CHAPTER 121

An Act to provide for the creation of dental service corporations; to
establish plans for prepaid dental and related service; to provide hou
such corporation shall be regulated, supervised and taxed; and tc
provide a penalty.

[fH 340]

Approved February 28, 1964

Be it enacted by the General Assembly of Virginia:
1. § 1. As used in this act, unless the context requires otherwise:
a) “Association” means the Virginia State Dental Association;
(b) “Dental service plan” or “plan” means a plan or arrangemen
under which prepaid dental services are or may be rendered to subscriber:
by participating dentists through a dental service plan corporation actins
as agent for the participating dentists;
(c) “Licensed dentist’? means a dentist licensed by the Virginia Stat
Board of Dental Examiners or other appropriate State licensing authority
(d) “Participating dentist” means a licensed dentist who is partici
pating in a dental service plan.
e) “Corporation” means a dental service plan corporation organize
pursuant to the provisions of this act and the laws of this State;
(f) “Subscriber” means an individual, partnership, association or cor
poration who or which contracts through a dental service plan corporatio:
with participating dentists for dental services; and,
(g) “Commission” means the State Corporation Commission.

§ 2. <A group of licensed dentists may organize a nonstock, nonprofit
dental service plan corporation, the certificate of incorporation of which
shall include the following provisions in addition to other provisions neces-
sary to carry out the provisions of this act and required by law: }

__ (a) There shall be a board of not less than twelve nor more than
eighteen directors. The original board of directors shall be designated by
the Governor and shall consist of (i) eight licensed dentists selected from
twelve nominees submitted by the Association, and (ii) four persons who
shall be residents of the State who are not dentists. Of the original board
the Governor shall designate two dentist members and one nondentist
member to serve for one year, two dentist members and one nondentist
member to serve for two years, two dentist members and one nondentist
member to serve for three years, and two dentist members and one non-
dentist member to serve for four years. Their successors shall be elected
by the participating dentists to serve for a term of four years each. All
vacancies occurring on the board shall be filled by the board. In electing
successors and filling vacancies the original proportion of dentists and
nondentists shall always be maintained.

(b) A corporation shall not engage in the practice of dentistry.

(c) The license and renewal fees paid by a corporation under this
act shall be in lieu of all other State and local license fees or license taxes,
and State income taxes of the corporation.

_ § 3. A corporation may ‘(subject to the approval of the Commis-
sion), as agent for the participating dentists, adopt one or more dental
service plans. Each plan shall include, in addition to other necessary pro-
visions, the following:

(a) The geographical area in which the plan shall operate, which
area shall be approved by the Commission. Only one corporation shall
operate in one area, unless the Commission finds that the operation of
more than one corporation in an area will promote the public welfare.
Subscription contracts shall not be sold to persons residing outside the
area of the plan unless they are regularly employed within the area. The
subscription contract of a subscriber who neither lives nor is employed
within the area shall be cancelled by notice given in accordance with the
subscription contract.

(b) That every licensed dentist practicing in the area shall have the
right to become a participating dentist under such terms and conditions
as are imposed on other participating dentists under similar circum-

nces.

(c) That a participating dentist shall have the right to engage in
other practice.

(d) That the private dentist-patient relationship shall be maintained
and the subscriber shall at all times have free choice of any participating
dentist who agrees to accept the subscriber as a patient.

(e) That the participating dentist will agree to perform the dental
services specified by the corporation at such rates of compensation as are
determined from time to time by the corporation and are filed with the
Commission and to abide by the bylaws, rules and regulations of the
corporation.

(f) A participating dentist may resign from a plan, but such resig-
nation shall not as to a subscriber, whose contract is in force at the date
of the resignation, become effective until the end of such subscriber’s cur-
rent contract year.

§ 4. Participating dentists, acting through the corporation as agent
may enter into contracts with subscribers to furnish specified dental serv-
ices at specified rates to the subscriber or subscriber’s members, officers or
employees. Contracts may vary as to services and rates.
§ 5. A corporation may enter into contracts with like or similar
corporations within or without this State for the interchange of services
to those included in subscription or other like contracts, and may provide
in subscription contracts for the substitution of such services in lieu of
those therein recited. .

