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Private Health Insurance Bill 2007

Part 6-5 External managers and terminating managers

Division 287 Introduction

287-1   What this Part is about

External management of health benefits funds takes place under Division 217, and terminating management of health benefits funds takes place under Division 149. This Part provides for several matters relating to external management and terminating management under those Divisions.

287-5   The Private Health Insurance (Management) Rules

                   * External management and * terminating management of * health benefits funds is also dealt with in the Private Health Insurance (Management) Rules. The provisions of this Part indicate when a particular matter is or may be dealt with in these Rules.

Note:          The Private Health Insurance (Management) Rules are made by the Minister under section 333-20.



 

Division 290 Powers of managers

290-1   Powers of managers

             (1)  While a * health benefits fund is under * external management or * terminating management, the * manager has power, in the interests of the * policy holders of the fund:

                     (a)  to control the business, affairs and property of the fund; and

                     (b)  to carry on the business of the fund, and to manage the affairs and property of the fund; and

                     (c)  to terminate or dispose of all or any part of the business, and to dispose of all or any part of the property, of the fund; and

                     (d)  to execute a document, bring or defend proceedings, or do any other thing, in the name of the * responsible insurer for the fund, for the purposes of the business of the fund; and

                     (e)  to appoint a solicitor to assist him or her in his or her duties; and

                      (f)  to appoint an agent to do any business that the manager is unable to do, or that it is unreasonable to expect the manager to do, in person; and

                     (g)  to perform any other function and exercise any other power that the insurer or any of its * officers could perform or exercise in relation to the conduct of the fund if the fund were not under external management or terminating management.

             (2)  The rights of the insurer, and any of its * officers, to exercise any of those powers in relation to the fund is suspended while the fund is under * external management or * terminating management.

290-5   Officers etc. not to perform functions etc. while fund is under management

             (1)  A person commits an offence if:

                     (a)  a * health benefits fund is under * external management or * terminating management; and

                     (b)  the person performs or exercises in relation to the fund, or purports to perform or exercise in relation to the fund, a function or power of:

                              (i)  an * officer of the * responsible insurer for the fund; or

                             (ii)  a receiver, or receiver and manager, of any of the * assets of the fund; and

                     (c)  the person is not the * manager of the fund; and

                     (d)  it is a function or power of the manager; and

                     (e)  the person does so without the manager’s written approval.

Penalty:  30 penalty units or imprisonment for 6 months, or both.

             (2)  Subsection (1) does not imply that an * officer of the insurer is removed from his or her office.

             (3)  Section 149-30 or 217-20 does not limit the scope of subsection (1).

             (4)  To avoid doubt, a person is not an * officer of a private health insurer merely because he or she is an employee of the insurer.

290-10   Managers act as agents of private health insurers

             (1)  When exercising a power as * manager of a * health benefits fund, the manager is taken to be acting as the agent of the * responsible insurer for the fund.

             (2)  To avoid doubt, subsection (1) does not confer on the * responsible insurer for the fund to direct the * manager in the exercise of his or her powers.



 

Division 293 Information concerning, and records and property of, health benefits funds

293-1   Directors etc. to help managers

             (1)  As soon as practicable after the * external management or * terminating management of a * health benefits fund begins, each * director of the * responsible insurer for the fund must:

                     (a)  deliver to the * manager all records in the director’s possession that relate to the business of the fund, other than records that the director is entitled to retain as against the manager and the insurer; and

                     (b)  if the director knows of the locality of other records relating to the business of the fund—tell the manager of that locality.

             (2)  Within 7 days after the * external management or * terminating management of the fund begins, or such longer period as the * manager allows, the * directors and other * officers of the * responsible insurer for the fund must give to the manager a statement about the business, property, affairs and financial circumstances of the fund.

             (3)  The statement must comply with any requirements of the * manager as to its form and contents.

