NON–PROFIT MEDICAL SERVICE PLANS

M.G.L. pt. Part I, tit. Title XXII, ch. c. 176C

in effect

M.G.L. c. 176C, § 1 Definitions

c. 176C, § 1. Definitions Section 1. In this chapter the following words and phrases shall have the following meanings: ''Medical service plan'', any plan or arrangement whereby members of the public pay regular subscription amounts and are entitled in return therefor to medical services. ''Medical service corporation'', any non-profit corporation which receives subscription payments from subscribing members and in return therefor makes available to subscribing members the benefits of any agreements which the corporation has with a medical organization for the rendering of care to its members. ''Medical organization'', any medical society or partnership of physicians whose members are members of the Massachusetts Medical Society or other recognized association of physicians, or whose members are members of the staff of any hospital approved by the American College of Surgeons, and which agrees to provide medical services to the subscribing members of a medical service plan. ''Associated physician'', any physician duly licensed to practice medicine in the commonwealth who complies with the qualifications, rules and regulations of a medical organization approved by the department of public health or any chiropractor registered under the provisions of chapter one hundred and twelve and who agrees in writing with the medical organization to perform any of the medical services specified in the form of subscribing members' agreement issued by a medical service corporation, and who agrees to accept compensation therefor in the manner hereinafter set forth. ''Recognized association of physicians'', an organized medical society or association, membership in which is contingent upon established professional qualifications and which is nationally recognized in the medical profession. ''Subscribing member'', any member of the public who is accepted as a subscribing member, with or without dependents, by a medical service corporation and who pays regular subscription dues to such corporation.

M.G.L. c. 176C, § 2 Application of chapter; exemption from insurance laws; exemption from practice of medicine provisions

c. 176C, § 2. Application of chapter; exemption from insurance laws; exemption from practice of medicine provisions Section 2. Any medical service plan, and any medical service corporation or medical organization operating in connection with a medical service plan, under the laws of the commonwealth, shall be governed by this chapter and shall, except as otherwise provided by this chapter, be exempt from all provisions of the insurance laws of the commonwealth. Any medical service corporation operating under this chapter shall not be deemed to be practicing medicine and shall be exempt from the provisions of chapter one hundred and twelve relating to the practice of medicine.

M.G.L. c. 176C, § 3 Incorporators; approval of certificate of organization; board of directors

c. 176C, § 3. Incorporators; approval of certificate of organization; board of directors Section 3. Persons desiring to form a medical service corporation shall incorporate as provided in section three of chapter one hundred and eighty. Every certificate of organization of a medical service corporation formed under this chapter, before being filed under chapter one hundred and eighty, shall have endorsed thereon or attached thereto the consent of the department of public health and of the commissioner of public welfare. The board of directors of a medical service corporation shall number not less than nine, of whom at least three and not more than one third shall be subscribing members of such a medical service corporation and of whom at least three and not more than one third shall be physicians who are members of the Massachusetts Medical Society or other recognized association of physicians and who are not associated physicians of the medical service plan.

M.G.L. c. 176C, § 4 Contracts to provide medical service

c. 176C, § 4. Contracts to provide medical service Section 4. No medical service corporation shall, through its own agents or employees, provide any medical services, but any such corporation may enter into an agreement with one or more medical organizations whereby said medical organization or organizations agree to provide specified medical services for the subscribing members of the said medical service corporation; provided, that said agreement shall provide for the payment of a stipulated percentage or percentages of the subscriptions or other receipts, or both, of the medical service corporation to the medical organization and shall not provide for any specific amounts, whether or not based upon the number of services rendered to subscribing members. Any such agreement shall be subject to the approval of the department of public health.

M.G.L. c. 176C, § 5 Medical organization defined; content of agreement; protection of patient-physician relationship; approval of department of public health

c. 176C, § 5. Medical organization defined; content of agreement; protection of patient-physician relationship; approval of department of public health Section 5. Any medical organization shall consist of not less than five physicians who are duly registered to practice in the commonwealth and who are members of the Massachusetts Medical Society or other recognized association of physicians, or are members of the staff of any hospital approved by the American College of Surgeons. Any medical organization may enter into an agreement with any duly registered physician whereby such associated physician agrees to furnish medical services to the subscribing members of a medical service corporation with which the medical organization has an agreement and whereby such associated physician agrees to accept as payment for said services a proportion of the funds received by the said medical organization from the said medical service corporation. Such agreement to accept payment for services shall provide for payment according to units of funds received by the said medical organization and shall not provide for specified amounts, whether according to the services rendered by the said physician or otherwise. Nothing herein shall change the normal relations between patient and physician nor prohibit any medical organization from employing a medical director and assistants, or nurses, or establishing a clinic for the rendering of medical services. Any such agreement between a medical organization and its associated physicians shall be subject to the approval of the department of public health.

