
60
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Subdivision B--Information concerning, and records and
1
property of, health benefits funds
2
73 Directors etc. to help managers
3
(1) As soon as practicable after the external management or
4
terminating management of a health benefits fund begins, each
5
director of the responsible insurer for the fund must:
6
(a) deliver to the manager all records in the director's possession
7
that relate to the business of the fund; and
8
(b) if the director knows of the locality of other records relating
9
to the business of the fund--tell the manager of that locality.
10
(2) The directors and other officers of the responsible insurer for the
11
fund must give the manager a statement about the business,
12
property, affairs and financial circumstances of the fund. The
13
statement must be given to the manager within 7 days after the
14
external management or terminating management begins, or such
15
longer period as the manager determines in writing.
16
(3) The statement must comply with any requirements of the manager
17
as to its form and contents.
18
(4) A director or other officer of the responsible insurer for the fund
19
must:
20
(a) attend on the manager at such times; and
21
(b) give the manager such information about the business,
22
property, affairs and financial circumstances of the fund;
23
as the manager reasonably requires.
24
(5) A person commits an offence if:
25
(a) the person is required, by or under subsection (1), (2), (3) or
26
(4), to do something; and
27
(b) the person does not comply with the requirement.
28
Penalty: 30 penalty units.
29
Note:
If a body corporate is convicted of an offence against this subsection,
30
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
31
fine of up to 5 times the penalty stated above.
32
Health benefits funds Part 3
External managers and terminating managers Division 8
Section 74
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
61
(6) Subsection (1) does not apply if the person is entitled to retain
1
possession of the records, as against the manager and the
2
responsible insurer for the fund.
3
Note:
A defendant bears an evidential burden in relation to the matter in this
4
subsection (see subsection 13.3(3) of the Criminal Code).
5
74 Managers' rights to certain records
6
(1) A person is not entitled, as against the manager of a health benefits
7
fund:
8
(a) to retain possession of records of the responsible insurer for
9
the fund; or
10
(b) to claim or enforce a lien on such records;
11
but such a lien is not otherwise prejudiced.
12
(2) Paragraph (1)(a) does not apply in relation to records of which a
13
secured creditor of the responsible insurer for the fund is entitled to
14
possession otherwise than because of a lien. However, the manager
15
is entitled to inspect, and make copies of, such records at any
16
reasonable time.
17
(3) The manager of a health benefits fund may, by written notice to a
18
person, require the person to deliver to the manager, as specified in
19
the notice, records so specified that are in the person's possession.
20
(4) A notice under subsection (3) must specify a period of at least 3
21
days as the period within which the notice must be complied with.
22
(5) A person commits an offence if:
23
(a) the person is given a notice under subsection (3); and
24
(b) the person fails to comply with the notice.
25
Penalty: 30 penalty units.
26
Note:
If a body corporate is convicted of an offence against this subsection,
27
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
28
fine of up to 5 times the penalty stated above.
29
(6) Subsection (5) does not apply if the person is entitled to retain
30
possession of the records, as against the manager and the
31
responsible insurer for the fund.
32
Part 3 Health benefits funds
Division 8 External managers and terminating managers
Section 75
62
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Note:
A defendant bears an evidential burden in relation to the matter in this
1
subsection (see subsection 13.3(3) of the Criminal Code).
2
75 Only manager can deal with property of fund under management
3
(1) A transaction or dealing affecting the property of a health benefits
4
fund that is entered into, while the fund is under external
5
management or terminating management, by the responsible
6
insurer for the fund (or by a person purportedly on behalf of the
7
fund or the responsible insurer), is void unless:
8
(a) the transaction or dealing has been entered into by the
9
manager of the fund; or
10
(b) the manager consented to the transaction or dealing before it
11
was entered into; or
12
(c) the transaction or dealing was entered into by order of the
13
Federal Court or of the Supreme Court of a State or Territory.
14
(2) Subsection (1) does not apply to a payment that an ADI makes, out
15
of an account kept with the ADI by the responsible insurer for the
16
fund, that is made:
17
(a) in good faith and in the ordinary course of the ADI's banking
18
business; and
19
(b) after the external management or terminating management
20
began but on or before the day on which:
21
(i) the manager gives to the ADI written notice of the
22
appointment that began the external management or
23
terminating management; or
24
(ii) the manager notifies the appointment in a national
25
newspaper, or in a newspaper circulating in each
26
jurisdiction where the responsible insurer has its
27
registered office or carries on business;
28
whichever happens first.
29
(3) Subsection (1) has effect subject to any order that the Federal
30
Court makes after the purported transaction or dealing.
31
(4) A person commits an offence if:
32
(a) the person is:
33
Health benefits funds Part 3
External managers and terminating managers Division 8
Section 76
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
63
(i) an officer of the responsible insurer for a health benefits
1
fund under external management or terminating
2
management; or
3
(ii) an external administrator of any of the assets of the
4
fund; and
5
(b) the person:
6
(i) purported to enter into a transaction or dealing on behalf
7
of the responsible insurer; or
8
(ii) was in any way, by act or omission, directly or
9
indirectly concerned in, or party to, a transaction or
10
dealing; and
11
(c) the transaction or dealing is, because of the operation of
12
subsection (1), void, or would be void apart from
13
subsection (3).
14
Penalty: Imprisonment for 12 months or 60 penalty units, or both.
15
Note:
If a body corporate is convicted of an offence against this subsection,
16
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
17
fine of up to 5 times the penalty stated above.
18
76 Order for compensation where officer involved in void
19
transaction
20
(1) If:
21
(a) a court finds a person guilty of an offence against
22
subsection 75(4); and
23
(b) the court is satisfied that the health benefits fund under
24
external management or terminating management to which
25
the offence relates has suffered loss or damage because of the
26
act or omission constituting the offence;
27
the court may (whether or not it imposes a penalty) order the
28
person to pay compensation of such amount as the order specifies
29
to the responsible insurer for the fund.
30
(2) An order under subsection (1) may be enforced as if it were a
31
judgment of the court.
32
Note:
For relief from liability, see section 166.
33
Part 3 Health benefits funds
Division 8 External managers and terminating managers
Section 77
64
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Subdivision C--Provisions incidental to appointment of
1
managers
2
77 Remuneration and allowances of managers
3
Remuneration and allowances of terminating managers appointed
4
under Division 7
5
(1) APRA may, in writing, determine the remuneration and allowances
6
that a terminating manager appointed under Division 7 is to
7
receive. However, APRA cannot make such a determination if an
8
order of the Federal Court under section 67 determines the
9
manager's remuneration and allowances.
10
Source of funds for payment of remuneration and allowances of
11
external managers and terminating managers
12
(2) Subject to any order made by the Federal Court under section 67,
13
and to any determination made by APRA under subsection (3) of
14
this section, the remuneration and allowances of an external
15
manager or terminating manager are to be paid out of the assets of
16
the health benefits fund under external management or terminating
17
management.
18
(3) APRA may, in writing, determine that a particular person is to pay
19
the remuneration and allowances of an external manager or
20
terminating manager. However APRA cannot make such a
21
determination for a terminating manager appointed under
22
Division 7 if an order of the Federal Court under section 67
23
determines who is to pay the remuneration and allowances.
24
78 Directions to managers
25
Directions to managers (other than terminating managers
26
appointed under Division 7)
27
(1) APRA may, by written notice to a manager (other than a
28
terminating manager appointed under Division 7) give the manager
29
directions concerning:
30
(a) the exercise of the powers that are vested in the manager; or
31
Health benefits funds Part 3
External managers and terminating managers Division 8
Section 79
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
65
(b) the provision to APRA, from time to time, of interim reports
1
relating to the business of the health benefits fund under
2
external management or terminating management.
3
(2) Directions under subsection (1) will ordinarily be of a general
4
nature but may, where appropriate, take into account specific
5
circumstances relevant to the particular health benefits fund under
6
external management or terminating management.
7
Directions to terminating managers appointed under Division 7
8
(3) The Federal Court may, by order, give to a terminating manager
9
appointed under Division 7 directions concerning:
10
(a) the exercise of the powers that are vested in the manager; or
11
(b) the provision to APRA, from time to time, of interim reports
12
relating to the business of the health benefits fund under
13
external management or terminating management.
14
(4) Orders under subsection (3) may be made on application by:
15
(a) APRA; or
16
(b) a terminating manager appointed under Division 7.
17
Obligation to comply with directions
18
(5) A manager must comply with any directions given to him or her
19
under subsection (1) or (3).
20
79 Termination of appointments of managers
21
(1) APRA may, at any time, by written notice given to a manager,
22
terminate the appointment of the manager with effect from the day
23
specified in the notice. When the termination takes effect:
24
(a) the manager is divested of the functions and powers referred
25
to in subsection 70(1); and
26
(b) all of the other functions and powers of the manager in
27
relation to the fund cease.
28
(2) If APRA terminates the appointment of an external manager, it
29
may, in writing, appoint another external manager to carry on the
30
external management.
31
Part 3 Health benefits funds
Division 8 External managers and terminating managers
Section 80
66
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(3) If APRA terminates the appointment of a terminating manager, it
1
must, in writing, appoint another terminating manager to carry on
2
the terminating management, unless:
3
(a) the Federal Court has ordered under section 43 an end to the
4
termination of the health benefits funds in question; or
5
(b) the termination of those funds has been completed, and the
6
terminating manager has reported to APRA in accordance
7
with paragraph 47(1)(a).
8
(4) If APRA terminates the appointment of a manager of a health
9
benefits fund but does not appoint another manager as mentioned
10
in subsection (2) or (3), then:
11
(a) subsection 70(2) ceases to have effect; and
12
(b) officers, employees and external administrators may resume
13
performing or exercising powers and functions in relation to
14
the fund, subject to any directions made by the Federal Court
15
under subsection 43(4).
16
Note:
In the case of terminating the appointment of a terminating manager,
17
this subsection is not intended to imply that APRA has a discretion not
18
to appoint another terminating manager, if subsection (3) requires
19
another terminating manager to be appointed.
20
80 Acts of managers valid etc.
21
(1) The acts of the manager of a health benefits fund are valid despite
22
any defects that may afterwards be discovered in his or her
23
appointment.
24
(2) Despite any defect or irregularity affecting the validity of the
25
appointment of the manager of a health benefits fund:
26
(a) a conveyance, assignment, transfer, mortgage or charge of
27
assets of the fund; or
28
(b) a payment of money of the fund; or
29
(c) any other disposition of assets of the fund;
30
is valid in favour of any person taking such assets in good faith and
31
for value and without actual knowledge of the defect or
32
irregularity.
33
Health benefits funds Part 3
External managers and terminating managers Division 8
Section 81
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
67
(3) Despite any defect or irregularity affecting the validity of the
1
appointment of the manager of a health benefits fund, a person
2
making or permitting:
3
(a) a payment of money of the fund; or
4
(b) any other disposition of assets of the fund;
5
is to be protected and indemnified in so doing if the person does
6
not have actual knowledge of the defect or irregularity.
7
81 Indemnity
8
The manager of a health benefits fund is not subject to any action,
9
claim or demand by, or liable to, any person in respect of anything
10
done or omitted to be done in good faith in, or in connection with,
11
the exercise of the powers conferred on the manager by this Act.
12
82 Qualified privilege
13
The manager of a health benefits fund has qualified privilege in
14
respect of a statement that he or she makes, whether orally or in
15
writing, in the course of his or her duties as manager.
16
Subdivision D--Miscellaneous
17
83 Time for doing act does not run while act prevented by this
18
Division or other provisions
19
If:
20
(a) for any purpose (for example, the purposes of a law,
21
agreement or instrument) an act must or may be done within
22
a particular period or before a particular time; and
23
(b) this Division, or Division 5 or 6, prevents the act from being
24
done within that period or before that time;
25
the period is extended, or the time is deferred, because of this
26
section, according to how long this Division, or Division 5 or 6,
27
prevented the act from being done.
28
Part 3 Health benefits funds
Division 8 External managers and terminating managers
Section 84
68
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
84 Continued application of other provisions of Act
1
(1) The appointment of a person as the external manager of a health
2
benefits fund does not affect the continued operation of provisions
3
of this Act (other than Division 6), or of the Private Health
4
Insurance Act 2007:
5
(a) in relation to the fund; or
6
(b) in relation to the rights and obligations of persons in relation
7
to the responsible insurer for the fund.