§ 6. All licensed dentists participating in a plan shall be jointly and
severally liable on all contracts made for the purposes of the plan by them
or by their agent for them. Each such contract executed by their agent on
their behalf may be signed by the agent alone; and a contract so signed
shall be binding on the principals and not on the agent. Actions for breach
of such contracts may be brought against the principals naming the agent
as the sole defendant, and a judgment in favor of the plaintiff may be satis-
fied out of the assets of the plan in the custody of the agent or out of the
assets of each and all of the principals. A licensed dentist may be admitted
to a plan at any time and will then automatically become liable on all its
outstanding contracts. Each participant shall be liable for his own torts
and not for the torts of any other participant or of the agent.

§ 7. §§ 38.1-29, 38.1-44 to 38.1-57, 38.1-99 to 38.1-104, 38.1-159 to
38.1-165, 38.1-174 to 38.1-178, and 38.1-342.1 of the Code of Virginia re-
lating to insurance shall, insofar as they are not inconsistent with this act,
apply to the operation of corporations and plans hereunder.

§ 8. It shall be unlawful to operate a plan without a license issued
by the Commission. The corporation as agent for the participating dentists
shall apply for a license for each plan, and furnish such relevant informa-
tion as the Commission requires. Each license shall expire at midnight on
the following thirtieth day of April. With each application for a license a
filing fee of fifty dollars shall be paid, and if the license is issued, the filing
fee shall serve as a license fee for the remaining portion of the license year.

§ 9. Unless the corporation notifies the Commission that it does not
wish a renewal license for a plan, the corporation shall be deemed to have
applied for a renewal license for that plan, and shall pay on the first day
of May of each year a renewal fee. If the plan has fewer than five thou-
sand and one subscribers, the renewal fee shall be fifty dollars. If the
plan has more than five thousand but fewer than ten thousand and one
subscribers, the renewal fee shall be one hundred dollars. If the plan has
more than ten thousand but fewer than twenty thousand and one sub-
scribers, the renewal fee shall be one hundred and fifty dollars. If the
plan has more than twenty thousand subscribers, the renewal fee shall be
two hundred dollars.

A ine number of subscribers shall be counted as of the first day of
pril.

§ 10. Subscription contracts may be solicited outside the principal
office of a plan only through licensed salesmen. Each salesman’s license
shall expire at midnight on the following thirtieth day of April. A sales-
man shall apply to the Commission for a license and furnish such relevant
information as the Commission may require. No salesman’s license shall
be issued unless the Commission is satisfied that the applicant is a person
of good character and reputation and competent to perform the obliga-
tions of a salesman of subscription contracts. With each application for a
salesman’s license a filing fee of ten dollars shall be paid, and if the license
is issued the filing fee shall serve as a license fee for the remaining portion
of the license year.

§ 11. Each salesman who wishes a renewal license shall apply for
it in writing and pay a renewal fee of five dollars.

§ 12. In the operation of a plan, it shall be unlawful to use any mis-
leading advertising matter or subscription applications or contracts, wheth-
er written or oral.

§ 18. The Commission shall have the jurisdiction and power of a
court of equity to issue temporary and permanent injunctions restraining
violations or attempted violations of this chapter, and to enforce such in-
junctions by fine or imprisonment.

§ 14. The Commission may, by judgment entered after a hearing on
notice duly served on the defendant not less than ten days before the date
of the hearing, if it be proved that the defendant has violated any provision
of this act or any lawful order of the Commission issued under this chapter,
impose a penalty not exceeding one thousand dollars, which shall be col-
lectible by the process of the Commission as provided by law.

In addition to imposing such penalty, or without imposing such pen-
alty, the Commission, in any such case, may revoke any license issued by
it to the defendant.

§ 15. Any person aggrieved by any final or interlocutory judgment,
order or decree of the Commission may appeal, as a matter of right, to the
Supreme Court of Appeals.

2. All laws or parts of laws irreconcilably inconsistent with the pro-
visions hereof are hereby repealed to the extent necessary to give full effect
to the provisions of this act, but no further.