1394.5. When any person, including any nonresident of this state,
engages in conduct prohibited or made actionable by this chapter or
any rule, regulation, or order adopted hereunder, whether or not the
person has filed a power of attorney under subdivision (j) of Section
1351, and personal jurisdiction over the person cannot otherwise be
obtained in this state, that conduct shall be considered equivalent
to the appointment of the director or the director's successor in
office to be the attorney in fact to receive any lawful process in
any noncriminal suit, action, or proceeding against the person or the
person's successor, executor, or administrator which arises out of
that conduct and which is brought under this chapter or any rule,
regulation, or order adopted hereunder, with the same force and
validity as if personally served. Service may be made by leaving a
copy of the process in the office of the director, but it is not
effective unless the plaintiff or petitioner, who may be the director
in a suit, action, or proceeding instituted by him or her, forthwith
sends notice of the service and a copy of the process by registered
or certified mail to the defendant or respondent at his or her last
known address or takes other steps which are reasonably calculated to
give actual notice, and in a court action, an affidavit of
compliance with this section is filed in the case on or before the
return day of the process, if any, or within such further time as the
court allows. In the case of administrative orders issued by the
director, the affidavit of compliance need not be filed with the
administrative tribunal unless the respondent requests a hearing.
1394.7. (a) As used in this section the following definitions shall
apply:
(1) "Health care service plan" means any plan as defined in
Section 1345, but this section does not apply to specialized health
care service contracts.
(2) "Carrier" means a health care service plan, an insurer issuing
group disability coverage which covers hospital, medical, or
surgical expenses, a nonprofit hospital service plan, or any other
entity responsible for either the payment of benefits or the
provision of hospital, medical, and surgical benefits under a group
contract.
(3) "Insolvency" means that the director has determined that the
health care service plan is not financially able to provide health
care services to its enrollees and (A) the director has taken an
action pursuant to Section 1386, 1391, or 1399, or (B) an order
requested by the director or the Attorney General has been issued by
the superior court under Section 1392, 1393, or 1394.1.
(b) In the event of the insolvency of a health care service plan
and upon order of the director, any health care service plan which
the director determines to have sufficient health care delivery
resources and sufficient financial and administrative capacity and
that participated in the enrollment process with the insolvent health
care service plan at the last regular open enrollment period of a
group shall offer enrollees of the group in the insolvent health care
service plan a 30-day enrollment period commencing upon the date
specified by the director. Each health care service plan shall offer
enrollees of the group in the insolvent health care service plan the
same coverages and rates that it offered to enrollees of the group at
the last regular open enrollment period of the group. Coverage shall
be effective upon receipt by the successor plan of an application
for enrollment by or on behalf of a subscriber or enrollee of the
insolvent plan. The director shall send a notice of the insolvency of
a health care service plan to the Insurance Commissioner.
(c) If no other carrier had been offered to groups enrolled in the
insolvent health care service plan, or if the director determines
that the other carriers do not include a sufficient number of health
care service plans that have adequate health care delivery resources
or the financial or administrative capacity to assure that health
care services will be available and accessible to all of the group
enrollees of the insolvent health care service plan, then the
director shall allocate equitably the insolvent health care service
plan's group contracts for the groups, except for Medi-Cal contracts
made pursuant to Section 14200 of the Welfare and Institutions Code,
among all health care service plans which operate within at least a
portion of the service area of the insolvent health care service
plan, taking into consideration the health care delivery resources
and the financial and administrative capacity of each health care
service plan. The director shall also have the authority to allocate
equitably enrollees, except Medi-Cal enrollees, if he or she has been
unable to successfully place them through the open enrollment
procedure in subdivision (b). The director shall make every
reasonable effort to allocate enrollees within 30 days of the
insolvency of the plan, but not later than 45 days after insolvency.
Each health care service plan to which a group or groups are so
allocated shall offer the group or groups the health care service
plan's coverage which is most similar to each group's coverage with
the insolvent health care service plan, as determined by the
director, at rates determined in accordance with the successor health
care service plan's existing rating methodology. Coverage shall be
effective upon the date specified by the director. Further, except to
the extent benefits for any condition would have been reduced or
excluded under the insolvent health care service plan's contract or
policy, no provision in a successor health care service plan's
contract of coverage that would operate to reduce or exclude benefits
on the basis that the condition giving rise to benefits preexisted
on the effective date of the enrollee's assignment to the succeeding
health care service plan shall be applied with respect to those
enrollees validly covered under the insolvent health care service
plan's contract or policy on the date of the assignment.