8
(2) The appointment of a person as the terminating manager of a
9
health benefits fund does not affect the continued operation of
10
provisions of this Act (other than Division 5 or 7), or of the Private
11
Health Insurance Act 2007:
12
(a) in relation to the fund; or
13
(b) in relation to the rights and obligations of persons in relation
14
to the responsible insurer for the fund.
15
85 Modifications of this Act in relation to health benefits funds
16
under management
17
(1) APRA rules may set out modifications of this Act, or the Private
18
Health Insurance Act 2007, relating to how Chapter 3 of the
19
Private Health Insurance Act 2007 applies in relation to health
20
benefits funds for which:
21
(a) external managers have been appointed under Division 6 of
22
this Part; or
23
(b) terminating managers have been appointed under Division 5
24
or 7 of this Part.
25
(2) APRA rules may provide for different such modifications
26
according to the nature of the health benefits funds concerned.
27
(3) The modifications cannot:
28
(a) modify a provision of this Act that creates an offence; or
29
(b) include new provisions that create offences.
30
(4) Before making APRA rules for the purposes of this section, APRA
31
must consult the Health Secretary. However, a failure to consult
32
the Health Secretary does not affect the validity of such rules.
33
Health benefits funds Part 3
External managers and terminating managers Division 8
Section 86
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
69
Note:
This consultation requirement also applies to any repeal or amendment
1
of such rules (see subsection 33(3) of the Acts Interpretation Act
2
1901).
3
(5) This Act and the Private Health Insurance Act 2007 have effect
4
subject to the modifications.
5
86 Order of Federal Court to be binding on all persons
6
An order of the Federal Court made under this Division, or
7
Division 5, 6 or 7, relating to any matter, is binding on all persons
8
and has effect despite anything in the constitution or rules of a
9
private health insurer to which the order may relate.
10
87 APRA rules dealing with various matters
11
APRA rules may:
12
(a) make provision for, or in relation to, any of the following
13
matters in relation to meetings required or permitted to be
14
held by Division 6, or by provisions of APRA rules:
15
(i) the convening, conduct of, and procedure at, a meeting;
16
(ii) voting at a meeting (including proxy voting);
17
(iii) the number of persons that constitutes a quorum at a
18
meeting;
19
(iv) the sending of notices to persons entitled to attend a
20
meeting;
21
(v) the lodging of copies of notices of, or resolutions passed
22
at, a meeting; and
23
(b) make provision relating to the form and contents of any
24
document or instrument required or permitted to be given to
25
APRA, or to an external manager or terminating manager of
26
a health benefits fund, by a provision of Division 5 or 6.
27
Part 3 Health benefits funds
Division 9 Duties and liabilities of directors etc.
Section 88
70
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 9--Duties and liabilities of directors etc.
1
88 Notices to remedy contraventions
2
(1) If a private health insurer has contravened this Part, APRA may, by
3
written notice to the insurer, require the insurer, within a specified
4
period, to take such action as is specified in the notice to remedy
5
the contravention.
6
(2) The period specified in the notice must end at least one month after
7
the giving of the notice. APRA may extend the period by written
8
notice to the insurer.
9
(3) The action to be specified in the notice is such action as APRA
10
considers appropriate and reasonable to overcome the effects of the
11
contravention.
12
89 Liability of directors in relation to non-compliance with notices
13
(1) If:
14
(a) APRA has given a notice to a private health insurer under
15
section 88 in respect of a contravention of this Part; and
16
(b) the contravention has resulted in a loss to a health benefits
17
fund; and
18
(c) the insurer has failed to comply with the notice within the
19
period specified in it, or within that period as extended under
20
subsection 88(2);
21
the persons who were the directors of the insurer when the
22
contravention occurred are jointly and severally liable to pay the
23
insurer an amount equal to the amount of the loss.
24
(2) A person is not liable under subsection (1) if the person proves that
25
he or she used due diligence to ensure that the insurer complied
26
with the notice.
27
(3) An action to recover an amount for which a person is liable under
28
subsection (1) may be brought:
29
(a) by the insurer; or
30
Health benefits funds Part 3
Duties and liabilities of directors etc. Division 9
Section 90
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
71
(b) with the written approval of APRA, by a policy holder of the
1
health benefits fund involved.
2
Note:
For relief from liability, see section 166.
3
(4) An approval under subsection (3) may be given subject to
4
conditions relating to the persons, or the number of persons, who
5
may join in the action as plaintiffs.
6
(5) An approval under subsection (3) is not a legislative instrument.
7
90 APRA may sue in the name of private health insurers
8
If APRA considers that it is in the interests of the policy holders of
9
a health benefits fund to do so, APRA may bring an action against
10
a person in the name, and for the benefit, of a private health insurer
11
for the recovery of an amount that the insurer is entitled to recover
12
under this Division.
13
Part 4 Prudential standards and directions
Division 1 Introduction
Section 91
72
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Part 4--Prudential standards and directions
1
Division 1--Introduction
2
91 Simplified outline of this Part
3
Private health insurers must comply with prudential standards
4
made by APRA.
5
A private health insurer must notify APRA if it becomes aware of a
6
contravention by it of a prudential standard (other than a
7
contravention that is merely of a minor or technical nature) or any
8
other matter or occurrence that materially affects its financial
9
position.
10
APRA may, on certain grounds, give a private health insurer a
11
direction that the insurer must comply with.
12
Prudential standards and directions Part 4
Prudential standards Division 2
Section 92
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
73
Division 2--Prudential standards
1
92 Prudential standards
2
APRA may make prudential standards
3
(1) Subject to subsection (8), APRA may, in writing, make standards
4
(prudential standards), relating to prudential matters, that must be
5
complied with by, or in relation to, private health insurers.
6
(2) Prudential matters, in relation to a private health insurer, are
7
matters relating to:
8
(a) the conduct of the affairs of the insurer in such a way as:
9
(i) to keep the insurer in a sound financial position; or
10
(ii) not to cause or promote instability in the Australian
11
private health insurance system; or
12
(b) the conduct of the affairs of the insurer with integrity,
13
prudence and professional skill.
14
The private health insurers to which a prudential standard applies
15
(3) A prudential standard may be expressed to apply in relation to:
16
(a) all private health insurers; or
17
(b) a specified class of private health insurers only; or
18
(c) one or more specified private health insurers only.
19
Prudential standards may provide for APRA to exercise powers
20
and discretions
21
(4) A prudential standard may provide for APRA to exercise powers
22
and discretions under the standard, including but not limited to
23
discretions to approve, impose, adjust or exclude specific
24
prudential requirements in relation to a particular private health
25
insurer.
26
Variation and revocation of prudential standards
27
(5) APRA may, in writing, vary or revoke a prudential standard.
28
Part 4 Prudential standards and directions
Division 2 Prudential standards
Section 92
74
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Prudential standards are legislative instruments (other than
1
standards that apply to one or more specified insurers)
2
(6) A prudential standard referred to in paragraph (3)(a) or (b), or an
3
instrument varying or revoking such a prudential standard, is a
4
legislative instrument. However, a prudential standard referred to
5
in paragraph (3)(c), or an instrument varying or revoking such a
6
prudential standard, is not a legislative instrument.
7
Note 1:
Paragraph (3)(c) covers prudential standards that are expressed to
8
apply in relation to one or more specified private health insurers only.
9
Section 93 applies to these prudential standards.
10
Note 2:
A decision to make, vary or revoke a prudential standard referred to in
11
paragraph (3)(c) is reviewable under section 168.
12
Prudential standards may provide for a matter by adopting etc.
13
material from another instrument
14
(7) A prudential standard may provide for a matter by applying,
15
adopting or incorporating, with or without modification, any matter
16
contained in an instrument or other writing as in force or existing
17
from time to time, despite:
18
(a) section 46AA of the Acts Interpretation Act 1901; and
19
(b) section 14 of the Legislative Instruments Act 2003.
20
Prudential standards may not do certain things
21
(8) To avoid doubt, prudential standards may not do the following:
22
(a) create an offence or civil penalty;
23
(b) provide powers of:
24
(i) arrest or detention; or
25
(ii) entry, search or seizure;
26
(c) impose a tax;
27
(d) set an amount to be appropriated from the Consolidated
28
Revenue Fund under an appropriation in this Act;
29
(e) directly amend the text of this Act.
30
Prudential standards and directions Part 4
Prudential standards Division 2
Section 93
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
75
Delegation of power to make etc. prudential standards
1
(9) APRA may, under section 15 of the Australian Prudential
2
Regulation Authority Act 1998, delegate the power to make, vary
3
or revoke prudential standards, but only if the delegation is to:
4
(a) an APRA member (within the meaning of that Act); or
5
(b) an APRA staff member who is an executive general manager
6
or equivalent.
7
93 Additional matters in relation to standards that are not legislative
8
instruments
9
(1) A prudential standard referred to in paragraph 92(3)(c), or an
10
instrument varying or revoking such a standard, has effect:
11
(a) from the day on which the standard or instrument is made; or
12
(b) if the standard or instrument specifies a later day--from that
13
later day.
14
(2) If APRA makes, varies or revokes a prudential standard referred to
15
in paragraph 92(3)(c), it must, as soon as practicable:
16
(a) in the case of making a standard--give a copy of the standard
17
to each private health insurer to which the standard applies;
18
or
19
(b) in the case of varying a standard--give a copy of the
20
variation to:
21
(i) each private health insurer to which the standard (as in
22
force before the variation) applied; and
23
(ii) any other private health insurer to which the standard
24
will (because of the variation) apply; or
25
(c) in the case of revoking a standard--give notice of the
26
revocation to each private health insurer to which the
27
standard (as in force before the revocation) applied.
28
94 Compliance with prudential standards
29
A private health insurer must comply with prudential standards that
30
apply in relation to the insurer.
31
Part 4 Prudential standards and directions
Division 2 Prudential standards
Section 95
76
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
95 Notice of contravention of prudential standards or of other
1
matters that materially affect financial position
2
(1) A private health insurer commits an offence if:
3
(a) the insurer becomes aware of:
4
(i) a contravention by it of a prudential standard, other than
5
a contravention that is merely of a minor or technical
6
nature; or
7
(ii) any other matter or occurrence that materially affects its
8
financial position; and
9
(b) the insurer fails to notify APRA, as soon as practicable, in
10
writing of the contravention or of the other matter or
11
occurrence.
12
Penalty: 30 penalty units.
13
Note:
If a body corporate is convicted of an offence against this subsection,
14
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
15
fine of up to 5 times the penalty stated above.
16
(2) A notification given to APRA of a matter referred to in
17
paragraph (1)(a) must not include personal information relating to
18
a person insured under a complying health insurance product that is
19
referable to a health benefits fund conducted by the insurer, unless
20
the information relates to prudential matters relating to the insurer.
21
Prudential standards and directions Part 4
Directions Division 3
Section 96
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
77
Division 3--Directions
1
96 APRA's power to give directions
2
(1) APRA may give a private health insurer a direction of a kind
3
specified in section 97 if APRA reasonably believes that:
4
(a) the insurer has contravened:
5
(i) an enforceable obligation; or
6
(ii) a provision of the Financial Sector (Collection of Data)
7
Act 2001; or
8
(b) the insurer:
9
(i) is likely to contravene an enforceable obligation, or a
10
provision referred to in subparagraph (a)(ii); and
11
(ii) the contravention is likely to give rise to a prudential
12
risk; or
13
(c) the direction is necessary in the interests of policy holders, or
14
prospective policy holders, of the insurer; or
15
(d) the insurer is, or is about to become, unable to meet its
16
liabilities; or
17
(e) there is, or there might be, a material risk to the security of
18
the insurer's assets; or
19
(f) there has been, or there might be, a material deterioration in
20
the insurer's financial condition; or
21
(g) the insurer is conducting its affairs in an improper or
22
financially unsound way; or
23
(h) the failure to issue a direction would materially prejudice the
24
interests of policy holders or prospective policy holders of
25
the insurer; or
26
(i) the insurer is conducting its affairs in a way that may cause
27
or promote instability in the Australian private health
28
insurance system.
29
Note:
A decision to give a direction on a ground specified in
30
paragraph (1)(a), (b) or (c) is reviewable under section 168.
