CHAPTER 698b
PREPAID LEGAL SERVICES

Table of Contents

Sec. 38a-230. (Formerly Sec. 38-401). Definitions. Legal service corporation may fix rates and contract for coordination of benefits.
Sec. 38a-231. (Formerly Sec. 38-402). Bar associations may form nonprofit legal service corporations.
Sec. 38a-232. (Formerly Sec. 38-403). Hospital service corporation may form corporation establishing nonprofit legal service plan.
Sec. 38a-233. (Formerly Sec. 38-404). Insurance company may issue contracts for payment of legal costs.
Sec. 38a-234. (Formerly Sec. 38-405). Incorporation of legal service corporations.
Sec. 38a-235. (Formerly Sec. 38-406). Nature of contract and mandatory provisions.
Sec. 38a-236. (Formerly Sec. 38-407). Filing of contracts and contract rates with Insurance Commissioner.
Sec. 38a-237. (Formerly Sec. 38-408). Filing of statement of financial condition. Insurance Commissioner's examination of legal service corporation; visitation rights; summoning of witnesses.
Sec. 38a-238. (Formerly Sec. 38-409). Investment of legal service corporation funds.
Sec. 38a-239. (Formerly Sec. 38-410). Liquidation, dissolution or rehabilitation of legal service corporation.
Sec. 38a-240. (Formerly Sec. 38-411). Legal service corporation property exempt from taxes.
Sec. 38a-241. (Formerly Sec. 38-412). Appeal from order of Insurance Commissioner. Disputes between subscriber and legal service corporation; venue.
Sec. 38a-242. (Formerly Sec. 38-413). Legal service corporation to reimburse state for cost and expense of regulation. Special charge in addition to tax under chapter 207.
Sec. 38a-243. (Formerly Sec. 38-414). Plan to permit subscribers to choose their own attorneys.
Sec. 38a-244. (Formerly Sec. 38-415). Applicability.
Sec. 38a-245. (Formerly Sec. 38-416). Solicitation of subscribers; prohibited acts.
Secs. 38a-246 to 38a-249.

      Sec. 38a-230. (Formerly Sec. 38-401). Definitions. Legal service corporation may fix rates and contract for coordination of benefits. (a) A nonprofit legal service corporation is defined as a nonprofit corporation without capital stock organized under the laws of the state for the purpose of establishing, maintaining and operating a plan whereby legal services may be provided at the expense of such corporation by attorneys-at-law to subscribers under contract entitling such subscribers to payments or benefits in fixed or variable amounts for the cost of legal services. Cost of legal services shall include attorneys' fees, court costs and related expenses incurred in the exercise of any right.

      (b) A legal service corporation providing benefits to plan subscribers under the provisions of subsection (a) of this section may, upon obtaining the approval of the Insurance Commissioner as provided in section 38a-234: (1) Fix or adjust the rates to be paid by any group or groups of its subscribers based upon past and prospective loss experience and may classify subscribers and groups of subscribers and determine rates with reference to standards for variations of risks or expenses which it may establish, and (2) contract for the coordination of benefits with other legal service corporations or with insurance companies to avoid duplication of benefits to be provided to its group subscribers. Subdivisions (1) and (2) of this subsection shall be subject to such regulations as may be promulgated by the Insurance Commissioner to establish guidelines of eligibility for experience rating and adoption of coordination of benefit clauses in legal service benefit contracts. Every such corporation shall be governed by sections 38a-230 to 38a-245, inclusive, and shall, except as specifically designated herein, be exempt from the provisions of the general statutes relating to insurance.

      (c) Any such legal service corporation may contract with any insurance company authorized to make any contract for accident and health insurance or casualty insurance in this state, or with any hospital service corporation incorporated under sections 38a-199 to 38a-209, inclusive, or any medical service corporation incorporated under sections 38a-214 to 38a-225, inclusive, for the performance of services to such legal service corporation or its subscribers necessary or proper in providing for payments or benefits under the provisions of this section.

      (P.A. 79-234, S. 1; P.A. 80-482, S. 3, 345, 348.)

      History: P.A. 80-482 abolished the department of business regulation and restored its division of insurance as an independent department (as it was prior to creation of the business regulation department in P.A. 77-614), thus allowing omission of reference to business regulation department in insurance commissioner's title; Sec. 38-401 transferred to Sec. 38a-230 in 1991.