             (4)  A * director or other * officer of the * responsible insurer for the fund must:

                     (a)  attend on the * manager at such times; and

                     (b)  give the manager such information about the business, property, affairs and financial circumstances of the fund;

as the manager reasonably requires.

             (5)  A person who fails to comply with the requirements of subsection (1), (2), (3) or (4) commits an offence.

Penalty:  30 penalty units or imprisonment for 6 months, or both.

293-5   Managers’ rights to certain records

             (1)  A person is not entitled, as against the * manager of a * health benefits fund:

                     (a)  to retain possession of records of the * responsible insurer for the fund; or

                     (b)  to claim or enforce a lien on such records;

but such a lien is not otherwise prejudiced.

             (2)  Paragraph (1)(a) does not apply in relation to records of which a secured creditor of the * responsible insurer for the fund is entitled to possession otherwise than because of a lien. However, the * manager is entitled to inspect, and make copies of, such records at any reasonable time.

             (3)  The * manager of a * health benefits fund may give to a person written notice requiring the person to deliver to the manager, as specified in the notice, records so specified that are in the person’s possession.

             (4)  A notice under subsection (3) must specify a period of at least 3 days as the period within which the notice must be complied with.

             (5)  A person commits an offence if:

                     (a)  the person receives a notice under subsection (3) from the * manager of a * health benefits fund; and

                     (b)  the person does not comply with the notice.

Penalty:  30 penalty units or imprisonment for 6 months, or both.

             (6)  Subsection (5) does not apply if the person is entitled to retain possession of the records, as against the * manager and also as against the * responsible insurer for the fund.

Note:          The defendant bears an evidential burden in relation to the matter in subsection (6). See subsection 13.3(3) of the Criminal Code .

293-10   Only manager can deal with property of fund under management

             (1)  A transaction or dealing affecting the property of a * health benefits fund under * external management or * terminating management, that is entered into by the * responsible insurer for the fund or by a person purportedly on behalf of the fund or the responsible insurer, is void unless:

                     (a)  the transaction or dealing has been entered into by the * manager of the fund; or

                     (b)  the manager consented to the transaction or dealing before it was entered into; or

                     (c)  the transaction or dealing was entered into by order of the Federal Court or of the Supreme Court of a State or Territory.

             (2)  Subsection (1) does not apply to a payment that an * ADI makes, out of an account kept with the ADI by the * responsible insurer for the fund, that is made:

                     (a)  in good faith and in the ordinary course of the ADI’s banking business; and

                     (b)  after the * external management or * terminating management began but on or before the day on which:

                              (i)  the * manager gives to the ADI written notice of the appointment that began the external management or terminating management; or

                             (ii)  the manager notifies the appointment in a national newspaper, or in a newspaper circulating in each jurisdiction where the responsible insurer has its registered office or carries on business;

                            whichever happens first.

             (3)  Subsection (1) has effect subject to any order that the Federal Court makes after the purported transaction or dealing.

             (4)  A person commits an offence if:

                     (a)  the person is:

                              (i)  an * officer of the * responsible insurer for a * health benefits fund under * external management or * terminating management; or

                             (ii)  a receiver, or receiver and manager, of any of the * assets of the fund; and

                     (b)  the person:

                              (i)  purported to enter into a transaction or dealing on behalf of the responsible insurer; or

                             (ii)  was in any way, by act or omission, directly or indirectly concerned in, or party to, a transaction or dealing; and

                     (c)  the transaction or dealing is, because of the operation of subsection (1), void, or would be void apart from subsection (3).

Penalty:  30 penalty units or imprisonment for 6 months, or both.

293-15   Order for compensation where officer involved in void transaction

             (1)  If:

                     (a)  a court finds a person guilty of an offence against subsection 293-10(4) (including such an offence that is taken to have been committed because of section 5 of the Crimes Act 1914 ); and

                     (b)  the court is satisfied that the * health benefits fund under * external management or * terminating management to which the offence relates has suffered loss or damage because of the act or omission constituting the offence;

the court may (whether or not it imposes a penalty) order the person to pay compensation of such amount as the order specifies to the * responsible insurer for the fund.