31
(2) A direction must:
32
(a) be given by written notice to the private health insurer; and
33
Part 4 Prudential standards and directions
Division 3 Directions
Section 97
78
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(b) specify the ground referred to in subsection (1) because of
1
which the direction is given.
2
Note:
Two or more directions may be given in the same notice.
3
(3) A direction under subsection (1) may deal with the time by which,
4
or period during which, it is to be complied with.
5
97 The kinds of direction that may be given
6
(1) The kinds of direction that a private health insurer may be given
7
under section 96 are directions to do any one or more of the
8
following:
9
(a) to comply with all, or specified:
10
(i) enforceable obligations; or
11
(ii) provisions of the Financial Sector (Collection of Data)
12
Act 2001; or
13
(b) to remove an officer of the insurer from office;
14
(c) to ensure an officer of the insurer does not take part in the
15
management or conduct of the business of the insurer except
16
as permitted by APRA;
17
(d) to appoint a person as an officer of the insurer for such term
18
as APRA directs;
19
(e) to terminate the appointment of the appointed actuary of the
20
insurer and to appoint another actuary to hold office for such
21
term as APRA directs;
22
(f) not to give financial accommodation to any person;
23
(g) not to issue or renew any policy, undertake any liability
24
under any policy or collect any premium;
25
(h) not to borrow any amount;
26
(i) not to accept any payment on account of share capital, except
27
payments in respect of calls that fell due before the direction
28
was given;
29
(j) not to repay any amount paid on shares;
30
(k) not to pay a dividend on any shares;
31
(l) not to discharge any policy or other liability;
32
(m) not to transfer any asset;
33
Prudential standards and directions Part 4
Directions Division 3
Section 97
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
79
(n) not to pay or transfer any amount to any person, or create an
1
obligation (contingent or otherwise) to do so;
2
(o) not to undertake any financial obligation (contingent or
3
otherwise) on behalf of any other person;
4
(p) to hold, or otherwise deal in a specified way, with a specified
5
amount of capital;
6
(q) to provide, or further provide, in its accounts for the purposes
7
of this Act, a specified amount or an amount determined in a
8
specified way in respect of its liabilities or the value of a
9
specified asset of the insurer;
10
(r) to order an actuarial investigation of the affairs of the insurer,
11
at the expense of the insurer, by an actuary chosen by APRA;
12
(s) to do, or to refrain from doing, an act that relates to the way
13
in which the affairs of the insurer are to be conducted or not
14
conducted;
15
(t) to modify the rules of the insurer;
16
(u) to take specified action to ensure, as far as practicable, that
17
the insurer will be able to meet the liabilities of a health
18
benefits fund conducted by the insurer out of the assets of the
19
fund as they become due;
20
(v) to take specified action to ensure, as far as practicable, that
21
assets of a health benefits fund conducted by the insurer will
22
provide adequate capital for the conduct of the business of
23
the fund in accordance with this Act and in the interests of
24
the policy holders of the fund.
25
(2) A direction referred to in paragraph (1)(m) or (n) does not apply to
26
the payment or transfer of money pursuant to an order of a court or
27
a process of execution.
28
(3) Without limiting subsection (1), a direction referred to in a
29
paragraph of that subsection may:
30
(a) deal with some only of the matters referred to in the
31
paragraph; or
32
(b) deal with a particular class or particular classes of those
33
matters; or
34
(c) make different provision with respect to different matters or
35
different classes of matters.
36
Part 4 Prudential standards and directions
Division 3 Directions
Section 98
80
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
98 Power to comply with a direction
1
A private health insurer has power to comply with a direction
2
under section 96 despite anything in its constitution or rules or any
3
contract or arrangement to which it is a party.
4
99 Varying or revoking a direction
5
(1) APRA may, by written notice to a private health insurer, vary a
6
direction given to the insurer under section 96 if, at the time of the
7
variation, APRA considers that the variation is necessary or
8
appropriate.
9
Note:
A decision to vary, or to refuse to vary, a direction that was given on a
10
ground specified in paragraph 96(1)(a), (b) or (c) is reviewable under
11
section 168.
12
(2) APRA may, by written notice to a private health insurer, revoke a
13
direction given to the insurer under section 96 if, at the time of the
14
revocation, APRA considers that the direction is no longer
15
necessary or appropriate.
16
Note:
A decision to refuse to revoke a direction that was given on a ground
17
specified in paragraph 96(1)(a), (b) or (c) is reviewable under
18
section 168.
19
100 When a direction ceases to have effect
20
A direction under section 96 ceases to have effect if APRA revokes
21
the direction under section 99.
22
101 Direction not grounds for denial of obligations
23
(1) This section applies if a private health insurer is party to a contract,
24
whether the proper law of the contract is Australian law (including
25
the law of a State or Territory) or law of a foreign country
26
(including the law of part of a foreign country).
27
(2) The fact that the private health insurer is subject to a direction by
28
APRA under section 96 does not allow the contract, or a party to
29
the contract, other than the insurer, to do any of the following:
30
(a) deny any obligations under that contract;
31
Prudential standards and directions Part 4
Directions Division 3
Section 102
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
81
(b) accelerate any debt under that contract;
1
(c) close out any transaction relating to that contract.
2
This subsection has effect subject to subsections (3) and (4).
3
(3) If the private health insurer is prevented from fulfilling its
4
obligations under the contract because of a direction under
5
section 96, other than a direction of a kind referred to in
6
paragraph 97(1)(l), the other party or parties to the contract are,
7
subject to any orders made under subsection (4) of this section,
8
relieved from obligations owed to the insurer under the contract.
9
(4) A party to a contract to which subsection (3) applies may apply to
10
the Federal Court for an order relating to the effect on the contract
11
of a direction under section 96. The order may deal with matters
12
including (but not limited to) the following:
13
(a) requiring a party to the contract to fulfil an obligation under
14
the contract despite subsection (3);
15
(b) obliging a party to the contract to take some other action (for
16
example, paying money or transferring property) in view of
17
obligations that were fulfilled under the contract before the
18
direction was made.
19
The order must not require a person to take action that would
20
contravene the direction, or any other direction under section 96.
21
102 Supply of information about directions
22
Power to publish notice of directions in Gazette
23
(1) APRA may publish in the Gazette notice of any direction given
24
under section 96. The notice must include the name of the private
25
health insurer given the direction and a summary of the direction.
26
Requirement to publish notice of variation or revocation of certain
27
directions in Gazette
28
(2) If APRA publishes notice of a direction given under section 96 and
29
then later varies or revokes the direction, APRA must publish in
30
the Gazette notice of that variation or revocation as soon as
31
practicable after the revocation.
32
Part 4 Prudential standards and directions
Division 3 Directions
Section 103
82
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Requirement to provide information about directions to Minister
1
(3) If the Minister, in writing, requests APRA to provide information
2
about:
3
(a) any directions under section 96 in respect of a particular
4
private health insurer; or
5
(b) any directions made during a specified period under
6
section 96 in respect of any private health insurer;
7
APRA must comply with the request.
8
Power to inform Minister of directions
9
(4) APRA may provide any information that it considers appropriate to
10
the Minister about any directions under section 96, or variations or
11
revocations of such directions, in respect of any private health
12
insurer, at any time.
13
Requirement to inform Minister of variation or revocation of
14
direction if informed of making of direction
15
(5) If APRA provides the Minister with information about a direction
16
and then later varies or revokes the direction, APRA must notify
17
the Minister of the variation or revocation of the direction as soon
18
as practicable after the revocation.
19
Failure to comply with this section does not affect validity of
20
direction etc.
21
(6) A failure to comply with a requirement of this section in relation to
22
a direction, or the variation or revocation of a direction, does not
23
affect the validity of the direction, or the variation or revocation.
24
103 Secrecy requirements
25
Information relating to directions under section 96, and revocations
26
of such directions, is subject to the secrecy requirements in Part 6
27
of the Australian Prudential Regulation Authority Act 1998, unless
28
the information has been published in the Gazette under
29
section 102 of this Act.
30
Prudential standards and directions Part 4
Directions Division 3
Section 104
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
83
104 Non-compliance with a direction
1
(1) A private health insurer commits an offence if:
2
(a) the insurer is given a direction under section 96; and
3
(b) the insurer fails to comply with the direction.
4
Penalty: 30 penalty units.
5
Note:
If a body corporate is convicted of an offence against this subsection,
6
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
7
fine of up to 5 times the penalty stated above.
8
(2) If a private health insurer commits an offence against
9
subsection (1), the insurer commits an offence against that
10
subsection in respect of:
11
(a) the first day on which the offence is committed; and
12
(b) each subsequent day (if any) on which the circumstances that
13
gave rise to the insurer committing the offence continue
14
(including the day of conviction for any such offence or any
15
later day).
16
Note:
This subsection is not intended to imply that section 4K of the Crimes
17
Act 1914 does not apply to offences against this Act.
18
(3) An officer of a private health insurer commits an offence if:
19
(a) the insurer is given a direction under section 96; and
20
(b) the officer's duties include ensuring that the insurer complies
21
with the direction, or with a class of directions that includes
22
the direction; and
23
(c) the officer fails to take reasonable steps to ensure that the
24
insurer complies with the direction.
25
Penalty: 30 penalty units.
26
Note:
If a body corporate is convicted of an offence against this subsection,
27
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
28
fine of up to 5 times the penalty stated above.
29
(4) If an officer of a private health insurer fails to take reasonable steps
30
to ensure that the insurer complies with a direction given to it
31
under section 96 in circumstances that give rise to the officer
32
committing an offence against subsection (3), the officer commits
33
an offence against that subsection in respect of:
34
Part 4 Prudential standards and directions
Division 3 Directions
Section 104
84
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(a) the first day on which the offence is committed; and
1
(b) each subsequent day (if any) on which the circumstances that
2
gave rise to the officer committing the offence continue
3
(including the day of conviction for any such offence or any
4
later day).
5
Note:
This subsection is not intended to imply that section 4K of the Crimes
6
Act 1914 does not apply to offences against this Act.
7
Other obligations of private health insurers Part 5
Introduction Division 1
Section 105
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
85
Part 5--Other obligations of private health insurers
1
Division 1--Introduction
2
105 Simplified outline of this Part
3
The obligations of a private health insurer include obligations to
4
have an appointed actuary, to not allow disqualified persons to act
5
as officers or actuaries, and to not use the insurer's money to meet
6
certain liabilities of officers.
7
The appointed actuary of a private health insurer also has
8
obligations, including obligations to draw certain matters to the
9
attention of the insurer's directors, and to provide information to
10
APRA.
11
Part 5 Other obligations of private health insurers
Division 2 Appointed actuaries
Section 106
86
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 2--Appointed actuaries
1
106 Appointment
2
(1) Subject to subsection (2), a private health insurer must have an
3
actuary appointed by the insurer.
4
(2) Within 6 weeks after a person ceases to be the appointed actuary of
5
a private health insurer, the insurer must appoint another person to
6
be the actuary of the insurer.
7
(3) A private health insurer must not appoint a person as the actuary of
8
the insurer unless the insurer is satisfied that the person meets the
9
eligibility criteria set out in prudential standards for appointment as
10
the actuary of a private health insurer.
11
(4) A private health insurer must not appoint a person as the actuary of
12
the insurer if:
13
(a) the person is disqualified from being or acting as an actuary
14
of the private health insurer because of an order under
15
section 120; or
16
(b) the person is a disqualified person (other than only because
17
of an order under section 120).
18
(5) An appointment of a person as actuary of a private health insurer
19
cannot take effect while there is in force an appointment of another
20
person as the actuary of the insurer.
21
107 Terminating an appointment as actuary
22
(1) A private health insurer must terminate the appointment of a
23
person as actuary of the insurer if:
24
(a) the person does not meet the eligibility criteria set out in
25
prudential standards for appointment as the actuary of a
26
private health insurer; or
27
(b) the insurer reasonably believes that the person has failed to
28
perform adequately and properly the person's statutory
29
functions and duties as actuary of the private health insurer;
30
or
31
Other obligations of private health insurers Part 5
Appointed actuaries Division 2
Section 108
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
87
(c) the person is disqualified from being or acting as an actuary
1
of the private health insurer because of an order under
2
section 120; or
3
(d) the person is a disqualified person (other than only because
4
of an order under section 120).