M.G.L. c. 176C, § 6 Associated physician; grounds for termination of agreement

c. 176C, § 6. Associated physician; grounds for termination of agreement Section 6. Every registered physician who complies with the qualifications, rules and regulations of a medical organization doing business in the community where such physician resides or practices, approved by the department of public health, shall have the right to become an associated physician of said medical organization. A medical organization may terminate its agreement with any associated physician for rendering any fraudulent or improper claim for payment or for failure reasonably to observe the approved rules and regulations of such medical organization including those governing the reports of services and the keeping of accounts and records or for failure to comply with the professional code of ethics as accepted by organized medicine.

M.G.L. c. 176C, § 7 Subscribers; choice of physician

c. 176C, § 7. Subscribers; choice of physician Section 7. Any person residing in the commonwealth who meets the qualifications specified in the by-laws of a medical service corporation shall have the right to become a subscribing member of the corporation. No officer, agent or employee of a medical service corporation shall influence or attempt to influence a subscribing member, or his dependent, in his choice of an associated physician. Any medical service corporation may, at its discretion, deny the right of membership to any person who makes any fraudulent claim or representation to the medical service corporation or associated physician or who has failed after a reasonable period of grace, to pay dues or other charges as provided in the subscription agreement, or for any other cause which may be approved by the department of public health.

M.G.L. c. 176C, § 8 Form and content of subscription agreement

c. 176C, § 8. Form and content of subscription agreement Section 8. A subscription agreement in a form approved by the department of public health shall be issued to each subscribing member of a medical service corporation. In addition to any other requirements such a form must meet the minimum readability standards required by section two B of chapter one hundred and seventy-five. Such agreement shall include a full and accurate statement of the benefits of membership, the medical services excluded if any, and the terms of duration, cancellation and termination. The by-laws, rules and regulations of a medical service corporation may by reference be incorporated in the subscription agreement; provided, that a full and complete copy of said by-laws, rules and regulations shall be available to any subscriber.

M.G.L. c. 176C, § 9 Annual statement; verification; content; violations

c. 176C, § 9. Annual statement; verification; content; violations Section 9. Every medical service corporation shall annually on or before the first day of March file in the office of the commissioner of insurance a statement verified by at least two of the principal officers of said corporation showing its condition as of the thirty-first day of December next preceding. Said statement shall be in such form and shall contain such other matters as the commissioner of insurance shall prescribe. A corporation neglecting to make and file its annual statement in the form and within the time herein specified shall forfeit one hundred dollars for each day during which such neglect continues after notification by said commissioner of such neglect, and thirty days after said notice said commissioner may terminate its authority to do new business while such default continues.

M.G.L. c. 176C, § 10 Inspection and examination of corporate affairs; access to information; confidentiality and privilege

c. 176C, § 10. Inspection and examination of corporate affairs; access to information; confidentiality and privilege Section 10. The commissioner of insurance or any deputy or other person whom the said commissioner shall designate shall, at least once in three years and whenever he deems it to be prudent, visit any such medical service corporation and examine into its affairs, shall have free access to all of the books, papers and documents of the corporation that relate to its business and may summon as witnesses and examine under oath its officers, agents or employees or other persons in relation to its affairs, transactions and condition. The commissioner of insurance shall require every such corporation to keep its books, records, accounts and vouchers in such manner that he or his authorized representatives may readily verify its annual statements and ascertain whether the corporation has complied with the law. The commissioner of insurance is authorized and directed on request of the commissioner of public health to advise him on any financial, accounting, bookkeeping or other similar question arising out of the operation of any medical service plan. Notwithstanding any other provision of the General Laws, including clause Twenty-sixth of section 7 of chapter 4 and chapter 66, documents, materials or other information, including but not limited to, all working papers and copies thereof created, produced or obtained by or disclosed to the commissioner or any other person in the course of an examination made pursuant to this section or in the course of analysis by the commissioner of the financial condition or market conduct of a medical service corporation shall be confidential by law and privileged, shall not be a public record under said clause Twenty-sixth, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties. Documents, materials or other information, including but not limited to, all working papers and copies thereof in the possession or control of the National Association of Insurance Commissioners and its affiliates and subsidiaries shall be confidential by law and privileged, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action if they are: (i) created, produced, obtained by or disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries in the course of the National Association of Insurance Commissioners and its affiliates and subsidiaries assisting an examination made pursuant to this section or assisting the commissioner in the analysis of the financial condition or market conduct of a medical service corporation; or (ii) disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries pursuant to this section by any member of the National Association of Insurance Commissioners. Neither the commissioner nor any person who received the documents, material or other information while acting under the authority of the commissioner, including the National Association of Insurance Commissioners and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials or information subject to this section. In order to assist in the performance of the commissioner's duties, the commissioner: (i) may share documents, materials or other information, including the confidential and privileged documents, materials or information subject to this section, with other state, federal and international regulatory agencies, the National Association of Insurance Commissioners and its affiliates and subsidiaries and state, federal and international law enforcement authorities provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication or other information; (ii) may receive documents, materials, communications or information, including otherwise confidential and privileged documents, materials or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries and regulatory and law enforcement officials of other foreign or domestic jurisdictions and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and (iii) may enter into agreements governing sharing and use of information consistent with this section. No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in this section. A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this section shall be available and enforced in any proceeding in and in any court of the commonwealth.