The State Department of Health Services shall have the authority
to allocate Medi-Cal enrollees to other carriers with valid Medi-Cal
contracts, which operate within the same service area of an insolvent
Medi-Cal contractor and that have sufficient capacity to absorb the
Medi-Cal enrollees allocated to them.
(d) The director shall also allocate equitably the insolvent
health care service plan's nongroup enrollees among all health care
service plans which operate within at least a portion of the service
area of the insolvent health care service plan, taking into
consideration the health care delivery resources or the financial and
administrative capacity of each health care service plan. Each
health care service plan to which nongroup enrollees are allocated
shall offer the nongroup enrollees the health care service plan's
most similar coverage for individual or conversion coverage, as
determined by the director, taking into consideration his or her type
of coverage in the insolvent health care service plan, at rates
determined in accordance with the successor health care service plan'
s existing rating methodology. Coverage shall be effective upon the
date specified by the director. Further, except to the extent
benefits for any condition would have been reduced or excluded under
the insolvent health care service plan's contract or policy, no
provision in a successor health care service plan's contract of
coverage that would operate to reduce or exclude benefits on the
basis that the condition giving rise to benefits preexisted on the
effective date of the enrollee's assignment to the succeeding health
care service plan shall be applied with respect to those enrollees
validly covered under the insolvent health care service plan's
contract or policy on the date of the assignment. Successor health
care service plans which do not offer direct nongroup enrollment may
aggregate all allocated nongroup enrollees into one group for rating
and coverage purposes.
(e) Contracting providers shall continue to provide services to
enrollees of an insolvent plan until the effective date of an
enrollee's coverage in a successor plan selected pursuant to either
open enrollment or the allocation process but in no event for the
period exceeding that required by their contract or 45 days in the
case of allocation, whichever is greater; or for a period exceeding
that required by their contract or 30 days in the case of open
enrollment, whichever is greater.
(f) The failure to comply with an order under this section shall
constitute a violation of this section.
1394.8. (a) As used in this section:
(1) "Carrier" means a specialized health care service plan, and
any of the following entities which offer coverage comparable to the
coverages offered by a specialized health care service plan: an
insurer issuing group disability coverage; a nonprofit hospital
service plan; or any other entity responsible for either the payment
of benefits for or the provisions of services under a group contract.
(2) "Insolvency" means that the director has determined that the
specialized health care service plan is not financially able to
provide specialized health care services to its enrollees and (A) the
director has taken an action pursuant to Section 1386, 1391, 1399,
or (B) an order requested by the director or the Attorney General has
been issued by the superior court under Sections 1392, 1393, or
1394.1.
(3) "Specialized health care service plan" means any plan
authorized to issue only specialized health care service plan
contracts as defined in Section 1345.
(b) In the event of the insolvency of a specialized health care
service plan and upon order of the director, any specialized health
care service plan which the director determines to have sufficient
health care delivery resources and sufficient financial and
administrative capacity and that participated in the enrollment
process with the insolvent specialized health care service plan at
the last regular open enrollment period of a group for the same type
of specialized health care services shall offer enrollees of the
group in the insolvent specialized health care service plan a 30-day
enrollment period commencing upon the date specified by the director.
Each specialized health care service plan shall offer enrollees of
the group in the insolvent specialized health care service plan the
same specialized coverage and rates that it offered to the enrollees
of the group at its last regular open enrollment period. Coverage
shall be effective upon receipt by the successor plan of an
application for enrollment by or on behalf of a subscriber or
enrollee of the insolvent plan. The director shall send a notice of
the insolvency of a specialized health care service plan to the
Insurance Commissioner.
(c) If no other carrier for the same type of specialized health
care services had been offered to some groups enrolled in the
insolvent specialized health care service plan, or if the director
determines that the other carriers do not include a sufficient number
of specified health care service plans which have adequate health
care delivery resources or the financial and administrative capacity
to assure that the specialized health care services will be available
and accessible to all of the group enrollees of the insolvent
specialized health care service plan, then the director shall
allocate equitably the insolvent specialized health care service plan'
s group contracts for the groups among all specialized health care
service plans which offer the same type of specialized health care
services as the insolvent plan and which operate within at least a
portion of the service area of the insolvent specialized health care
service plan, taking into consideration the health care delivery
resources and the financial and administrative capacity of each
specialized health care service plan. The director shall also have
the authority to allocate equitable enrollees if he or she has been
unable to successfully place them through the open enrollment
procedure in subdivision (b). The director shall make every
reasonable effort to allocate enrollees within 30 days of the
insolvency of the plan, but not later than 45 days after insolvency.