5
(2) The statutory functions and duties of an actuary of a private health
6
insurer are the functions and duties that an actuary has under:
7
(a) this Act; and
8
(b) the Private Health Insurance Act 2007; and
9
(c) the Financial Sector (Collection of Data) Act 2001.
10
Note 1:
The reference in paragraph (a) to this Act includes prudential
11
standards and APRA rules (see the definition of this Act in
12
subsection 4(1)).
13
Note 2:
The references in paragraphs (b) and (c) to Acts include regulations,
14
rules, standards etc. made under those Acts (see subsection 4(2)).
15
(3) If:
16
(a) a private health insurer is required under subsection (1) to
17
terminate the appointment of a person as actuary of the
18
insurer; and
19
(b) the power to appoint the actuary of the insurer is not vested
20
in the directors of the insurer or is not vested in the directors
21
of the insurer alone;
22
the directors may appoint a person who satisfies the requirements
23
of subsection 106(3) to be the actuary of the insurer until an
24
appointment is made in accordance with the constitution or rules of
25
the private health insurer.
26
108 Notification of appointment etc.
27
(1) A private health insurer that appoints a person under this Division
28
must give APRA written notice of:
29
(a) the name of the person; and
30
(b) details of the actuarial qualifications and experience of the
31
person; and
32
(c) the date of the appointment; and
33
(d) any other matter specified in prudential standards.
34
Part 5 Other obligations of private health insurers
Division 2 Appointed actuaries
Section 109
88
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(2) Notice under subsection (1) must be given within 14 days after the
1
day of the appointment.
2
(3) If a person ceases to be the appointed actuary of a private health
3
insurer, the insurer must give APRA written notice that the person
4
has so ceased and of the day on which he or she so ceased.
5
(4) Notice under subsection (3) must be given within 14 days after the
6
day on which the person ceased to be the appointed actuary.
7
109 Role of appointed actuary
8
(1) The appointed actuary of a private health insurer must perform the
9
actuary's statutory functions and duties.
10
(2) The private health insurer must make any arrangements necessary
11
to enable the appointed actuary to perform those functions and
12
duties. These arrangements may include (without limitation) the
13
following:
14
(a) providing access to documents and information in the
15
insurer's control;
16
(b) requiring officers or employees of the insurer to answer
17
questions;
18
(c) allowing the actuary to attend meetings of directors of the
19
insurer, annual general meetings or any other meetings of
20
members of the insurer;
21
(d) allowing the actuary to speak at meetings of directors of the
22
insurer on matters under consideration that relate to the
23
actuary's statutory functions and duties.
24
110 Actuary's obligations to inform of matters etc.
25
Obligation to draw matters to attention of private health insurer or
26
its directors
27
(1) The appointed actuary of a private health insurer must draw to the
28
attention of the insurer, or the directors of the insurer, any matter
29
that comes to the attention of the actuary and that the actuary
30
considers requires action to be taken by the insurer or its directors:
31
Other obligations of private health insurers Part 5
Appointed actuaries Division 2
Section 110
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
89
(a) to avoid a contravention of this Act, the Private Health
1
Insurance Act 2007 or the Financial Sector (Collection of
2
Data) Act 2001; or
3
(b) to avoid prejudice to the interests of policy holders of a
4
health benefits fund conducted by the insurer.
5
Obligation to inform APRA of matters
6
(2) If the appointed actuary of a private health insurer considers:
7
(a) that the insurer, or an officer of the insurer, may have
8
contravened this Act or any other law; and
9
(b) that the contravention is of such a nature that it may affect
10
significantly the interests of policy holders of a health
11
benefits fund conducted by the insurer;
12
the appointed actuary must immediately inform APRA in writing
13
of:
14
(c) his or her opinion; and
15
(d) the information on which it is based.
16
(3) Subsection (2) does not apply to the appointed actuary of a private
17
health insurer in relation to a contravention if:
18
(a) an officer of the private health insurer informs the actuary
19
that the private health insurer has informed APRA in writing
20
of the contravention; and
21
(b) the actuary has no reason to disbelieve the officer.
22
(4) A person commits an offence if:
23
(a) the person is an officer of a private health insurer; and
24
(b) the person knows that:
25
(i) there are reasonable grounds for believing that the
26
insurer, or an officer of the insurer, may have
27
contravened this Act or any other law; and
28
(ii) the contravention is of such a nature that it may affect
29
significantly the interests of policy holders of a health
30
benefits fund conducted by the insurer; and
31
(c) the person informs the appointed actuary of the private health
32
insurer that the private health insurer has informed APRA in
33
writing of the contravention; and
34
Part 5 Other obligations of private health insurers
Division 2 Appointed actuaries
Section 111
90
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(d) the private health insurer has not so informed APRA.
1
Penalty: Imprisonment for 12 months or 60 penalty units, or both.
2
Note:
If a body corporate is convicted of an offence against this subsection,
3
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
4
fine of up to 5 times the penalty stated above.
5
(5) If:
6
(a) the appointed actuary of a private health insurer has drawn to
7
the attention of the insurer, or of an officer of the insurer, a
8
matter that the actuary considers requires action to be taken
9
by the insurer or its directors:
10
(i) to avoid a contravention of this Act, the Private Health
11
Insurance Act 2007 or the Financial Sector (Collection
12
of Data) Act 2001; or
13
(ii) to avoid prejudice to policy holders of a health benefits
14
fund conducted by the insurer; and
15
(b) the appointed actuary is satisfied that there has been
16
reasonable time for the taking of the action but the action has
17
not been taken;
18
the appointed actuary must inform APRA in writing of the matter
19
referred to in paragraph (a).
20
(6) If:
21
(a) a person becomes subject to an obligation under
22
subsection (2) or (5) to inform APRA of anything; and
23
(b) before the person informs APRA, the person ceases to be the
24
appointed actuary of the private health insurer concerned;
25
the person remains subject to the obligation as if he or she were
26
still the appointed actuary of the insurer.
27
111 Appointed actuary may give information or documents to
28
APRA
29
(1) A person who is or was the appointed actuary of a private health
30
insurer may give information, or produce documents, relating to
31
the private health insurer to APRA if the person considers that
32
doing so will assist APRA in performing its functions under this
33
Other obligations of private health insurers Part 5
Appointed actuaries Division 2
Section 112
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
91
Act, the Private Health Insurance Act 2007 or the Financial Sector
1
(Collection of Data) Act 2001.
2
(2) A person who, in good faith and without negligence, gives
3
information, or produces a document, to APRA in accordance with
4
this section is not subject to any action, claim or demand by, or any
5
liability to, any other person in respect of the information or
6
document.
7
112 Duty of appointed actuary to give information or documents
8
when required
9
(1) APRA may, by written notice to a person who is, or was, the
10
appointed actuary of a private health insurer, require the person,
11
within the period specified in the notice, to:
12
(a) give APRA information relating to the private health insurer;
13
or
14
(b) produce to APRA documents relating to the private health
15
insurer;
16
if APRA considers that the giving of the information, or the
17
production of the documents, will assist APRA in performing
18
APRA's functions under this Act, the Private Health Insurance Act
19
2007 or the Financial Sector (Collection of Data) Act 2001.
20
(2) The period specified in a notice under subsection (1) must be
21
reasonable, and must end at least 7 days after the day on which the
22
notice is given.
23
(3) A person commits an offence if:
24
(a) the person is given a notice under subsection (1); and
25
(b) the person fails to comply with the notice.
26
Penalty: 30 penalty units.
27
Note:
If a body corporate is convicted of an offence against this subsection,
28
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
29
fine of up to 5 times the penalty stated above.
30
(4) However, a person is only required to comply with a notice under
31
subsection (1) to the extent that the person is capable of doing so.
32
Part 5 Other obligations of private health insurers
Division 2 Appointed actuaries
Section 113
92
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Note:
A defendant bears an evidential burden in relation to the matter in this
1
subsection (see subsection 13.3(3) of the Criminal Code).
2
Self-incrimination
3
(5) A person is not excused from giving information or producing a
4
document pursuant to a notice under subsection (1) on the ground
5
that the information or production of the document might tend to
6
incriminate the person or expose the person to a penalty.
7
(6) However, in the case of an individual:
8
(a) the information given or document produced; and
9
(b) giving the information or producing the document;
10
are not admissible in evidence against the individual in any
11
criminal or civil proceedings, except proceedings under, or arising
12
out of, section 137.1 or 137.2 of the Criminal Code in relation to
13
giving the information or producing the document.
14
Note 1:
This subsection does not apply in relation to proceedings for a penalty
15
by way of a disqualification under section 120 (see subsection 122(4)).
16
Note 2:
Sections 137.1 and 137.2 of the Criminal Code create offences for
17
providing false or misleading information or documents.
18
113 Qualified privilege of appointed actuary
19
(1) A person who is, or has been, the appointed actuary of a private
20
health insurer has qualified privilege in respect of any statement,
21
whether written or oral, made by him or her for the purpose of the
22
performance of the actuary's statutory functions and duties.
23
(2) In particular (and without limiting subsection (1)), a person who is
24
or has been the appointed actuary of a private health insurer has
25
qualified privilege in respect of:
26
(a) any statement, written or oral, made by him or her under, or
27
for the purposes of, a provision of this Act, the Private
28
Health Insurance Act 2007 or the Financial Sector
29
(Collection of Data) Act 2001; and
30
(b) the answer to any question he or she is required by the
31
insurer to answer.
32
Other obligations of private health insurers Part 5
Appointed actuaries Division 2
Section 114
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
93
(3) The privilege conferred by this section is in addition to any
1
privilege conferred on a person by any other law.
2
114 Referring matters to professional associations for actuaries
3
(1) If APRA considers that an appointed actuary of a private health
4
insurer:
5
(a) has failed, whether within or outside Australia, to perform
6
adequately and properly:
7
(i) the actuary's statutory functions and duties; or
8
(ii) the actuary's functions or duties under any other law of
9
the Commonwealth, or of a State or Territory; or
10
(b) is otherwise not a fit and proper person to be the actuary of a
11
private health insurer;
12
APRA may, in writing, refer the details of the matter to those
13
members of the professional association of the actuary whom
14
APRA considers will be involved in considering or taking any
15
disciplinary or other action concerning the matter against the
16
actuary.
17
(2) If APRA refers details of a matter under this section, APRA must
18
also give written notice of the referral (including the nature of the
19
matter) to the actuary.
20
115 APRA may direct removal of actuary
21
When a direction may be given
22
(1) APRA may, by written notice to a private health insurer, direct the
23
insurer to terminate the appointment of a person as the appointed
24
actuary of the insurer if APRA is satisfied that there is a ground
25
under subsection (2) for giving the direction.
26
Note:
Decisions to give directions under this section are reviewable under
27
section 168.
28
(2) The grounds for giving a direction to terminate a person's
29
appointment are:
30
Part 5 Other obligations of private health insurers
Division 2 Appointed actuaries
Section 115
94
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(a) the person is disqualified from being or acting as an actuary
1
of the private health insurer because of an order under
2
section 120; or
3
(b) the person is a disqualified person (other than only because
4
of an order under section 120); or
5
(c) the person is not a fit and proper person to hold the
6
appointment; or
7
(d) the person has failed to perform adequately and properly the
8
person's statutory functions and duties as an actuary of the
9
insurer.
10
Notice to be given before direction
11
(3) Before directing a private health insurer to terminate a person's
12
appointment, APRA must:
13
(a) give written notice to:
14
(i) the insurer; and
15
(ii) the person; and
16
(b) give the insurer and the person a reasonable opportunity to
17
make submissions on the matter.
18
(4) The notice must include a statement that any submissions in
19
response to the notice may be discussed by APRA with other
20
persons as mentioned in paragraph (5)(b).
21
(5) If a submission is made in response to the notice, APRA:
22
(a) must have regard to the submission; and
23
(b) may discuss any matter contained in the submission with any
24
persons APRA considers appropriate for the purpose of
25
assessing the truth of the matter.
26
When a direction takes effect
27
(6) A direction to terminate a person's appointment takes effect on the
28
day specified in the notice giving the direction, which must be at
29
least 7 days after the day on which notice is given.