M.G.L. c. 176C, § 11 Depositary for funds

c. 176C, § 11. Depositary for funds Section 11. The funds of any corporation subject to this chapter shall be kept only in banks in which funds of the commonwealth are authorized to be deposited, or by depositing on paid-up shares and accounts of and in co-operative banks, or by investing in share accounts of federal savings and loan associations located in this commonwealth in accordance with the authority and limitations specified in section ten of chapter one hundred and seventy-six B.

M.G.L. c. 176C, § 12 Submission of disputes; review of determination

c. 176C, § 12. Submission of disputes; review of determination Section 12. Any dispute arising between a medical service corporation and any medical organization with which such corporation has an agreement as provided by this chapter may be submitted to the department of public health for its decision with respect thereto. All decisions and findings of any state department or officer made under any provision of this chapter may be revised by proper proceedings in the superior court.

M.G.L. c. 176C, § 13 Grounds for enjoining transaction of business; receivers; distribution of funds

c. 176C, § 13. Grounds for enjoining transaction of business; receivers; distribution of funds Section 13. If the department of public health is satisfied as to any corporation subject to this chapter that: 1. It has failed to comply with the provisions of its charter, or 2. It is being operated for profit, or 3. It is fraudulently conducted, or 4. Its condition is such as to render its further transaction of business hazardous to the public or to its subscribers, or 5. Its officers and agents have refused to submit to an examination under section ten, or 6. It has exceeded its powers, or 7. It has violated any provision of law, it may apply to the supreme judicial court for an injunction restraining such corporation from further proceeding with its business. The court may forthwith issue a temporary injunction restraining the transaction of any business, and it may after a full hearing make the injunction permanent and appoint one or more receivers to take possession of the books, papers, monies and other assets of the corporation, settle its affairs, and distribute its funds to those entitled thereto, subject to such rules and orders as the court may prescribe.

M.G.L. c. 176C, § 14 Tax exemption; liability

c. 176C, § 14. Tax exemption; liability Section 14. Every corporation subject to this chapter is hereby declared to be a charitable and benevolent corporation and, except as hereinafter provided, its property shall be exempt from state, county, district and municipal taxes. No such corporation nor any medical organization shall be liable for injuries resulting from negligence or malpractice on the part of any associated physician or any of its employees.

M.G.L. c. 176C, § 15 Excise tax; violation

c. 176C, § 15. Excise tax; violation Section 15. Every corporation subject to this chapter shall annually on or before March first, make a return to the commissioner of revenue, signed and sworn to by a majority of its board of directors, of the total amount of subscription dues paid by subscribing members during the preceding calendar year, and shall pay to said commissioner an excise of one per cent upon the amount of such dues. If said corporation neglects to make such return, it shall forfeit fifty dollars for each day such neglect continues.

M.G.L. c. 176C, § 16 Salaries, compensation or emoluments

c. 176C, § 16. Salaries, compensation or emoluments Section 16. No corporation subject to this chapter shall pay any salary, compensation or emolument to any officer, trustee or director thereof, nor shall any such corporation pay any salary, compensation or emolument, amounting in any year to more than five thousand dollars, to any person, unless such payment be first authorized by a vote of its board of directors. No corporation subject to this chapter shall make any agreement with any of its officers, trustees or employees whereby it agrees that for any services rendered or to be rendered he shall receive any salary, compensation or emolument for a period of more than three years from the date of such agreement.

M.G.L. c. 176C, § 16A Pay-roll deductions for governmental employees

c. 176C, § 16A. Pay-roll deductions for governmental employees Section 16A. The pertinent provisions of section one hundred and thirty-eight A of chapter one hundred and seventy-five shall apply to deductions on pay-roll schedules from the salary of any state, county or municipal employee for the payment of the amount payable by such an employee under a contract issued to him as a subscribing member by a medical service corporation.

M.G.L. c. 176C, § 17 Right of organization to provide medical services

c. 176C, § 17. Right of organization to provide medical services Section 17. Nothing herein shall be construed to prohibit the providing of medical services by an educational or other charitable institution to the persons whom it serves, nor to prohibit any business organization from providing medical services for its employees, nor to prohibit an insurance company, or other corporation or society which is subject to the supervision of the commissioner of insurance, from operating in accordance with the laws governing insurance companies or such corporations or societies.

Source: Massachusetts General Court (malegislature.gov)URL: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter176CFetched: 10/20/2026

NON&ndash;PROFIT MEDICAL SERVICE PLANS