Each specialized health care service plan to which a group or groups
is so allocated shall offer such group or groups the specialized
health care service plan's coverage which is most similar to each
group's coverage with the insolvent specialized health care service
plan as determined by the director, at rates determined in accordance
with the successor specialized health care service plan's existing
rating methodology. Coverage shall be effective on a date specified
by the director. Further, except to the extent benefits for any
condition would have been reduced or excluded under the insolvent
specialized health care service plan's contract or policy, no
provision in a successor specialized health care service plan's
contract of coverage which would operate to reduce or exclude
benefits on the basis that the condition giving rise to benefits
preexisted on the effective date of the enrollee's assignment to the
succeeding plan shall be applied with respect to those enrollees
validly covered under the insolvent specialized health care service
plan's contract or policy on the date of the assignment.
(d) The director shall also allocate equitably the insolvent
specialized health care service plan's nongroup enrollees among all
specialized health care services which offer the same type of
specialized health care services as the insolvent plan and which
operate within at least a portion of the insolvent specialized health
care service plan's service area, taking into consideration the
health care delivery resources and the financial and administrative
capacity of each specialized health care service plan. Each
specialized health care service plan to which nongroup enrollees are
allocated shall offer the nongroup enrollees the health care service
plan's most similar coverage for individual or conversion coverage,
as determined by the director, taking into consideration his or her
type of coverage in the insolvent specialized health care service
plan at rates determined in accordance with the successor specialized
health care service plan's existing rating methodology. Coverage
shall be effective on the date specified by the director. Further,
except to the extent benefits for any condition would have been
reduced or excluded under the insolvent specialized health care
service plan's contract or policy, no provision in a successor
specialized health care service plan's contract of coverage which
would operate to reduce or exclude benefits on the basis that the
condition giving rise to benefits preexisted on the effective date of
the enrollee's assignment to the succeeding plan shall be applied
with respect to those enrollees validly covered under the insolvent
specialized health care service plan's contract or policy on the date
of the assignment. Successor specialized health care service plans
which do not offer direct nongroup enrollment may aggregate all
allocated nongroup enrollees into one group for rating and coverage
purposes.
(e) Contracting providers shall continue to provide services to
enrollees of an insolvent plan until the effective date of an
enrollee's coverage in a successor plan selected pursuant to either
open enrollment or the allocation process but in no event for the
period exceeding that required by their contract or 45 days in the
case of allocation, whichever is greater; or for a period exceeding
that required by their contract or 30 days in the case of open
enrollment, whichever is greater.
(f) Failure to comply with an order pursuant to this section shall
constitute a violation of this section.
1394.5. When any person, including any nonresident of this state,
engages in conduct prohibited or made actionable by this chapter or
any rule, regulation, or order adopted hereunder, whether or not the
person has filed a power of attorney under subdivision (j) of Section
1351, and personal jurisdiction over the person cannot otherwise be
obtained in this state, that conduct shall be considered equivalent
to the appointment of the director or the director's successor in
office to be the attorney in fact to receive any lawful process in
any noncriminal suit, action, or proceeding against the person or the
person's successor, executor, or administrator which arises out of
that conduct and which is brought under this chapter or any rule,
regulation, or order adopted hereunder, with the same force and
validity as if personally served. Service may be made by leaving a
copy of the process in the office of the director, but it is not
effective unless the plaintiff or petitioner, who may be the director
in a suit, action, or proceeding instituted by him or her, forthwith
sends notice of the service and a copy of the process by registered
or certified mail to the defendant or respondent at his or her last
known address or takes other steps which are reasonably calculated to
give actual notice, and in a court action, an affidavit of
compliance with this section is filed in the case on or before the
return day of the process, if any, or within such further time as the
court allows. In the case of administrative orders issued by the
director, the affidavit of compliance need not be filed with the
administrative tribunal unless the respondent requests a hearing.
1394.7. (a) As used in this section the following definitions shall
apply:
(1) "Health care service plan" means any plan as defined in
Section 1345, but this section does not apply to specialized health
care service contracts.