30
Other obligations of private health insurers Part 5
Appointed actuaries Division 2
Section 115
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
95
Insurer and person to be given copy of direction
1
(7) If APRA directs a private health insurer to terminate a person's
2
appointment, APRA must give the insurer and the person a copy of
3
the direction.
4
Offence
5
(8) A private health insurer commits an offence if:
6
(a) the insurer is given a direction under this section; and
7
(b) the insurer fails to comply with the direction.
8
Penalty for contravention of this subsection: 30 penalty units.
9
Note:
If a body corporate is convicted of an offence against this subsection,
10
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
11
fine of up to 5 times the penalty stated above.
12
Part 5 Other obligations of private health insurers
Division 3 Disqualified persons
Section 116
96
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 3--Disqualified persons
1
116 Private health insurers not to allow disqualified persons to act
2
as officers or appointed actuaries
3
(1) A private health insurer commits an offence if:
4
(a) the insurer allows a person to be or to act as an officer, or
5
appointed actuary, of the insurer; and
6
(b) the person is a disqualified person; and
7
(c) if the person is a disqualified person only because of an order
8
under section 120--the person is disqualified from being or
9
acting as that officer or actuary.
10
Penalty: Imprisonment for 12 months or 60 penalty units, or both.
11
Note:
If a body corporate is convicted of an offence against this subsection,
12
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
13
fine of up to 5 times the penalty stated above.
14
(2) Subsection (1) does not apply if the private health insurer:
15
(a) contacted APRA within a reasonable period before allowing
16
the person to be to or act as an officer or appointed actuary,
17
as the case may be; and
18
(b) was advised by APRA that the person was not a disqualified
19
person.
20
Note:
A defendant bears an evidential burden in relation to the matters in
21
this subsection (see subsection 13.3(3) of the Criminal Code).
22
117 Disqualified persons must not act for private health insurers
23
A person commits an offence if:
24
(a) the person acts as an officer, or appointed actuary, of a
25
private health insurer; and
26
(b) the person is a disqualified person; and
27
(c) if the person is a disqualified person only because of an order
28
under section 120--the person is disqualified from being or
29
acting as that officer or actuary.
30
Penalty: Imprisonment for 12 months or 60 penalty units, or both.
31
Other obligations of private health insurers Part 5
Disqualified persons Division 3
Section 118
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
97
Note:
If a body corporate is convicted of an offence against this section,
1
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
2
fine of up to 5 times the penalty stated above.
3
118 Effect of non-compliance
4
A failure to comply with section 116 or 117 does not affect the
5
validity of an appointment or transaction.
6
119 Who is a disqualified person?
7
(1) A person is a disqualified person if, at any time:
8
(a) the person has been convicted of an offence against or arising
9
out of:
10
(i) this Act; or
11
(ii) the Private Health Insurance Act 2007; or
12
(iii) the Financial Sector (Collection of Data) Act 2001; or
13
(iv) the Corporations Act 2001, the Corporations Law that
14
was previously in force, or any law of a foreign country
15
that corresponds to that Act or to that Corporations
16
Law; or
17
(b) the person has been convicted of an offence against or arising
18
out of a law in force in Australia, or the law of a foreign
19
country, if the offence concerns dishonest conduct or conduct
20
relating to:
21
(i) a private health insurer; or
22
(ii) a financial sector company (within the meaning of the
23
Financial Sector (Shareholdings) Act 1998); or
24
(iii) a superannuation entity (within the meaning of the
25
Superannuation Industry (Supervision) Act 1993); or
26
(c) the person has been or becomes bankrupt; or
27
(d) the person has applied to take the benefit of a law for the
28
relief of bankrupt or insolvent debtors; or
29
(e) the person has compounded with his or her creditors; or
30
(f) the Federal Court has disqualified the person under
31
section 120.
32
Part 5 Other obligations of private health insurers
Division 3 Disqualified persons
Section 120
98
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(2) A reference in subsection (1) to a person who has been convicted
1
of an offence includes a reference to a person in respect of whom
2
an order has been made relating to the offence under:
3
(a) section 19B of the Crimes Act 1914; or
4
(b) a corresponding provision of a law of a State or Territory, or
5
of a foreign country.
6
(3) Nothing in this section affects the operation of Part VIIC of the
7
Crimes Act 1914 (which includes provisions that, in certain
8
circumstances, relieve persons from the requirement to disclose
9
spent convictions and require persons aware of such convictions to
10
disregard them).
11
120 Court power of disqualification
12
(1) On application by APRA, the Federal Court may, by order,
13
disqualify a person from being or acting as someone referred to in
14
subsection (2), for a period that the Court considers appropriate, if
15
the Court is satisfied that:
16
(a) the person is not a fit and proper person to be or act as such a
17
person; and
18
(b) the disqualification is justified.
19
(2) For the purposes of subsection (1), the Federal Court may
20
disqualify a person from being or acting as an officer or appointed
21
actuary of:
22
(a) a particular private health insurer; or
23
(b) a class of private health insurers; or
24
(c) any private health insurer.
25
(3) In deciding whether paragraph (1)(a) is satisfied, the Federal Court
26
may take into account:
27
(a) any criteria for fitness and propriety set out in prudential
28
standards; and
29
(b) any other matters specified in prudential standards; and
30
(c) any other matters the Court considers relevant.
31
(4) In deciding whether paragraph (1)(b) is satisfied, the Federal Court
32
may have regard to:
33
Other obligations of private health insurers Part 5
Disqualified persons Division 3
Section 121
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
99
(a) if the application is for the person to be disqualified from
1
being or acting as an officer--the person's conduct in
2
relation to the management, business or property of any
3
corporation; and
4
(b) if the application is for the person to be disqualified from
5
being or acting as an appointed actuary--the person's
6
conduct, in relation to the person's functions or duties as an
7
actuary, under any of the following:
8
(i) this Act;
9
(ii) the Private Health Insurance Act 2007;
10
(iii) the Financial Sector (Collection of Data) Act 2001;
11
(iv) the Insurance Act 1973;
12
(v) the Life Insurance Act 1995;
13
(vi) the Superannuation Industry (Supervision) Act 1993;
14
and
15
(c) in any case--any other matters the Court considers relevant.
16
(5) As soon as practicable after the Federal Court disqualifies a person
17
under this section, APRA must cause particulars of the
18
disqualification:
19
(a) if the person is, or is acting as, an officer or appointed
20
actuary of a private health insurer--to be given to the private
21
health insurer concerned; and
22
(b) to be published in the Gazette.
23
121 Court power to revoke or vary a disqualification etc.
24
(1) A disqualified person, or APRA, may apply to the Federal Court
25
for:
26
(a) if the person is a disqualified person only because of an order
27
under section 120--a variation or a revocation of the order
28
made under that section; or
29
(b) otherwise--an order that the person is not a disqualified
30
person.
31
(2) If the Federal Court revokes an order under paragraph (1)(a) or
32
makes an order under paragraph (1)(b), then, despite section 119,
33
the person is not a disqualified person.
34
Part 5 Other obligations of private health insurers
Division 3 Disqualified persons
Section 122
100
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(3) At least 21 days before commencing the proceedings, written
1
notice of the application must be given:
2
(a) if the disqualified person makes the application--by the
3
person to APRA; or
4
(b) if APRA makes the application--by APRA to the
5
disqualified person.
6
(4) An order under paragraph (1)(b) may be expressed to be subject to
7
exceptions and conditions determined by the Federal Court.
8
122 Privilege against exposure to penalty--disqualification under
9
section 120
10
Proceedings
11
(1) In the case of any proceeding under, or arising out of, this Act, a
12
person is not entitled to refuse or fail to comply with a
13
requirement:
14
(a) to answer a question or give information; or
15
(b) to produce a document; or
16
(c) to do any other act;
17
on the ground that the answer or information, production of the
18
document, or doing that other act, as the case may be, might tend to
19
make the person liable to a penalty by way of a disqualification
20
under section 120.
21
(2) Subsection (1) applies whether or not the person is a defendant in,
22
or a party to, the proceeding or any other proceeding.
23
Statutory requirements
24
(3) A person is not entitled to refuse or fail to comply with a
25
requirement under this Act:
26
(a) to answer a question or give information; or
27
(b) to produce a document; or
28
(c) to do any other act;
29
on the ground that the answer or information, production of the
30
document, or doing that other act, as the case may be, might tend to
31
Other obligations of private health insurers Part 5
Disqualified persons Division 3
Section 122
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
101
make the person liable to a penalty by way of a disqualification
1
under section 120.
2
Admissibility
3
(4) Subsections 112(6) and 149(2) do not apply to a proceeding for the
4
imposition of a penalty by way of a disqualification under
5
section 120.
6
Note:
Subsections 112(6) and 149(2) relate to self-incrimination.
7
Other provisions
8
(5) Subsections (1) and (3) of this section have effect despite anything
9
in:
10
(a) any other provision of this Act; or
11
(b) the Private Health Insurance Act 2007; or
12
(c) the Administrative Appeals Tribunal Act 1975.
13
Part 5 Other obligations of private health insurers
Division 4 Miscellaneous
Section 123
102
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 4--Miscellaneous
1
123 Restrictions on payment of pecuniary penalties etc.
2
A private health insurer must not:
3
(a) use its money, or permit the use of its money, for:
4
(i) the payment of a pecuniary penalty imposed on an
5
officer of the insurer because of an offence under this
6
Act; or
7
(ii) the payment of an amount that an officer of the insurer,
8
or a person who has been such an officer, is liable to
9
pay under this Act; or
10
(b) reimburse:
11
(i) an officer of the insurer in respect of a pecuniary
12
penalty imposed on the officer because of an offence
13
under this Act; or
14
(ii) an officer of the insurer, or a person who has been such
15
an officer, in respect of a liability imposed on the officer
16
under this Act.
17
124 Giving APRA copies of reports made to policy holders
18
APRA rules may require a private health insurer to give APRA
19
copies of reports that the insurer makes to all or any of the policy
20
holders of health benefits funds conducted by the insurer.
21
125 Notifying APRA of name and contact details of officers
22
APRA rules may require a private health insurer to notify APRA
23
of, or of changes to, the names and contact details of officers of the
24
insurer.
25
Monitoring and investigation Part 6
Introduction Division 1
Section 126
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
103
Part 6--Monitoring and investigation
1
Division 1--Introduction
2
126 Simplified outline of this Part
3
APRA may, for the purposes of this Act or the risk equalisation
4
levy legislation, require insurers to provide information, reports or
5
documents, and may require officers of insurers to provide
6
documents.
7
APRA may appoint an inspector to investigate the affairs of a
8
private health insurer in certain circumstances. The powers of an
9
inspector include power to require a person to provide documents
10
or to appear for examination, and power to enter premises (either
11
with consent or under a warrant) and exercise search powers.
12
Part 6 Monitoring and investigation
Division 2 Monitoring
Section 127
104
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 2--Monitoring
1
127 Purposes for which powers may be exercised etc.
2
(1) The powers in this Division may only be exercised:
3
(a) for the purposes of this Act; or
4
(b) for the purposes of the risk equalisation levy legislation.
5
(2) The powers in this Division may be exercised in relation to a
6
private health insurer, even if an investigation is being conducted
7
of the whole or a part of the affairs of the insurer under Division 3.
8
128 Power to require private health insurer to provide information
9
and reports
10
(1) APRA may, by written notice to a private health insurer, require
11
the insurer to give APRA particular information, or a report on
12
particular matters, relating to the affairs of the insurer within the
13
period specified in the notice.
14
Note:
Refusal or failure to comply with a requirement under this subsection
15
is an offence (see section 148).
16
(2) The period specified in a notice under subsection (1) must be
17
reasonable, and must end at least 7 days after the day on which the
18
notice is given.
19
129 Power to require production of documents
20
(1) APRA may, by written notice to:
21
(a) a private health insurer; or
22
(b) an officer of a private health insurer;
23
require the insurer or officer to produce to APRA, at a time and
24
place specified in the notice, any documents relating to the affairs
25
of the insurer.
26
Note:
Refusal or failure to comply with a requirement under this subsection
27
is an offence (see section 148).
28
Monitoring and investigation Part 6
Monitoring Division 2
Section 129
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
105
(2) The time specified in a notice under subsection (1) must be
1
reasonable, and must be at least 7 days after the day on which the
2
notice is given. The place specified in the notice must also be
3
reasonable.