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      Sec. 38a-231. (Formerly Sec. 38-402). Bar associations may form nonprofit legal service corporations. The Connecticut Bar Association, any county bar association or any municipal bar association, including any bar association made up of attorneys-at-law in more than a single municipality in this state may, by vote of its board of directors, board of governors or other managing board or committee, form or cause to be formed a nonprofit legal service corporation in accordance with the provisions of sections 38a-230 to 38a-245, inclusive.

      (P.A. 79-234, S. 2.)

      History: Sec. 38-402 transferred to Sec. 38a-231 in 1991.

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      Sec. 38a-232. (Formerly Sec. 38-403). Hospital service corporation may form corporation establishing nonprofit legal service plan. Any hospital service corporation incorporated under sections 38a-199 to 38a-209, inclusive, in addition to its powers under said sections, may form a corporation for the purpose of establishing, maintaining and operating a nonprofit legal service plan with authority to issue contracts for the payment of costs of legal services including, but not limited to, court costs and attorneys' fees incurred by or on behalf of persons covered by such contracts. The formation of any such corporation, the conduct of its business, its contracts and rates shall be subject to the approval of the Insurance Commissioner in a like manner as the conduct of business, contracts and rates of hospital service corporations pursuant to the provisions of said sections.

      (P.A. 79-234, S. 3.)

      History: Sec. 38-403 transferred to Sec. 38a-232 in 1991.

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      Sec. 38a-233. (Formerly Sec. 38-404). Insurance company may issue contracts for payment of legal costs. Any insurance company authorized to make any contract for accident and health insurance or liability insurance in this state may, when licensed by the commissioner, issue contracts for the payment of costs of legal services, including, but not limited to, court costs and attorneys' fees incurred by or on behalf of persons insured by such contracts.

      (P.A. 79-234, S. 4.)

      History: Sec. 38-404 transferred to Sec. 38a-233 in 1991.

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      Sec. 38a-234. (Formerly Sec. 38-405). Incorporation of legal service corporations. Any nonprofit legal service corporation as defined in section 38a-230 may be incorporated in this state, subject to the following provisions: (1) The certificate of incorporation of each such corporation shall have endorsed thereon, or attached thereto, the consent of the Insurance Commissioner, if he finds the same to be in accordance with sections 38a-230 to 38a-245, inclusive, provided security guaranteeing the performance of the obligations of such corporation shall be furnished in such form and amount as the commissioner determines necessary; (2) the certificate shall include a statement of the territory in which the corporation will operate and the services to be rendered by the corporation; and (3) a majority of the total membership of the board of directors shall consist of persons who are not admitted to practice law in Connecticut and who are not otherwise affiliated with or employed by an attorney, a law firm, a law department of a corporation or a bar association.

      (P.A. 79-234, S. 5; P.A. 90-243, S. 157.)

      History: P.A. 90-243 added a reference to "nonprofit" legal service corporation; Sec. 38-405 transferred to Sec. 38a-234 in 1991.

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      Sec. 38a-235. (Formerly Sec. 38-406). Nature of contract and mandatory provisions. (a) No single contract between any nonprofit legal service corporation as defined in section 38a-230, and its subscribers shall entitle more than one person to benefits, reimbursement or indemnity, except that a single contract may be issued to any person for the benefit of such person and his dependents, to any employer for the benefit of his employees, or any class thereof, and their dependents, to any labor union for the benefit of its members, or any class thereof, and their dependents, to the trustees of any fund established by two or more labor unions or employers or combination thereof for the benefit of their members or employees, or both, or any class thereof, and their dependents, and to any other entity or combination of entities which may be approved by the Insurance Commissioner.

      (b) A contract issued pursuant to subsection (a) of this section shall be in writing and a copy thereof shall be furnished to each subscriber and shall contain the following provisions: (1) A statement of the amount payable to the corporation by the subscriber and the manner in which such amount is payable; (2) a statement of the amount of benefits, reimbursement or indemnity to be furnished and the period during which it will be established, and, if there are to be exceptions, a detailed statement of such exceptions; (3) a statement of terms and conditions upon which the contract may be cancelled or otherwise terminated at the option of either party; (4) a statement that the contract includes the endorsements thereon and attached papers, if any, and contains the entire contract; (5) a statement that no statements by the subscriber in his application for a contract shall void the contract or be used in any legal proceeding thereunder, unless such application or an exact copy thereof is included in or attached to such contract; (6) a statement of the period of grace which will be allowed the subscriber for making any payment due under the contract, which period shall not be less than ten days; (7) a statement that nothing contained in the plan shall affect the ordinary professional relationship existing between the person rendering legal services under the plan and the subscriber to whom such services are rendered and that no action at law based upon or arising out of the attorney-client relationship shall be maintained against a nonprofit legal service corporation.