(2) "Carrier" means a health care service plan, an insurer issuing
group disability coverage which covers hospital, medical, or
surgical expenses, a nonprofit hospital service plan, or any other
entity responsible for either the payment of benefits or the
provision of hospital, medical, and surgical benefits under a group
contract.
(3) "Insolvency" means that the director has determined that the
health care service plan is not financially able to provide health
care services to its enrollees and (A) the director has taken an
action pursuant to Section 1386, 1391, or 1399, or (B) an order
requested by the director or the Attorney General has been issued by
the superior court under Section 1392, 1393, or 1394.1.
(b) In the event of the insolvency of a health care service plan
and upon order of the director, any health care service plan which
the director determines to have sufficient health care delivery
resources and sufficient financial and administrative capacity and
that participated in the enrollment process with the insolvent health
care service plan at the last regular open enrollment period of a
group shall offer enrollees of the group in the insolvent health care
service plan a 30-day enrollment period commencing upon the date
specified by the director. Each health care service plan shall offer
enrollees of the group in the insolvent health care service plan the
same coverages and rates that it offered to enrollees of the group at
the last regular open enrollment period of the group. Coverage shall
be effective upon receipt by the successor plan of an application
for enrollment by or on behalf of a subscriber or enrollee of the
insolvent plan. The director shall send a notice of the insolvency of
a health care service plan to the Insurance Commissioner.
(c) If no other carrier had been offered to groups enrolled in the
insolvent health care service plan, or if the director determines
that the other carriers do not include a sufficient number of health
care service plans that have adequate health care delivery resources
or the financial or administrative capacity to assure that health
care services will be available and accessible to all of the group
enrollees of the insolvent health care service plan, then the
director shall allocate equitably the insolvent health care service
plan's group contracts for the groups, except for Medi-Cal contracts
made pursuant to Section 14200 of the Welfare and Institutions Code,
among all health care service plans which operate within at least a
portion of the service area of the insolvent health care service
plan, taking into consideration the health care delivery resources
and the financial and administrative capacity of each health care
service plan. The director shall also have the authority to allocate
equitably enrollees, except Medi-Cal enrollees, if he or she has been
unable to successfully place them through the open enrollment
procedure in subdivision (b). The director shall make every
reasonable effort to allocate enrollees within 30 days of the
insolvency of the plan, but not later than 45 days after insolvency.
Each health care service plan to which a group or groups are so
allocated shall offer the group or groups the health care service
plan's coverage which is most similar to each group's coverage with
the insolvent health care service plan, as determined by the
director, at rates determined in accordance with the successor health
care service plan's existing rating methodology. Coverage shall be
effective upon the date specified by the director. Further, except to
the extent benefits for any condition would have been reduced or
excluded under the insolvent health care service plan's contract or
policy, no provision in a successor health care service plan's
contract of coverage that would operate to reduce or exclude benefits
on the basis that the condition giving rise to benefits preexisted
on the effective date of the enrollee's assignment to the succeeding
health care service plan shall be applied with respect to those
enrollees validly covered under the insolvent health care service
plan's contract or policy on the date of the assignment.
The State Department of Health Services shall have the authority
to allocate Medi-Cal enrollees to other carriers with valid Medi-Cal
contracts, which operate within the same service area of an insolvent
Medi-Cal contractor and that have sufficient capacity to absorb the
Medi-Cal enrollees allocated to them.
(d) The director shall also allocate equitably the insolvent
health care service plan's nongroup enrollees among all health care
service plans which operate within at least a portion of the service
area of the insolvent health care service plan, taking into
consideration the health care delivery resources or the financial and
administrative capacity of each health care service plan. Each
health care service plan to which nongroup enrollees are allocated
shall offer the nongroup enrollees the health care service plan's
most similar coverage for individual or conversion coverage, as
determined by the director, taking into consideration his or her type
of coverage in the insolvent health care service plan, at rates
determined in accordance with the successor health care service plan'
s existing rating methodology. Coverage shall be effective upon the
date specified by the director. Further, except to the extent
benefits for any condition would have been reduced or excluded under
the insolvent health care service plan's contract or policy, no
provision in a successor health care service plan's contract of
coverage that would operate to reduce or exclude benefits on the
basis that the condition giving rise to benefits preexisted on the
effective date of the enrollee's assignment to the succeeding health
care service plan shall be applied with respect to those enrollees
validly covered under the insolvent health care service plan's
contract or policy on the date of the assignment. Successor health
care service plans which do not offer direct nongroup enrollment may
aggregate all allocated nongroup enrollees into one group for rating
and coverage purposes.