4
(3) If a document produced to APRA under subsection (1) is not in
5
writing and in English, APRA may, by written notice to the
6
insurer, require the insurer to produce to APRA a version of the
7
document that is in writing and in English.
8
Note:
Refusal or failure to comply with a requirement under this subsection
9
is an offence (see section 148).
10
(4) APRA, or an APRA staff member, may inspect, take extracts from
11
and make copies of any document, or of any version of any
12
document, produced to APRA under this section.
13
Part 6 Monitoring and investigation
Division 3 Investigation
Section 130
106
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 3--Investigation
1
130 Investigation of private health insurers by inspectors
2
(1) Subject to subsection (2), APRA may, in writing, appoint an
3
APRA staff member to be an inspector to investigate the affairs of
4
a private health insurer if APRA reasonably suspects that:
5
(a) the affairs of the insurer are being, or are about to be, carried
6
on in a way that is not in the interests of the policy holders of
7
a health benefits fund conducted by the insurer; or
8
(b) the insurer has contravened an enforceable obligation.
9
(2) APRA must not appoint an APRA staff member to be an inspector
10
unless APRA is satisfied that the staff member has suitable
11
qualifications and experience to exercise properly the powers of an
12
inspector.
13
(3) An instrument appointing an APRA staff member to be an
14
inspector must specify:
15
(a) the matter referred to in paragraph (1)(a) or (b) that APRA
16
suspects; and
17
(b) the ground on which APRA suspects the matter; and
18
(c) the matters into which the investigation is to be made, being
19
the whole or some part of the affairs of the private health
20
insurer.
21
(4) APRA may, in writing, at any time:
22
(a) terminate an investigation; or
23
(b) terminate the appointment of a person as an inspector; or
24
(c) appoint another APRA staff member to be an inspector for
25
the purposes of an investigation.
26
131 Identity cards for inspectors
27
(1) APRA must issue an identity card to each inspector.
28
(2) The identity card must:
29
(a) be in the form prescribed by APRA rules; and
30
Monitoring and investigation Part 6
Investigation Division 3
Section 132
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
107
(b) contain a photograph that is no more than 1 year old of the
1
inspector.
2
(3) A person commits an offence if:
3
(a) the person has been issued with an identity card; and
4
(b) the person ceases to be an inspector; and
5
(c) the person does not return the identity card to APRA within
6
14 days after ceasing to be an inspector.
7
Penalty: 1 penalty unit.
8
(4) Subsection (3) does not apply if the identity card was lost or
9
destroyed.
10
Note:
A defendant bears an evidential burden in relation to the matter in this
11
subsection (see subsection 13.3(3) of the Criminal Code).
12
(5) An inspector must carry his or her identity card at all times when
13
exercising powers under this Act as an inspector.
14
132 Powers of inspectors
15
(1) An inspector may, by written notice to a person whom the
16
inspector believes to have some knowledge of the affairs of the
17
private health insurer that the inspector is investigating, require that
18
person, within the period specified in the notice:
19
(a) to produce to the inspector all or any documents relating to
20
the affairs of the insurer that are in the custody, or under the
21
control, of that person; or
22
(b) to give to the inspector all reasonable assistance within the
23
person's power in connection with the investigation; or
24
(c) to appear before the inspector for examination concerning
25
matters that are relevant to the investigation and are within
26
the knowledge of the person.
27
Note:
Refusal or failure to comply with a requirement under this subsection
28
is an offence (see section 148).
29
(2) The period specified in a notice under subsection (1) must be
30
reasonable, and must end at least 7 days after the day on which the
31
notice is given.
32
Part 6 Monitoring and investigation
Division 3 Investigation
Section 133
108
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(3) If documents are produced to an inspector under subsection (1), the
1
inspector may:
2
(a) take possession of them for such period as the inspector
3
considers necessary for the purposes of the investigation; and
4
(b) make copies of, and take extracts from, them.
5
(4) An inspector is not entitled to refuse to permit a person to inspect
6
documents that are in the possession of the inspector under
7
subsection (3) if the person would be entitled to inspect those
8
documents if the inspector had not taken possession of them.
9
133 Person may be represented by lawyer when being examined
10
A lawyer acting for a person being examined by an inspector:
11
(a) may attend the examination; and
12
(b) may, to the extent that the inspector allows:
13
(i) address the inspector; and
14
(ii) examine the person;
15
in relation to matters in respect of which the inspector has
16
questioned the person.
17
134 Access to premises
18
The functions of an inspector under this section
19
(1) An inspector who:
20
(a) is appointed to investigate the whole or a part of the affairs of
21
a private health insurer; and
22
(b) enters any premises under subsection (3) or (4);
23
may exercise the functions of an inspector under this section in
24
relation to the insurer.
25
(2) The functions of an inspector under this section in relation to the
26
insurer are to exercise search powers in relation to any documents
27
that relate, or that the inspector reasonably believes relate, to the
28
affairs of the insurer.
29
Monitoring and investigation Part 6
Investigation Division 3
Section 135
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
109
Entry with consent
1
(3) An inspector may, with the consent of the occupier of premises,
2
enter the premises for the purpose of exercising the functions of an
3
inspector under this section in relation to the private health insurer
4
whose affairs the inspector is investigating.
5
Note:
See also section 135, which contains general provision relating to
6
obtaining consent.
7
Entry under warrant
8
(4) An inspector may, in accordance with an investigation warrant in
9
relation to premises, enter the premises for the purpose of
10
exercising the functions of an inspector under this section in
11
relation to the private health insurer whose affairs the inspector is
12
investigating.
13
Note:
An investigation warrant also authorises such assistance as the
14
inspector considers necessary, and such force as is necessary and
15
reasonable in the circumstances (see paragraph 136(4)(c)).
16
135 General provisions relating to obtaining consent to enter
17
premises
18
(1) Before obtaining the consent of an occupier of premises for the
19
purpose of subsection 134(3), an inspector must inform the
20
occupier that the occupier may refuse consent.
21
(2) A consent has no effect unless the consent is voluntary.
22
(3) A consent may be expressed to be limited to entry during a
23
particular period. If so, the consent has effect for that period unless
24
the consent is withdrawn before the end of that period.
25
(4) A consent that is not limited as mentioned in subsection (3) has
26
effect until the consent is withdrawn.
27
(5) If an inspector entered premises because of the consent of the
28
occupier of the premises, the inspector, and any person assisting,
29
must leave the premises if the consent ceases to have effect.
30
(6) If:
31
Part 6 Monitoring and investigation
Division 3 Investigation
Section 136
110
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(a) an inspector enters premises because of the consent of the
1
occupier of the premises; and
2
(b) the inspector has not shown the occupier his or her identity
3
card before entering the premises;
4
the inspector must do so on, or as soon as is reasonably practicable
5
after, entering the premises.
6
136 Investigation warrants
7
(1) An inspector may apply to a magistrate for a warrant under this
8
section (an investigation warrant) in relation to premises.
9
(2) The magistrate may issue the warrant if the magistrate is satisfied,
10
by information on oath or affirmation, that there are reasonable
11
grounds for suspecting that there are, or there may be within the
12
next 72 hours, documents in the premises relating to the affairs of
13
the private health insurer that the inspector is investigating.
14
(3) However, the magistrate must not issue the warrant unless the
15
inspector or some other person has given to the magistrate, either
16
orally or by affidavit, such further information (if any) as the
17
magistrate requires concerning the grounds on which the issue of
18
the warrant is being sought.
19
(4) The warrant must:
20
(a) state that the warrant is issued under this Division; and
21
(b) name the inspector who applied for the warrant; and
22
(c) state that the warrant authorises the inspector, with such
23
assistance as the inspector considers necessary, to enter the
24
premises, using such force as is necessary and reasonable in
25
the circumstances:
26
(i) during such hours of the day or night as the warrant
27
specifies; or
28
(ii) if the warrant so specifies, at any time;
29
for the purpose of exercising the functions of an inspector
30
under section 134 in relation to the insurer concerned; and
31
(d) specify the day (not more than 1 week after the issue of the
32
warrant) on which the warrant ceases to be in force.
33
Monitoring and investigation Part 6
Investigation Division 3
Section 137
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
111
137 Announcement before entry under investigation warrant
1
(1) Before an inspector enters premises under an investigation warrant,
2
the inspector must:
3
(a) announce that he or she is authorised to enter the premises;
4
and
5
(b) show his or her identity card to the occupier of the premises,
6
or to another person who apparently represents the occupier,
7
if the occupier or other person is present at the premises; and
8
(c) give any person at the premises an opportunity to allow entry
9
to the premises.
10
(2) However, an inspector is not required to comply with
11
subsection (1) if the inspector believes on reasonable grounds that
12
immediate entry to the premises is required to ensure that the
13
effective execution of the warrant is not frustrated.
14
(3) If:
15
(a) an inspector does not comply with subsection (1) because of
16
subsection (2); and
17
(b) the occupier of the premises, or another person who
18
apparently represents the occupier, is present at the premises;
19
the inspector must, as soon as practicable after entering the
20
premises, show his or her identity card to the occupier or other
21
person.
22
138 Inspector to be in possession of investigation warrant
23
An inspector executing an investigation warrant must be in
24
possession of the warrant issued by the magistrate under
25
section 136, or a copy of the warrant as so issued.
26
139 Details of warrant etc. to be given to occupier
27
If:
28
(a) an investigation warrant is being executed in relation to
29
premises; and
30
(b) the occupier of the premises, or another person who
31
apparently represents the occupier, is present at the premises;
32
Part 6 Monitoring and investigation
Division 3 Investigation
Section 140
112
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
an inspector executing the warrant must, as soon as practicable:
1
(c) make a copy of the warrant available to the occupier or other
2
person; and
3
(d) inform the occupier or other person in writing of the rights
4
and responsibilities of the occupier or other person under
5
sections 140 and 141.
6
140 Right to observe execution of warrant
7
(1) The occupier of premises to which an investigation warrant relates,
8
or another person who apparently represents the occupier, is
9
entitled to observe the execution of the warrant if the occupier or
10
other person is present at the premises while the warrant is being
11
executed.
12
(2) The right to observe the execution of the warrant ceases if the
13
occupier or other person impedes that execution.
14
(3) This section does not prevent the execution of the warrant in 2 or
15
more areas of the premises at the same time.
16
141 Responsibility to provide facilities and assistance
17
(1) The occupier of premises to which an investigation warrant relates,
18
or another person who apparently represents the occupier, must
19
provide:
20
(a) an inspector executing the warrant; and
21
(b) any person assisting the inspector;
22
with all reasonable facilities and assistance for the effective
23
exercise of their powers.
24
Note:
Obstructing, hindering, intimidating or resisting an inspector in the
25
performance of his or her functions is an offence against section 149.1
26
of the Criminal Code.
27
(2) A person commits an offence if:
28
(a) the person is subject to subsection (1); and
29
(b) the person fails to comply with that subsection.
30
Penalty for contravention of this subsection: 30 penalty units.
31
Monitoring and investigation Part 6
Investigation Division 3
Section 142
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
113
Note:
If a body corporate is convicted of an offence against this subsection,
1
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
2
fine of up to 5 times the penalty stated above.
3
142 Concealing etc. documents
4
(1) A person commits an offence if:
5
(a) the person does an act; and
6
(b) the act results in the concealment, destruction, mutilation or
7
alteration of a document; and
8
(c) the document relates to affairs of a private health insurer that
9
are being investigated under this Division.
10
Penalty: Imprisonment for 12 months or 60 penalty units, or both.
11
Note:
If a body corporate is convicted of an offence against this subsection,
12
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
13
fine of up to 5 times the penalty stated above.
14
(2) Subsection (1) does not apply if the person did not act with intent
15
to defeat the purposes of this Division and did not act with intent to
16
delay or obstruct the carrying out of the investigation.
17
Note:
A defendant bears an evidential burden in relation to the matters in
18
this subsection (see subsection 13.3(3) of the Criminal Code).
19
143 Reports of inspectors
20
(1) An inspector:
21
(a) must, on the completion of an investigation of the whole or a
22
part of the affairs of a private health insurer, report in writing
23
to APRA on the result of the investigation; and
24
(b) if so directed in writing by APRA, must make such written
25
reports during the investigation as are specified in the
26
direction; and
27
(c) may make one or more other written reports to APRA during
28
the investigation.
