Bill > A6175

Introduced Session

This bill permits dental service corporations to establish nonprofit parent corporations. Current law does not provide a mechanism for a dental service corporation (DSC) to update its corporate structure. Other states with similar laws have supplemented their statutes to enable DSCs to reorganize in this manner. It is the sponsor's intent to supplement the "Dental Service Corporation Act of 1968" to ensure that a DSC can continue to provide affordable dental care to its subscribers and promote competition in the dental service market that has evolved significantly since the act's passage in 1968, in a manner which provides transparency and consumer protection. The bill continues to impose all statutory requirements on a DSC under the act, while also facilitating and increasing the DSC's utilization of modern technologies and tools to better address current challenges to the State's oral health infrastructure. The bill stipulates that a DSC seeking to form a nonprofit parent corporation must make an application to the Commissioner of the Department of Banking and Insurance which shall include a plan for the formation of the nonprofit parent corporation, including resolutions, diagrams of the proposed structure, a list of the directors or executive officers, plans or proposals to make material changes to the DSC's business, documentation demonstrating compliance with all solvency requirements, and plans or proposals to make any distributions. The bill requires the commissioner to review the application for completeness and, if found complete, the commissioner has the sole discretion to approve or disprove the application within 120 days. The bill provides for procedures in the event of a disapproval, including the opportunity to cure deficiencies and seek judicial review. Under the bill, the parent corporation is required to maintain the DSC's statutorily prescribed purposes. The parent corporation's purpose is to provide affordable and accessible oral health care, promote the integration of the oral health care system to meet the needs of consumers, promote the innovation and delivery of solutions and diversified services for the benefit of consumers, and enhance competition in the delivery of oral health care and related products and services. The parent corporation is prohibited from being organized for pecuniary profit and is required to be a charitable and benevolent institution. Although the parent corporation may have subsidiaries, from the bill prohibits conversion to a for-profit entity, re-domestication in another state, the transaction of business in this State as a risk-bearing entity, including as a DSC, and the underwriting of an offering of securities. Lastly, the bill allows a DSC to make distributions to the parent company consistent with provisions of existing law. It further imposes specific requirements on the DSC and parent corporation related to enterprise risk reporting to identify material risks within the insurance holding company system that could adversely affect the DSC.

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Roy Freiman (D)*, 

Introduced, Referred to Assembly Financial Institutions and Insurance Committee (on 12/08/2025)

Official Document