(e) Contracting providers shall continue to provide services to
enrollees of an insolvent plan until the effective date of an
enrollee's coverage in a successor plan selected pursuant to either
open enrollment or the allocation process but in no event for the
period exceeding that required by their contract or 45 days in the
case of allocation, whichever is greater; or for a period exceeding
that required by their contract or 30 days in the case of open
enrollment, whichever is greater.
(f) The failure to comply with an order under this section shall
constitute a violation of this section.
1394.8. (a) As used in this section:
(1) "Carrier" means a specialized health care service plan, and
any of the following entities which offer coverage comparable to the
coverages offered by a specialized health care service plan: an
insurer issuing group disability coverage; a nonprofit hospital
service plan; or any other entity responsible for either the payment
of benefits for or the provisions of services under a group contract.
(2) "Insolvency" means that the director has determined that the
specialized health care service plan is not financially able to
provide specialized health care services to its enrollees and (A) the
director has taken an action pursuant to Section 1386, 1391, 1399,
or (B) an order requested by the director or the Attorney General has
been issued by the superior court under Sections 1392, 1393, or
1394.1.
(3) "Specialized health care service plan" means any plan
authorized to issue only specialized health care service plan
contracts as defined in Section 1345.
(b) In the event of the insolvency of a specialized health care
service plan and upon order of the director, any specialized health
care service plan which the director determines to have sufficient
health care delivery resources and sufficient financial and
administrative capacity and that participated in the enrollment
process with the insolvent specialized health care service plan at
the last regular open enrollment period of a group for the same type
of specialized health care services shall offer enrollees of the
group in the insolvent specialized health care service plan a 30-day
enrollment period commencing upon the date specified by the director.
Each specialized health care service plan shall offer enrollees of
the group in the insolvent specialized health care service plan the
same specialized coverage and rates that it offered to the enrollees
of the group at its last regular open enrollment period. Coverage
shall be effective upon receipt by the successor plan of an
application for enrollment by or on behalf of a subscriber or
enrollee of the insolvent plan. The director shall send a notice of
the insolvency of a specialized health care service plan to the
Insurance Commissioner.
(c) If no other carrier for the same type of specialized health
care services had been offered to some groups enrolled in the
insolvent specialized health care service plan, or if the director
determines that the other carriers do not include a sufficient number
of specified health care service plans which have adequate health
care delivery resources or the financial and administrative capacity
to assure that the specialized health care services will be available
and accessible to all of the group enrollees of the insolvent
specialized health care service plan, then the director shall
allocate equitably the insolvent specialized health care service plan'
s group contracts for the groups among all specialized health care
service plans which offer the same type of specialized health care
services as the insolvent plan and which operate within at least a
portion of the service area of the insolvent specialized health care
service plan, taking into consideration the health care delivery
resources and the financial and administrative capacity of each
specialized health care service plan. The director shall also have
the authority to allocate equitable enrollees if he or she has been
unable to successfully place them through the open enrollment
procedure in subdivision (b). The director shall make every
reasonable effort to allocate enrollees within 30 days of the
insolvency of the plan, but not later than 45 days after insolvency.
Each specialized health care service plan to which a group or groups
is so allocated shall offer such group or groups the specialized
health care service plan's coverage which is most similar to each
group's coverage with the insolvent specialized health care service
plan as determined by the director, at rates determined in accordance
with the successor specialized health care service plan's existing
rating methodology. Coverage shall be effective on a date specified
by the director. Further, except to the extent benefits for any
condition would have been reduced or excluded under the insolvent
specialized health care service plan's contract or policy, no
provision in a successor specialized health care service plan's
contract of coverage which would operate to reduce or exclude
benefits on the basis that the condition giving rise to benefits
preexisted on the effective date of the enrollee's assignment to the
succeeding plan shall be applied with respect to those enrollees
validly covered under the insolvent specialized health care service
plan's contract or policy on the date of the assignment.