29
(2) Subject to subsection (3), an inspector may include in a report
30
under this section any recommendations that the inspector
31
considers appropriate.
32
Part 6 Monitoring and investigation
Division 3 Investigation
Section 144
114
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(3) An inspector must not include in a report under this section:
1
(a) a recommendation relating to the institution of criminal
2
proceedings; or
3
(b) a statement to the effect that the inspector considers that a
4
specified person has committed a criminal offence.
5
(4) However, if an inspector considers that criminal proceedings ought
6
to be instituted or that a person has committed a criminal offence,
7
the inspector must state that opinion in writing given to APRA.
8
144 Dissemination of reports
9
(1) APRA must give a copy of a report made to APRA under
10
paragraph 143(1)(a) to the private health insurer to which the
11
report relates.
12
(2) However, subsection (1) does not apply if APRA considers that,
13
having regard to proceedings that have been or might be instituted,
14
a copy of the report should not be given to the insurer.
15
(3) If APRA has given a copy of the report to the insurer under
16
subsection (1), APRA may, if it considers it is in the public interest
17
to do so, cause the whole or a part of the report to be published.
18
(4) A court before which proceedings under this Act, or the risk
19
equalisation levy legislation, are brought against a private health
20
insurer or other person in respect of matters dealt with in a report
21
under section 143 may order that a copy of the report be given to
22
that insurer or other person.
23
145 Liability for publishing reports etc.
24
An action or proceeding, civil or criminal, does not lie against a
25
person (not being a person referred to in section 58 of the
26
Australian Prudential Regulation Authority Act 1998) for
27
publishing in good faith a copy of, or a fair extract from or of, a
28
publication made under subsection 144(3).
29
Note:
Section 58 of the Australian Prudential Regulation Authority Act 1998
30
protects APRA and persons connected with APRA (including, APRA
31
members and APRA staff members) from liability.
32
Monitoring and investigation Part 6
Investigation Division 3
Section 146
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
115
146 Powers of magistrates
1
(1) A power conferred on a magistrate by this Division is conferred on
2
the magistrate:
3
(a) in a personal capacity; and
4
(b) not as a court or a member of a court.
5
(2) The magistrate need not accept the power conferred.
6
(3) A magistrate exercising a power conferred by this Division has the
7
same protection and immunity as if the magistrate were exercising
8
the power:
9
(a) as the court of which the magistrate is a member; or
10
(b) as a member of the court of which the magistrate is a
11
member.
12
147 Delegation by inspectors
13
(1) An inspector may, by writing signed by the inspector, delegate any
14
of the inspector's powers under this Division to an APRA staff
15
member.
16
(2) An inspector must not delegate powers to an APRA staff member
17
unless the inspector is satisfied that the staff member has suitable
18
qualifications and experience to exercise those powers properly.
19
(3) A delegate who proposes to exercise his or her delegated powers
20
must, at the request of any person who may be affected by the
21
proposed exercise, produce for the inspection of that person the
22
instrument of delegation or a copy of that instrument.
23
Part 6 Monitoring and investigation
Division 4 Other matters
Section 148
116
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Division 4--Other matters
1
148 Refusing or failing to comply with requirements
2
(1) A person commits an offence if:
3
(a) a requirement is made of the person under section 128, 129
4
or 132; and
5
(b) the person fails to comply with the requirement.
6
Penalty: 30 penalty units.
7
Note:
If a body corporate is convicted of an offence against this subsection,
8
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
9
fine of up to 5 times the penalty stated above.
10
(2) However, a person is only required to comply with a requirement
11
referred to in paragraph (1)(a) to the extent that the person is
12
capable of doing so.
13
Note:
A defendant bears an evidential burden in relation to the matter in this
14
subsection (see subsection 13.3(3) of the Criminal Code).
15
149 Self-incrimination
16
(1) A person is not excused from answering a question, providing
17
information or a report, or producing a document, under this Part
18
on the ground that the answer, the information or report, or the
19
production of the document, might tend to incriminate the person
20
or make the person liable to a penalty.
21
(2) However, in the case of an individual:
22
(a) the answer given, the information or report provided or the
23
document produced; and
24
(b) answering the question, providing the information or report,
25
or producing the document;
26
are not admissible in evidence against the individual in any
27
criminal or civil proceedings, except proceedings under, or arising
28
out of, section 137.1 or 137.2 of the Criminal Code in relation to
29
answering the question, providing the information or report, or
30
producing the document.
31
Monitoring and investigation Part 6
Other matters Division 4
Section 150
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
117
Note 1:
This subsection does not apply in relation to proceedings for a penalty
1
by way of a disqualification under section 120 (see subsection 122(4)).
2
Note 2:
Sections 137.1 and 137.2 of the Criminal Code create offences for
3
providing false or misleading information or documents.
4
150 Protection from liability
5
A person who complies with a requirement made of the person
6
under this Part by APRA or an inspector does not incur any
7
liability to any other person merely because of that compliance.
8
Part 7 Enforceable undertakings
Section 151
118
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Part 7--Enforceable undertakings
1
2
151 Simplified outline of this Part
3
APRA may accept an undertaking given by a person in connection
4
with matters relating to this Act or the risk equalisation levy
5
legislation.
6
APRA may apply to the Federal Court for an order (for example,
7
an order directing compliance) if APRA considers that an
8
undertaking has been contravened.
9
152 Enforceable undertakings
10
(1) APRA may accept a written undertaking given by a person in
11
connection with a matter in relation to which APRA has a power or
12
function under:
13
(a) this Act; or
14
(b) the risk equalisation levy legislation.
15
(2) The person may withdraw or vary the undertaking at any time, but
16
only with APRA's written consent.
17
(3) A consent under subsection (2) is not a legislative instrument.
18
(4) If APRA considers that the person who gave the undertaking has
19
contravened any of its terms, APRA may apply to the Federal
20
Court for an order under subsection (5).
21
(5) If the Federal Court is satisfied that the person has contravened a
22
term of the undertaking, the Court may make all or any of the
23
following orders:
24
(a) an order directing the person to comply with that term of the
25
undertaking;
26
(b) an order directing the person to pay to the Commonwealth an
27
amount up to the amount of any financial benefit that the
28
Enforceable undertakings Part 7
Section 152
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
119
person has obtained directly or indirectly and that is
1
reasonably attributable to the contravention;
2
(c) any order that the Court considers appropriate directing the
3
person to compensate any other person who has suffered loss
4
or damage as a result of the contravention;
5
(d) any other order that the Court considers appropriate.
6
Part 8 Remedies in the Federal Court
Section 153
120
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Part 8--Remedies in the Federal Court
1
2
153 Simplified outline of this Part
3
If APRA is satisfied that a private health insurer has contravened
4
an enforceable obligation, APRA may apply to the Federal Court
5
for a range of remedies. These may include a civil penalty order
6
against an officer of the insurer who failed to take reasonable steps
7
to prevent the contravention.
8
154 APRA may apply to the Federal Court
9
(1) If APRA is satisfied that a private health insurer has contravened
10
an enforceable obligation, APRA may apply to the Federal Court
11
for:
12
(a) a declaration of contravention (see section 155); and
13
(b) any one or more of the following orders:
14
(i) a civil penalty order (see section 156);
15
(ii) a compensation order (see section 157);
16
(iii) any other order that APRA considers to be appropriate
17
to redress the contravention.
18
(2) The application must be made within 4 years of the alleged
19
contravention.
20
155 Declarations of contravention
21
(1) If, on application under section 154, the Federal Court is satisfied
22
that a private health insurer has contravened an enforceable
23
obligation, it must make a declaration of contravention.
24
Note:
For relief from liability, see section 166.
25
(2) The declaration must specify:
26
(a) the enforceable obligation that was contravened; and
27
(b) the private health insurer that contravened the obligation; and
28
Remedies in the Federal Court Part 8
Section 156
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
121
(c) the conduct that constituted the contravention; and
1
(d) if the Federal Court is satisfied that an officer of the private
2
health insurer failed to take reasonable steps to prevent the
3
insurer contravening the obligation--the officer.
4
(3) The declaration is conclusive evidence of the matters mentioned in
5
subsection (2).
6
156 Civil penalty order
7
(1) If the Federal Court has made a declaration of contravention that
8
specifies an officer of a private health insurer (see
9
paragraph 155(2)(d)), the Court may order the officer to pay the
10
Commonwealth a pecuniary penalty of up to 1,000 penalty units.
11
(2) An order under subsection (1) is a civil penalty order.
12
(3) The Federal Court must not make a civil penalty order if it is
13
satisfied that a court has ordered the officer to pay damages in the
14
nature of punitive damages in respect of:
15
(a) the contravention of the enforceable obligation; or
16
(b) the officer's failure to take reasonable steps to prevent the
17
insurer contravening the enforceable obligation.
18
(4) The pecuniary penalty is a civil debt payable to the
19
Commonwealth.
20
(5) The Commonwealth may enforce the order as if it were an order
21
made in civil proceedings against the officer to recover a debt due
22
by the officer. The debt arising from the order is taken to be a
23
judgment debt.
24
157 Compensation order
25
(1) If the Federal Court has made a declaration of contravention, the
26
Court may order the private health insurer specified in the
27
declaration to compensate an individual for any injury or loss
28
suffered by the individual as a result of the contravention.
29
(2) The order must specify the amount of compensation.
30
Part 8 Remedies in the Federal Court
Section 158
122
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(3) The order may be enforced as if it were a judgment of the Court.
1
158 Other order
2
(1) If the Federal Court has made a declaration of contravention, the
3
Court may make any other order that APRA applies for.
4
(2) The order may be enforced as if it were a judgment of the Court.
5
159 Civil evidence and procedure rules for declarations and orders
6
The Federal Court must apply the rules of evidence and procedure
7
for civil matters in proceedings under this Part.
8
Note:
The standard of proof in civil proceedings is the balance of
9
probabilities (see section 140 of the Evidence Act 1995).
10
160 Civil proceedings after criminal proceedings
11
The Federal Court must not make a civil penalty order against an
12
officer of a private health insurer if the officer has been convicted
13
of an offence constituted by conduct that is substantially the same
14
as the conduct to which the Court had regard in satisfying itself
15
that the officer failed to take reasonable steps to prevent the insurer
16
contravening the enforceable obligation.
17
161 Criminal proceedings during civil proceedings
18
(1) Proceedings for a civil penalty order against an officer of a private
19
health insurer are stayed if:
20
(a) criminal proceedings are started or have already been started
21
against the officer for an offence; and
22
(b) the offence is constituted by conduct that is substantially the
23
same as the conduct to which the Federal Court had regard in
24
satisfying itself that the officer failed to take reasonable steps
25
to prevent the insurer contravening the enforceable
26
obligation.
27
(2) The proceedings for the order may be resumed if the officer is not
28
convicted of the offence. Otherwise, the proceedings for the order
29
are dismissed.
30
Remedies in the Federal Court Part 8
Section 162
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
123
162 Criminal proceedings after civil proceedings
1
Criminal proceedings may be started against a person for conduct
2
that is substantially the same as conduct constituting a
3
contravention of an enforceable obligation regardless of whether:
4
(a) a declaration of contravention has been made that specifies
5
the person; or
6
(b) an order has been made against the person under this Part.
7
163 Evidence given in proceedings for penalty not admissible in
8
criminal proceedings
9
Evidence of information given or evidence of production of
10
documents by an officer of a private health insurer is not
11
admissible in criminal proceedings against the officer if:
12
(a) the officer previously gave the evidence or produced the
13
documents in proceedings for a civil penalty order against the
14
officer (whether or not the order was made); and
15
(b) the conduct alleged to constitute the offence is substantially
16
the same as the conduct to which the Federal Court had
17
regard in satisfying itself that the officer failed to take
18
reasonable steps to prevent the insurer contravening the
19
enforceable obligation.
20
However, this does not apply to a criminal proceeding in respect of
21
the falsity of the evidence given by the officer in the proceedings
22
for the civil penalty order.