             (2)  An order under subsection (1) may be enforced as if it were a judgment of the court.

             (3)  If, in proceedings against a person under subsection 293-10(4), it appears to the court that the person is, or might be, liable to pay compensation under subsection (1), but that:

                     (a)  the person has acted honestly; and

                     (b)  having regard to all the circumstances of the case, the person ought fairly to be excused from paying compensation;

the court may relieve the person either wholly or partly from a liability to pay compensation under subsection (2) to which the person would otherwise be subject, or that might otherwise be imposed on the person.

             (4)  If a person thinks that proceedings under subsection 293-10(4) will, or might be, begun against him or her, he or she may apply to the Federal Court for relief.

             (5)  On an application under subsection (4), the Federal Court may grant relief under subsection (3) as if proceedings under subsection 293-10(4) had been begun in the Federal Court.

             (6)  For the purposes of subsection (3) as it applies for the purposes of a case tried by a judge with a jury:

                     (a)  a reference in that subsection to the court is a reference to the judge; and

                     (b)  the relief that may be granted includes withdrawing the case in whole or in part from the jury and directing judgment to be entered for the defendant on such terms as to costs as the judge thinks appropriate.



 

Division 296 Provisions incidental to appointment of managers

296-1   Remuneration of managers

             (1)  The Council may, in writing, determine:

                     (a)  the remuneration and allowances that an * external manager or * terminating manager is to receive; and

                     (b)  who is to pay that remuneration and those allowances, if they are not to be paid as mentioned in subsection (2).

             (2)  Unless the Council determines otherwise, the remuneration and allowances are to be paid out of the * assets of the * health benefits fund under * external management or * terminating management.

296-5   Council may give directions to managers

             (1)  The Council may give a * manager written directions concerning the exercise of the powers that are vested in the manager.

             (2)  The directions given to the * manager will ordinarily be of a general nature but may, where appropriate, take into account specific circumstances relevant to the particular * health benefits fund under * external management or * terminating management.

             (3)  The Council may also give directions to the * manager concerning the provision to the Council, from time to time, of interim reports relating to the business of the * health benefits fund under * external management or * terminating management.

             (4)  The * manager must comply with any directions given to him or her under this section.

296-10   Termination of appointments of managers

             (1)  The Council may, at any time, by written notice given to a * manager, terminate the appointment of the manager with effect from the date specified in the instrument of termination.

             (2)  If the Council terminates the appointment of an * external manager, it may appoint another external manager (the replacement external manager ) to carry on the * external management.

             (3)  If the Council terminates the appointment of an * external manager of a * health benefits fund but does not appoint a replacement external manager, then, with effect from the termination:

                     (a)  the external manager whose appointment has been terminated is divested of the power:

                              (i)  to control the business, affairs and property of the fund; and

                             (ii)  to carry on the business, and to manage the affairs and property, of the fund;

                            and those powers vest once again in the * officers of the * responsible insurer for the fund; and

                     (b)  all of the other powers of the external manager in relation to the fund cease.

             (4)  If the Council terminates the appointment of a * terminating manager, it must appoint another terminating manager to carry on the * terminating management, unless:

                     (a)  the Federal Court has ordered under section 149-35 an end to the termination of the * health benefits funds in question; or

                     (b)  the termination of those funds has been * completed, and the terminating manager has reported to the Council under section 149-55.

296-15   Acts of managers valid etc.

             (1)  The acts of the * manager of a * health benefits fund are valid despite any defects that may afterwards be discovered in his or her appointment.

             (2)  Despite any defect or irregularity affecting the validity of the appointment of * manager of a * health benefits fund:

                     (a)  a conveyance, assignment, transfer, mortgage or charge of * assets of the fund; or

                     (b)  a payment of money of the fund; or

                     (c)  any other disposition of assets of the fund;

is valid in favour of any person taking such assets in good faith and for value and without actual knowledge of the defect or irregularity.