(d) The director shall also allocate equitably the insolvent
specialized health care service plan's nongroup enrollees among all
specialized health care services which offer the same type of
specialized health care services as the insolvent plan and which
operate within at least a portion of the insolvent specialized health
care service plan's service area, taking into consideration the
health care delivery resources and the financial and administrative
capacity of each specialized health care service plan. Each
specialized health care service plan to which nongroup enrollees are
allocated shall offer the nongroup enrollees the health care service
plan's most similar coverage for individual or conversion coverage,
as determined by the director, taking into consideration his or her
type of coverage in the insolvent specialized health care service
plan at rates determined in accordance with the successor specialized
health care service plan's existing rating methodology. Coverage
shall be effective on the date specified by the director. Further,
except to the extent benefits for any condition would have been
reduced or excluded under the insolvent specialized health care
service plan's contract or policy, no provision in a successor
specialized health care service plan's contract of coverage which
would operate to reduce or exclude benefits on the basis that the
condition giving rise to benefits preexisted on the effective date of
the enrollee's assignment to the succeeding plan shall be applied
with respect to those enrollees validly covered under the insolvent
specialized health care service plan's contract or policy on the date
of the assignment. Successor specialized health care service plans
which do not offer direct nongroup enrollment may aggregate all
allocated nongroup enrollees into one group for rating and coverage
purposes.
(e) Contracting providers shall continue to provide services to
enrollees of an insolvent plan until the effective date of an
enrollee's coverage in a successor plan selected pursuant to either
open enrollment or the allocation process but in no event for the
period exceeding that required by their contract or 45 days in the
case of allocation, whichever is greater; or for a period exceeding
that required by their contract or 30 days in the case of open
enrollment, whichever is greater.
(f) Failure to comply with an order pursuant to this section shall
constitute a violation of this section.
1394.5. When any person, including any nonresident of this state,
engages in conduct prohibited or made actionable by this chapter or
any rule, regulation, or order adopted hereunder, whether or not the
person has filed a power of attorney under subdivision (j) of Section
1351, and personal jurisdiction over the person cannot otherwise be
obtained in this state, that conduct shall be considered equivalent
to the appointment of the director or the director's successor in
office to be the attorney in fact to receive any lawful process in
any noncriminal suit, action, or proceeding against the person or the
person's successor, executor, or administrator which arises out of
that conduct and which is brought under this chapter or any rule,
regulation, or order adopted hereunder, with the same force and
validity as if personally served. Service may be made by leaving a
copy of the process in the office of the director, but it is not
effective unless the plaintiff or petitioner, who may be the director
in a suit, action, or proceeding instituted by him or her, forthwith
sends notice of the service and a copy of the process by registered
or certified mail to the defendant or respondent at his or her last
known address or takes other steps which are reasonably calculated to
give actual notice, and in a court action, an affidavit of
compliance with this section is filed in the case on or before the
return day of the process, if any, or within such further time as the
court allows. In the case of administrative orders issued by the
director, the affidavit of compliance need not be filed with the
administrative tribunal unless the respondent requests a hearing.
1394.7. (a) As used in this section the following definitions shall
apply:
(1) "Health care service plan" means any plan as defined in
Section 1345, but this section does not apply to specialized health
care service contracts.
(2) "Carrier" means a health care service plan, an insurer issuing
group disability coverage which covers hospital, medical, or
surgical expenses, a nonprofit hospital service plan, or any other
entity responsible for either the payment of benefits or the
provision of hospital, medical, and surgical benefits under a group
contract.
(3) "Insolvency" means that the director has determined that the
health care service plan is not financially able to provide health
care services to its enrollees and (A) the director has taken an
action pursuant to Section 1386, 1391, or 1399, or (B) an order
requested by the director or the Attorney General has been issued by
the superior court under Section 1392, 1393, or 1394.1.
(b) In the event of the insolvency of a health care service plan
and upon order of the director, any health care service plan which
the director determines to have sufficient health care delivery
resources and sufficient financial and administrative capacity and
that participated in the enrollment process with the insolvent health
care service plan at the last regular open enrollment period of a
group shall offer enrollees of the group in the insolvent health care
service plan a 30-day enrollment period commencing upon the date
specified by the director. Each health care service plan shall offer
enrollees of the group in the insolvent health care service plan the
same coverages and rates that it offered to enrollees of the group at
the last regular open enrollment period of the group. Coverage shall
be effective upon receipt by the successor plan of an application
for enrollment by or on behalf of a subscriber or enrollee of the
insolvent plan. The director shall send a notice of the insolvency of
a health care service plan to the Insurance Commissioner.
