2025 - 2026 LEGISLATURE
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2025 SENATE BILL 98
March 7, 2025 - Introduced by Senators HUTTON, FELZKOWSKI and WALL,
cosponsored by Representatives CALLAHAN, ARMSTRONG, DITTRICH,
GUNDRUM, KNODL, KREIBICH, SUBECK, SUMMERFIELD, TUSLER, WICHGERS
and WITTKE. Referred to Committee on Insurance, Housing, Rural Issues and
Forestry.
AN ACT to create 613.76 of the statutes; relating to: conversion of cooperative
associations organized to establish and operate nonprofit plans or programs
for health care into service insurance corporations.
Analysis by the Legislative Reference Bureau
This bill allows a health care cooperative to convert into a service insurance
corporation.
Under current law, a cooperative may be formed by filing articles of
incorporation with the Department of Financial Institutions. A cooperative is
organized and owned by its members and managed by a board of directors. Under
current law, a cooperative may be organized primarily to establish and operate
nonprofit plans or programs for health care for their members and their members[
dependents.
Also under current law, a service insurance corporation, sometimes referred to
as a Xnonprofit service plan,Y may be formed by following many of the same
procedures that apply to nonstock corporations, like filing articles of incorporation
and bylaws, except that service insurance corporations are regulated by the Office
of the Commissioner of Insurance instead of DFI. A service insurance corporation
is a corporation incorporated in this state to provide insured service benefits, like
health care, to consumers within a flexible legal framework.
Under this bill, a health care cooperative may convert into a service insurance
corporation. To convert into a service insurance corporation, a health care
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cooperative seeking conversion must adopt a plan of conversion, obtain the
commissioner[s approval of the plan of conversion, have the members of the health
care cooperative agree to the conversion as provided under current law, and submit
evidence to the commissioner that the members of the cooperative association
approve of the plan of conversion. The bill requires the commissioner to approve
any submitted plan of conversion unless the commissioner concludes, after a
hearing, that the plan is contrary to law, the surplus of the resulting service
insurance corporation or the contracts that the resulting service insurance
corporation possesses with providers are inadequate to support the plan, or the
plan is contrary to the interests of members of the health care cooperative seeking
conversion or to the interests of the public. If all requirements for conversion are
met, the bill provides that the commissioner must issue a certificate of authority to
the new service insurance corporation and that, immediately after issuing the
certificate of authority, the legal existence of the health care cooperative ceases.
The bill provides that the new service insurance corporation has all the assets and
is liable for all of the obligations of the converted health care cooperative.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SECTION 1. 613.76 of the statutes is created to read:
613.76 Conversion of a cooperative association into a service
insurance corporation. (1) AUTHORIZATION. A cooperative association
organized under s. 185.981 may be converted into a service insurance corporation
under this chapter as provided in this section.
(2) ACTION BY BOARD. A cooperative association seeking conversion under this
section shall adopt a plan of conversion stating all of the following:
(a) The reasons for and purposes of the proposed action.
(b) The proposed terms, conditions, and procedures for implementing the
conversion.
(c) The proposed name of the service insurance corporation.
(d) The proposed articles and bylaws of the service insurance corporation.
(3) COMMISSIONER[S APPROVAL REQUIRED. (a) No proposed plan of conversion
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under this section may be submitted to the members of the cooperative association
under sub. (4) until the cooperative association submits the plan adopted under sub.
(2) to the commissioner, together with as much of the information under s. 611.13
(2) as the commissioner reasonably requires, and the commissioner approves the
plan.
(b) The commissioner shall approve a plan of conversion submitted under par.
(a) unless the commissioner finds, after a hearing, that any of the following would
apply:
1. The plan is contrary to law.
2. The surplus of the service insurance corporation or the contracts the
service insurance corporation possesses with providers are inadequate to support
the plan.
3. The plan is contrary to the interests of members of the cooperative
association seeking conversion or the public.
(4) APPROVAL BY MEMBERS. After being approved by the commissioner under
sub. (3) (b), the plan adopted under sub. (2) shall be submitted for approval to the
members of the cooperative association in accordance with ch. 185.
(5) REPORT APPROVAL TO COMMISSIONER. A cooperative association seeking
conversion under this section that has submitted a plan of conversion to the
commissioner under sub. (3) (a) that is approved by the commissioner under sub. (3)
(b) shall submit evidence to the commissioner that the members of the cooperative
association approve of the plan of conversion under sub. (4).
(6) AMENDMENT, ABANDONMENT , ARTICLES, AND EFFECT OF CONVERSION. (a)
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A plan of conversion approved by the members of a cooperative association under
sub. (4) may be amended or abandoned as provided in s. 181.1163 (2) and (3).
(b) A cooperative association seeking conversion under this section that
submits a plan of conversion for approval by its membership under sub. (4) that is
approved by the membership shall file with the department of financial institutions
articles of conversion as provided in s. 181.1164.
(c) The effect of conversion shall be as provided in s. 181.1165.
(7) OFFICERS AND DIRECTORS. The officers and directors of a cooperative
association converting into a service insurance corporation under this section shall
be the initial officers and directors of the service insurance corporation.
(8) CERTIFICATE OF AUTHORITY. If all requirements of the law are met, the
commissioner shall issue a certificate of authority to the new service insurance
corporation. Thereupon the cooperative association shall cease its legal existence
and the corporate existence of the new service insurance corporation shall begin,
but it shall be deemed to have been incorporated as of the date the converted
cooperative association was incorporated. The new service insurance corporation
shall have all the assets and be liable for all of the obligations of the converted
cooperative association. The commissioner may grant a period not exceeding one
year for adjustment to the requirements of ch. 613, specifying the extent to which
particular provisions of ch. 613 do not apply.
(9) EXPENSES. A cooperative association converting into a service insurance
corporation under this section may not pay compensation of any kind to existing
personnel, in connection with the proposed conversion, other than regular salaries.
With the commissioner[s approval, payment may be made at reasonable rates for
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printing costs and for legal and other professional fees for services actually
rendered.
(END)
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