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Question ID 17134

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are
entitled to certain rights as owners of the company, and it issues both participating and
nonparticipating insurance policies. Tidewater is considering converting to the type of
company that is owned by individuals who purchase shares of the company's stock.
Tidewater is incorporated under the laws of Illinois, but it conducts business in the
Canadian provinces of Ontario and Manitoba.
Tidewater established the Diversified Corporation, which then acquired various subsidiary
firms that produce unrelated products and services. Tidewater remains an independent
corporation and continues to own Diversified and the subsidiaries. In order to create and
maintain a common vision and goals among the subsidiaries, the management of
Diversified makes decisions about strategic planning and budgeting for each of the
businesses.
Tidewater's participating policy owners have the right to

Option A

Elect the board of directors on the basis of one vote per policy owner

Option B

Elect the board of directors on the basis of one vote for each policy a person owns

Option C

Participate in developing a corporate mission statement and strategic plans

Option D

Receive stock dividends for each policy they own

Correct Answer A
Explanation


Question ID 17135

Determine whether the following statement is true or false:
Although most-favored-nation (MFN) clauses in contracts between health plans and
healthcare providers are not per se illegal, they should be reviewed under the rule of
reason analysis for antitrust purposes.

Option A

True, because the Federal Trade Commission (FTC) ruled that MFN clauses are not per se illegal and the FTC encourages health plans to include them in provider contracts.

Option B

True, because although MFN clauses are not per se illegal, they violate antitrust laws if they have a predatory purpose and an anticompetitive effect.

Option C

False, because MFN clauses involve decisions by providers concerning the level of fees to charge, and thus they are per se illegal.

Option D

False, because MFN clauses are not per se illegal, and thus they are exempt from antitrust laws and regulation by the FTC.

Correct Answer B
Explanation

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