(c) If no other carrier had been offered to groups enrolled in the
insolvent health care service plan, or if the director determines
that the other carriers do not include a sufficient number of health
care service plans that have adequate health care delivery resources
or the financial or administrative capacity to assure that health
care services will be available and accessible to all of the group
enrollees of the insolvent health care service plan, then the
director shall allocate equitably the insolvent health care service
plan's group contracts for the groups, except for Medi-Cal contracts
made pursuant to Section 14200 of the Welfare and Institutions Code,
among all health care service plans which operate within at least a
portion of the service area of the insolvent health care service
plan, taking into consideration the health care delivery resources
and the financial and administrative capacity of each health care
service plan. The director shall also have the authority to allocate
equitably enrollees, except Medi-Cal enrollees, if he or she has been
unable to successfully place them through the open enrollment
procedure in subdivision (b). The director shall make every
reasonable effort to allocate enrollees within 30 days of the
insolvency of the plan, but not later than 45 days after insolvency.
Each health care service plan to which a group or groups are so
allocated shall offer the group or groups the health care service
plan's coverage which is most similar to each group's coverage with
the insolvent health care service plan, as determined by the
director, at rates determined in accordance with the successor health
care service plan's existing rating methodology. Coverage shall be
effective upon the date specified by the director. Further, except to
the extent benefits for any condition would have been reduced or
excluded under the insolvent health care service plan's contract or
policy, no provision in a successor health care service plan's
contract of coverage that would operate to reduce or exclude benefits
on the basis that the condition giving rise to benefits preexisted
on the effective date of the enrollee's assignment to the succeeding
health care service plan shall be applied with respect to those
enrollees validly covered under the insolvent health care service
plan's contract or policy on the date of the assignment.
The State Department of Health Services shall have the authority
to allocate Medi-Cal enrollees to other carriers with valid Medi-Cal
contracts, which operate within the same service area of an insolvent
Medi-Cal contractor and that have sufficient capacity to absorb the
Medi-Cal enrollees allocated to them.
(d) The director shall also allocate equitably the insolvent
health care service plan's nongroup enrollees among all health care
service plans which operate within at least a portion of the service
area of the insolvent health care service plan, taking into
consideration the health care delivery resources or the financial and
administrative capacity of each health care service plan. Each
health care service plan to which nongroup enrollees are allocated
shall offer the nongroup enrollees the health care service plan's
most similar coverage for individual or conversion coverage, as
determined by the director, taking into consideration his or her type
of coverage in the insolvent health care service plan, at rates
determined in accordance with the successor health care service plan'
s existing rating methodology. Coverage shall be effective upon the
date specified by the director. Further, except to the extent
benefits for any condition would have been reduced or excluded under
the insolvent health care service plan's contract or policy, no
provision in a successor health care service plan's contract of
coverage that would operate to reduce or exclude benefits on the
basis that the condition giving rise to benefits preexisted on the
effective date of the enrollee's assignment to the succeeding health
care service plan shall be applied with respect to those enrollees
validly covered under the insolvent health care service plan's
contract or policy on the date of the assignment. Successor health
care service plans which do not offer direct nongroup enrollment may
aggregate all allocated nongroup enrollees into one group for rating
and coverage purposes.
(e) Contracting providers shall continue to provide services to
enrollees of an insolvent plan until the effective date of an
enrollee's coverage in a successor plan selected pursuant to either
open enrollment or the allocation process but in no event for the
period exceeding that required by their contract or 45 days in the
case of allocation, whichever is greater; or for a period exceeding
that required by their contract or 30 days in the case of open
enrollment, whichever is greater.
(f) The failure to comply with an order under this section shall
constitute a violation of this section.
1394.8. (a) As used in this section:
(1) "Carrier" means a specialized health care service plan, and
any of the following entities which offer coverage comparable to the
coverages offered by a specialized health care service plan: an
insurer issuing group disability coverage; a nonprofit hospital
service plan; or any other entity responsible for either the payment
of benefits for or the provisions of services under a group contract.
(2) "Insolvency" means that the director has determined that the
specialized health care service plan is not financially able to
provide specialized health care services to its enrollees and (A) the
director has taken an action pursuant to Section 1386, 1391, 1399,
or (B) an order requested by the director or the Attorney General has
been issued by the superior court under Sections 1392, 1393, or
1394.1.
