Section 550.112. Discretionary clauses prohibited.

(a) A discretionary   clause  is  unjust,   unfair,  inequitable, misleading, deceptive, and encourages misrepresentation  of   the  coverage within the  meaning  of   section  607(3)(b) of the  nonprofit  health  care corporation act, 1980 PA 350, MCL 550.1607(3)(b).

(b)  On and after the first day of the first month following the effective date of these rules, a health care corporation shall not issue, advertise, or deliver to any person in this state a policy, contract, rider, indorsement, certificate, or similar contract document that contains a discretionary clause. This does not apply to a contract document in use before that date, but does apply to any such document revised in any respect on or  after  that date.

(c)  On and after the first day of the first month following the effective date of these rules, a discretionary clause issued or delivered to any person in this state in a policy, contract, rider, indorsement, certificate, or similar contract document is void and of no effect. This does not apply to contract documents in use before that date, but does apply to any such document revised in any respect on or after that date.

(d)   Nothing in this rule limits the commissioner's authority under section 607(5) of the nonprofit health care corporation reform act, 1980 PA 350, MCL 550.607(5), to disapprove any form that contains a discretionary clause.

(e)   By the first day of the second month following the effective date of these rules, each health care corporation transacting insurance in this state shall submit to the commissioner a list of all forms in effect in Michigan that contain discretionary clauses and shall submit a certification that the list is complete and accurate. If a health care corporation has no such forms in effect, it shall submit a letter to the commissioner reporting and certifying that fact.

History: 2007 AACS.