      (c) For the purposes of this section, "employer" shall include two or more organizations subject to common control through stock ownership or contract.

      (P.A. 79-234, S. 6; P.A. 90-243, S. 158.)

      History: P.A. 90-243 divided section into Subsecs., added a reference to "nonprofit" legal service corporation and made technical corrections for statutory consistency; Sec. 38-406 transferred to Sec. 38a-235 in 1991.

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      Sec. 38a-236. (Formerly Sec. 38-407). Filing of contracts and contract rates with Insurance Commissioner. No nonprofit legal service corporation, as defined in section 38a-230, shall enter into any contract with subscribers unless and until it has filed with the Insurance Commissioner a full schedule of the rates to be paid by the subscriber and has obtained said commissioner's approval thereof. The commissioner may refuse such approval if he finds such rates are excessive, inadequate or unfairly discriminatory. No such legal service corporation shall enter into any contract with subscribers unless and until it has filed with the Insurance Commissioner a copy of such contract, including all riders and endorsements thereof, and until the commissioner's approval thereof has been obtained. The Insurance Commissioner shall, within a reasonable time after the filing of any such form, notify such corporation either of his approval or disapproval thereof.

      (P.A. 79-234, S. 7; P.A. 90-243, S. 159.)

      History: P.A. 90-243 added a reference to "nonprofit" legal service corporation and made technical corrections for statutory consistency; Sec. 38-407 transferred to Sec. 38a-236 in 1991.

      Subsec. (e):

      Cited. 44 CA 698. P.A. 93-77, Sec. 2(e) cited. Id.


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      Sec. 38a-237. (Formerly Sec. 38-408). Filing of statement of financial condition. Insurance Commissioner's examination of legal service corporation; visitation rights; summoning of witnesses. (a) Each nonprofit legal service corporation, as defined in section 38a-230, shall, annually, on or before the first day of March, file in the office of the Insurance Commissioner a statement, verified by at least two of its principal officers, showing its condition on the thirty-first day of December next preceding, which shall be in such form and contain such information as the commissioner prescribes. The Insurance Commissioner or his representative shall make an examination of the financial condition of each such legal service corporation at least quadrennially.

      (b) The Insurance Commissioner, or any deputy or examiner or any other person whom he appoints, shall have the power of visitation and examination into the affairs of any such corporation and free access to all of the books, papers and documents that relate to the business of the corporation, and may summon and qualify witnesses under oath to examine its officers, agents or employees or other persons in relation to the affairs, transactions and condition of the corporation.

      (P.A. 79-234, S. 8; P.A. 90-243, S. 160.)

      History: P.A. 90-243 divided section into Subsecs., added a reference to "nonprofit" legal service corporation and made technical corrections for statutory consistency; Sec. 38-408 transferred to Sec. 38a-237 in 1991.

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      Sec. 38a-238. (Formerly Sec. 38-409). Investment of legal service corporation funds. No nonprofit legal service corporation, as defined in section 38a-230, shall invest its funds in any security other than those permitted by the general statutes for trust funds, except that no funds of such legal service corporation shall be invested in real estate mortgages.

      (P.A. 79-234, S. 9; P.A. 90-243, S. 161.)

      History: P.A. 90-243 added a reference to "nonprofit" legal service corporation; Sec. 38-409 transferred to Sec. 38a-238 in 1991.

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      Sec. 38a-239. (Formerly Sec. 38-410). Liquidation, dissolution or rehabilitation of legal service corporation. Each nonprofit legal service corporation, as defined in section 38a-230, shall be subject to liquidation, dissolution or rehabilitation, and such proceeding shall be under the supervision of the Insurance Commissioner, who shall have such powers hereunder as he possesses in reference to domestic insurance corporations.

      (P.A. 79-234, S. 10; P.A. 90-243, S. 162.)

      History: P.A. 90-243 added a reference to "nonprofit" legal service corporation; Sec. 38-410 transferred to Sec. 38a-239 in 1991.

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      Sec. 38a-240. (Formerly Sec. 38-411). Legal service corporation property exempt from taxes. All property of any nonprofit legal service corporation as defined in section 38a-230 shall be exempt from state, district and municipal taxes.

      (P.A. 79-234, S. 11; P.A. 90-243, S. 163.)