23
164 APRA may require person to assist
24
(1) A person commits an offence if:
25
(a) APRA requires, in writing, the person to give all reasonable
26
assistance in connection with an application for:
27
(i) a declaration of contravention in relation to a private
28
health insurer; or
29
(ii) a declaration of contravention that specifies an officer of
30
a private health insurer; or
31
(iii) a civil penalty order in relation to an officer of a private
32
health insurer; and
33
Part 8 Remedies in the Federal Court
Section 164
124
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(b) the person fails to comply with the requirement.
1
Penalty: 5 penalty units.
2
Note:
If a body corporate is convicted of an offence against this subsection,
3
subsection 4B(3) of the Crimes Act 1914 allows a court to impose a
4
fine of up to 5 times the penalty stated above.
5
(2) A requirement under subsection (1) is not a legislative instrument.
6
(3) APRA may require a person to assist under subsection (1) only if:
7
(a) it appears to APRA that the person is unlikely to have:
8
(i) contravened the enforceable obligation to which the
9
application relates; or
10
(ii) committed an offence constituted by the same, or
11
substantially the same, conduct as the conduct to which
12
the application relates; and
13
(b) APRA reasonably suspects or believes that the person can
14
give information relevant to the application.
15
(4) APRA cannot require a person to assist under subsection (1) if the
16
person is or has been a lawyer for the person suspected of
17
contravening the enforceable obligation to which the application
18
relates.
19
(5) The Federal Court may order a person to comply with a
20
requirement under subsection (1) in a specified way. Only APRA
21
may apply to the Court for an order under this subsection.
22
(6) For the purposes of this section, it does not matter whether the
23
application mentioned in subsection (1) has actually been made.
24
Note:
Subsection (1) does not abrogate or affect the law relating to legal
25
professional privilege, or any other immunity, privilege or restriction
26
that applies to the disclosure of information, documents or other
27
things.
28
Miscellaneous Part 9
Section 165
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
125
Part 9--Miscellaneous
1
2
165 Simplified outline of this Part
3
This Part deals with miscellaneous matters such as relief from
4
liability in certain proceedings under this Act, annual publication
5
of information relating to health benefits funds, review of
6
decisions, approved forms and APRA rules.
7
166 Relief from liability
8
(1) If:
9
(a) any of the following proceedings are before a court:
10
(i) proceedings seeking an order against a person under
11
subsection 46(3) in respect of a loss;
12
(ii) proceedings seeking an order against a person under
13
subsection 76(1) in respect of compensation;
14
(iii) proceedings seeking an order against a person for
15
recovery of a loss under section 89;
16
(iv) proceedings seeking an order under Part 8 imposing a
17
liability on a person in respect of a contravention of an
18
enforceable obligation; and
19
(b) it appears to the court that the person has acted honestly, and
20
having regard to all the circumstances of the case, ought
21
fairly to be excused from liability for the loss or
22
compensation, or from being liable under Part 8 in respect of
23
the contravention;
24
the court may relieve the person, either wholly or partly, from
25
liability for the loss or compensation, or from being liable under
26
Part 8.
27
(2) A person who thinks that proceedings of a kind referred to in
28
paragraph (1)(a) will or may be begun against the person may
29
apply to the Federal Court for relief.
30
Part 9 Miscellaneous
Section 167
126
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(3) On an application under subsection (2), the Federal Court may
1
grant relief under subsection (1) as if the proceedings had been
2
begun in the Court.
3
(4) For the purposes of subsection (1) as applying for the purposes of a
4
case tried by a judge with a jury:
5
(a) a reference in that subsection to the court is a reference to the
6
judge; and
7
(b) the relief that may be granted includes withdrawing the case
8
in whole or in part from the jury and directing judgment to be
9
entered for the defendant on such terms as to costs as the
10
judge thinks appropriate.
11
167 Annual publication of information relating to health benefits
12
funds
13
(1) As soon as practicable after 30 September in each year, APRA
14
must publish on its website the following information in respect of
15
the operations, during the financial year ending on 30 June in that
16
year, of each health benefits fund conducted by each private health
17
insurer:
18
(a) premiums payable to the fund;
19
(b) other amounts payable to the fund;
20
(c) fund benefits payable out of the fund;
21
(d) management expenses;
22
(e) other amounts payable out of the fund;
23
(f) the balance of the fund at the end of that financial year;
24
(g) details of how the reserves of the fund have been invested;
25
(h) any other information required by APRA rules made for the
26
purpose of this paragraph.
27
(2) APRA must not, under subsection (1), publish personal
28
information relating to a person insured under a policy.
29
168 Review of decisions
30
What decisions are reviewable?
31
(1) Each of the following decisions is a reviewable decision.
32
Miscellaneous Part 9
Section 168
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
127
1
Reviewable decisions
Item
Decision
Provision under which
decision is made
1
to refuse an application for registration as a
private health insurer
section 15
2
to grant an application, subject to terms and
conditions, for registration as a private
health insurer
section 15
3
to refuse an application for approval for a
private health insurer to convert to being
registered as a for profit insurer
section 20
4
to refuse to approve the crediting of an
amount to a health benefits fund of a private
health insurer
subparagraph 27(3)(b)(ii)
5
to refuse to approve a restructure of the
health benefits funds of a private health
insurer
section 32
6
to refuse to approve a transfer of the health
benefits funds of one or more private health
insurers
section 33
7
to refuse to approve a termination of the
health benefits funds of a private health
insurer
section 37
8
to make, vary or revoke a prudential
standard referred to in paragraph 92(3)(c)
section 92
9
to give a direction under section 96 on a
ground specified in paragraph 96(1)(a), (b)
or (c)
section 96
10
to vary, or to refuse to vary or revoke, a
direction that was given under section 96 on
a ground specified in paragraph 96(1)(a), (b)
or (c)
section 99
11
to give a direction to terminate the
appointment of a person as appointed
actuary
section 115
Part 9 Miscellaneous
Section 168
128
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
Reconsideration of decision by APRA
1
(2) A person affected by a reviewable decision who is dissatisfied with
2
the decision may request APRA to reconsider the decision.
3
(3) The request must:
4
(a) be made by written notice given to APRA within 21 days
5
after the day on which the decision first comes to the notice
6
of the person, or within such longer period as APRA
7
determines in writing; and
8
(a) set out the reasons for making the request.
9
(4) Upon receiving the request, APRA must reconsider the decision
10
and may confirm or revoke the decision, or vary the decision in a
11
way that APRA considers appropriate.
12
(5) If APRA does not confirm, revoke or vary a decision within 21
13
days after the day on which APRA received the request, APRA is
14
taken, at the end of that period, to have confirmed the decision
15
under subsection (4).
16
(6) If APRA confirms, revokes or varies a decision before the end of
17
the period referred to in subsection (5), APRA must, by notice
18
served on the person who made the request:
19
(a) tell the person of the result of APRA's reconsideration of the
20
decision; and
21
(b) set out the findings on material questions of fact; and
22
(c) refer to the evidence or other material on which those
23
findings were based; and
24
(d) give APRA's reasons for confirming, revoking or varying the
25
decision, as the case may be.
26
AAT review of decision
27
(7) Applications may be made to the Administrative Appeals Tribunal
28
for the review of decisions of APRA that have been confirmed or
29
varied under subsection (4).
30
(8) If a decision is taken, by subsection (5), to be confirmed,
31
section 29 of the Administrative Appeals Tribunal Act 1975 applies
32
as if the prescribed time for making application for review of the
33
Miscellaneous Part 9
Section 169
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
129
decision were the period beginning on the day on which the
1
decision is taken to be confirmed and ending on the 28th day after
2
that day.
3
Operation and implementation of a decision that is subject to a
4
request for reconsideration
5
(9) If a person makes a request under subsection (2) in respect of a
6
reviewable decision, section 41 of the Administrative Appeals
7
Tribunal Act 1975 applies as if the making of the request were the
8
making of an application to the Administrative Appeals Tribunal
9
for review of that decision.
10
169 Statements to accompany notification of decisions
11
(1) If a reviewable decision is made and written notice of the decision
12
is given to a person affected by the decision, the notice is to
13
include a statement to the effect that:
14
(a) the person may, if dissatisfied with the decision, seek a
15
reconsideration of the decision by APRA in accordance with
16
subsection 168(2); and
17
(b) a person whose interests are affected by the decision may,
18
subject to the Administrative Appeals Tribunal Act 1975, if
19
dissatisfied with a decision made by APRA upon that
20
reconsideration confirming or varying the first-mentioned
21
decision, apply to the Administrative Appeals Tribunal for a
22
review of the decision so confirmed or varied.
23
(2) If APRA confirms or varies a decision under subsection 168(4) and
24
gives to a person written notice of the confirmation or variation of
25
the decision, the notice is to include a statement to the effect that a
26
person whose interests are affected by the decision may, subject to
27
the Administrative Appeals Tribunal Act 1975, if dissatisfied with
28
the decision so confirmed or varied, apply to the Administrative
29
Appeals Tribunal for review of the decision.
30
(3) A failure to comply with subsection (1) or (2) of this section in
31
relation to a decision does not affect the validity of the decision.
32
Part 9 Miscellaneous
Section 170
130
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
170 Approvals, determinations etc. by APRA
1
If:
2
(a) a provision of this Act refers to an approval given,
3
determination made or other act or thing done by APRA; and
4
(b) there is no other provision of this Act expressly authorising
5
APRA to give the approval, make the determination or do the
6
act or thing;
7
APRA is authorised to give the approval, make the determination
8
or do the act or thing.
9
171 Powers of Federal Court
10
A provision of this Act conferring a power on the Federal Court
11
does not affect any other power of the Court conferred by another
12
provision of this Act or otherwise.
13
172 Approved forms, and giving documents not required to be in
14
approved forms
15
Approved forms
16
(1) A notice, statement, application or other document under this Act
17
is in the approved form if:
18
(a) it is in the form approved in writing by APRA for that kind of
19
notice, statement, application or other document; and
20
(b) it contains the information that the form requires, and is
21
accompanied by any other documentation that the form
22
requires; and
23
(c) if the form requires the form to be signed by a person or
24
persons--it is signed by the person or persons in accordance
25
with any applicable requirements specified in the form; and
26
(d) the form is given in a manner that complies with any
27
applicable requirements specified in the form.
28
(2) Requirements specified in a form referred to in paragraph (1)(c) or
29
(d) may include requirements relating to the giving of forms by
30
electronic means.
31
Miscellaneous Part 9
Section 173
No. , 2015
Private Health Insurance (Prudential Supervision) Bill 2015
131
Note:
For example, a form may include requirements relating to electronic
1
signatures, or for the use of specified software.
2
(3) The approved forms must be publicly available on APRA's
3
website.
4
Other documents
5
(4) APRA rules may impose requirements relating to the manner in
6
which other documents (being documents that are not required to
7
be in an approved form) are to be given under this Act.
8
(5) Requirements specified in APRA rules referred to in subsection (4)
9
may include requirements relating to the giving of documents by
10
electronic means.
11
Note:
For example, APRA rules may include requirements relating to the
12
use of specified software.
13
173 Delegation by Minister
14
The Minister may, in writing, delegate all or any of his or her
15
functions or powers under this Act to an SES employee, or an
16
acting SES employee, in the Department.
17
174 APRA rules
18
(1) APRA may, by legislative instrument (and subject to
19
subsection (3)), make rules (APRA rules) prescribing matters:
20
(a) required or permitted by this Act to be prescribed by APRA
21
rules; or
22
(b) necessary or convenient to be prescribed for carrying out or
23
giving effect to this Act.
24
(2) APRA rules may provide for APRA to exercise powers and
25
discretions under the rules.
26
(3) To avoid doubt, APRA rules may not do the following:
27
(a) create an offence or civil penalty;
28
(b) provide powers of:
29
(i) arrest or detention; or
30
Part 9 Miscellaneous
Section 174
132
Private Health Insurance (Prudential Supervision) Bill 2015
No. , 2015
(ii) entry, search or seizure;
1
(c) impose a tax;
2
(d) set an amount to be appropriated from the Consolidated
3
Revenue Fund under an appropriation in this Act;
4
(e) directly amend the text of this Act.
5
(4) APRA may, under section 15 of the Australian Prudential
6
Regulation Authority Act 1998, delegate the power to make, vary
7
or revoke APRA rules, but only if the delegation is to:
8
(a) an APRA member (within the meaning of that Act); or
9
(b) an APRA staff member who is an executive general manager
10
or equivalent.
11