             (3)  Despite any defect or irregularity affecting the validity of the appointment of * manager of a * health benefits fund, a person making or permitting:

                     (a)  a payment of money of the fund; or

                     (b)  any other disposition of * assets of the fund;

is to be protected and indemnified in so doing despite any defect or irregularity affecting the validity of the appointment of the manager that is not then known to that person.

296-20   Indemnity

                   The * manager of a * health benefits fund is not subject to any action, claim or demand by, or liable to, any person in respect of anything done or omitted to be done in good faith in, or in connection with, the exercise of the powers conferred on the manager by this Act.

296-25   Qualified privilege

                   The * manager of a * health benefits fund has qualified privilege in respect of a statement that he or she makes, whether orally or in writing, in the course of his or her duties as manager.



 

Division 299 Miscellaneous

299-1   Time for doing act does not run while act prevented by this Division

                   If:

                     (a)  for any purpose (for example, the purposes of a law, agreement or instrument) an act must or may be done within a particular period or before a particular time; and

                     (b)  Division 149 or Part 5-3 or this Part prevents the act from being done within that period or before that time;

the period is extended, or the time is deferred, because of this section, according to how long Division 149 or Part 5-3 or this Part prevented the act from being done.

299-5   Continued application of other provisions of Act

             (1)  The appointment of a person as the * external manager of a * health benefits fund does not affect the continued operation of provisions of this Act other than the provisions of Division 217:

                     (a)  in relation to the fund; or

                     (b)  in relation to the rights and obligations of persons in relation to the * responsible insurer for the fund.

             (2)  The appointment of a person as the * terminating manager of a * health benefits fund does not affect the continued operation of provisions of this Act other than the provisions of Division 149 or 220:

                     (a)  in relation to the fund; or

                     (b)  in relation to the rights and obligations of persons in relation to the * responsible insurer for the fund.

299-10   Modifications of this Act in relation to health benefits funds under management

             (1)  The Private Health Insurance (Management) Rules may set out modifications of this Act (including omissions, additions and substitutions) relating to how Chapter 3 applies in relation to * health benefits funds for which:

                     (a)  * external managers have been appointed under Division 217; or

                     (b)  * terminating managers have been appointed under Division 149 or 220.

             (2)  The Private Health Insurance (Management) Rules may provide for different such modifications according to the nature of the * health benefits funds concerned.

             (3)  The modifications cannot:

                     (a)  modify a provision of this Act that creates an offence; or

                     (b)  include new provisions that create offences.

             (4)  This Act has effect subject to the modifications.

299-15   Order of Court to be binding on all persons

                   An order of the Court made under Division 149, Part 5-3 or this Part, relating to any matter, is binding on all persons and has effect despite anything in the constitution or * rules of a private health insurer to which the order may relate.

299-20   Jurisdiction of Federal Court

                   The Federal Court has jurisdiction to hear and determine applications under Division 149, Part 5-3 or this Part and to make any necessary orders in respect of those applications.

299-25   Private Health Insurance (Management) Rules dealing with various matters

                   The Private Health Insurance (Management) Rules may:

                     (a)  make provision for, or in relation to, any of the following matters in relation to meetings required or permitted to be held by Division 217, or by provisions of the Private Health Insurance (Health Benefits Fund Enforcement) Rules made for the purposes of that Division:

                              (i)  the convening, conduct of, and procedure at, a meeting;

                             (ii)  voting at a meeting (including proxy voting);

                            (iii)  the number of persons that constitutes a quorum at a meeting;

                            (iv)  the sending of notices to persons entitled to attend a meeting;

                             (v)  the lodging of copies of notices of, or resolutions passed at, a meeting; and

                     (b)  make provision relating to the form and contents of any document or instrument required or permitted to be given to the Council, or to an * external manager or * terminating manager of a * health benefits fund, by a provision of Division 217 or 149.