      History: P.A. 90-243 added a reference to "nonprofit" legal service corporation; Sec. 38-411 transferred to Sec. 38a-240 in 1991.

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      Sec. 38a-241. (Formerly Sec. 38-412). Appeal from order of Insurance Commissioner. Disputes between subscriber and legal service corporation; venue. From any order or decision of the Insurance Commissioner, an appeal may be taken by any person or corporation aggrieved thereby in accordance with the provisions of section 4-183. Any dispute which arises between a subscriber and a legal service corporation shall be referred, at the request of any party to such dispute, to the Insurance Commissioner, who shall have the power to hear and decide the same, subject to appeal in accordance with the provisions of section 4-183, except venue for such appeal shall be in the judicial district of New Britain.

      (P.A. 79-234, S. 12; P.A. 80-482, S. 3, 345, 348; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 95-220, S. 4-6; P.A. 99-215, S. 24, 29.)

      History: P.A. 80-482 omitted reference to abolished department of business regulation in commissioner's title, reflecting restoration of insurance commissioner and division of insurance to independent status which they held prior to creation of business regulation department in P.A. 77-614; P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; Sec. 38-412 transferred to Sec. 38a-241 in 1991; P.A. 93-142 changed the effective date of P.A. 88-320 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 95-220 changed the effective date of P.A. 88-230 from September 1, 1996, to September 1, 1998, effective July 1, 1995; P.A. 99-215 replaced "judicial district of Hartford" with "judicial district of New Britain", effective June 29, 1999.

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      Sec. 38a-242. (Formerly Sec. 38-413). Legal service corporation to reimburse state for cost and expense of regulation. Special charge in addition to tax under chapter 207. Each corporation organized in accordance with the provisions of this chapter shall pay to the Commissioner of Revenue Services on or before March first, annually, a charge at the rate of two per cent of the total net direct subscriber charges received by such corporation during the next preceding calendar year, which shall be in addition to any other payment required under section 38a-49 and shall be in compensation for the costs and expenses of regulation by the Insurance Department and all other governmental services. Returns, declarations and payments of this charge shall be made in accordance with the provisions of chapter 207, provided the corporations organized in accordance with the provisions of sections 38a-230 to 38a-245, inclusive, enumerated in this section shall not be subject to the tax provided in said chapter 207.

      (P.A. 79-234, S. 13; P.A. 80-482, S. 4, 345, 348.)

      History: P.A. 80-482 replaced division of insurance within the department of business regulation with insurance department, reflecting abolition of department of business regulation and restoration of state's insurance agency to its status before the creation of business regulation department in P.A. 77-614; Sec. 38-413 transferred to Sec. 38a-242 in 1991.

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      Sec. 38a-243. (Formerly Sec. 38-414). Plan to permit subscribers to choose their own attorneys. The plan shall assure that every subscriber shall be entitled to choose any attorney admitted to practice in Connecticut, provided such attorney is willing to accept such employment. Such plan may also provide for the use by the subscriber of any attorney who has agreed to participate as a member of the nonprofit legal services plan and may reasonably differentiate between the amount of service available from a participating or nonparticipating attorney.

      (P.A. 79-234, S. 14.)

      History: Sec. 38-414 transferred to Sec. 38a-243 in 1991.

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      Sec. 38a-244. (Formerly Sec. 38-415). Applicability. Nothing contained in sections 38a-230 to 38a-245, inclusive, is intended or shall be deemed or construed to apply to any group legal service plan, corporation, trust fund established under Section 302 of the Labor Management Relations Act, 1947, or arrangement whereby a group or association of any type retains attorneys on a full-time basis or retains an attorney or private law firm to render legal services to the members of such group or association, or the dependents or beneficiaries of such trust funds.

      (P.A. 79-234, S. 15.)

      History: Sec. 38-415 transferred to Sec. 38a-244 in 1991.

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      Sec. 38a-245. (Formerly Sec. 38-416). Solicitation of subscribers; prohibited acts. No person shall be engaged to solicit subscribers to any nonprofit prepaid legal services plan upon a commission basis or upon any other basis whereby the payment of the compensation or expenses of such person shall be conditioned upon the enrollment of subscribers unless the method of solicitation and rate of compensation has the prior written approval of the Insurance Commissioner.

      (P.A. 79-234, S. 16.)

      History: Sec. 38-416 transferred to Sec. 38a-245 in 1991.

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      Secs. 38a-246 to 38a-249. Reserved for future use.

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