(3) "Specialized health care service plan" means any plan
authorized to issue only specialized health care service plan
contracts as defined in Section 1345.
(b) In the event of the insolvency of a specialized health care
service plan and upon order of the director, any specialized health
care service plan which the director determines to have sufficient
health care delivery resources and sufficient financial and
administrative capacity and that participated in the enrollment
process with the insolvent specialized health care service plan at
the last regular open enrollment period of a group for the same type
of specialized health care services shall offer enrollees of the
group in the insolvent specialized health care service plan a 30-day
enrollment period commencing upon the date specified by the director.
Each specialized health care service plan shall offer enrollees of
the group in the insolvent specialized health care service plan the
same specialized coverage and rates that it offered to the enrollees
of the group at its last regular open enrollment period. Coverage
shall be effective upon receipt by the successor plan of an
application for enrollment by or on behalf of a subscriber or
enrollee of the insolvent plan. The director shall send a notice of
the insolvency of a specialized health care service plan to the
Insurance Commissioner.
(c) If no other carrier for the same type of specialized health
care services had been offered to some groups enrolled in the
insolvent specialized health care service plan, or if the director
determines that the other carriers do not include a sufficient number
of specified health care service plans which have adequate health
care delivery resources or the financial and administrative capacity
to assure that the specialized health care services will be available
and accessible to all of the group enrollees of the insolvent
specialized health care service plan, then the director shall
allocate equitably the insolvent specialized health care service plan'
s group contracts for the groups among all specialized health care
service plans which offer the same type of specialized health care
services as the insolvent plan and which operate within at least a
portion of the service area of the insolvent specialized health care
service plan, taking into consideration the health care delivery
resources and the financial and administrative capacity of each
specialized health care service plan. The director shall also have
the authority to allocate equitable enrollees if he or she has been
unable to successfully place them through the open enrollment
procedure in subdivision (b). The director shall make every
reasonable effort to allocate enrollees within 30 days of the
insolvency of the plan, but not later than 45 days after insolvency.
Each specialized health care service plan to which a group or groups
is so allocated shall offer such group or groups the specialized
health care service plan's coverage which is most similar to each
group's coverage with the insolvent specialized health care service
plan as determined by the director, at rates determined in accordance
with the successor specialized health care service plan's existing
rating methodology. Coverage shall be effective on a date specified
by the director. Further, except to the extent benefits for any
condition would have been reduced or excluded under the insolvent
specialized health care service plan's contract or policy, no
provision in a successor specialized health care service plan's
contract of coverage which would operate to reduce or exclude
benefits on the basis that the condition giving rise to benefits
preexisted on the effective date of the enrollee's assignment to the
succeeding plan shall be applied with respect to those enrollees
validly covered under the insolvent specialized health care service
plan's contract or policy on the date of the assignment.
(d) The director shall also allocate equitably the insolvent
specialized health care service plan's nongroup enrollees among all
specialized health care services which offer the same type of
specialized health care services as the insolvent plan and which
operate within at least a portion of the insolvent specialized health
care service plan's service area, taking into consideration the
health care delivery resources and the financial and administrative
capacity of each specialized health care service plan. Each
specialized health care service plan to which nongroup enrollees are
allocated shall offer the nongroup enrollees the health care service
plan's most similar coverage for individual or conversion coverage,
as determined by the director, taking into consideration his or her
type of coverage in the insolvent specialized health care service
plan at rates determined in accordance with the successor specialized
health care service plan's existing rating methodology. Coverage
shall be effective on the date specified by the director. Further,
except to the extent benefits for any condition would have been
reduced or excluded under the insolvent specialized health care
service plan's contract or policy, no provision in a successor
specialized health care service plan's contract of coverage which
would operate to reduce or exclude benefits on the basis that the
condition giving rise to benefits preexisted on the effective date of
the enrollee's assignment to the succeeding plan shall be applied
with respect to those enrollees validly covered under the insolvent
specialized health care service plan's contract or policy on the date
of the assignment. Successor specialized health care service plans
which do not offer direct nongroup enrollment may aggregate all
allocated nongroup enrollees into one group for rating and coverage
purposes.
(e) Contracting providers shall continue to provide services to
enrollees of an insolvent plan until the effective date of an
enrollee's coverage in a successor plan selected pursuant to either
open enrollment or the allocation process but in no event for the
period exceeding that required by their contract or 45 days in the
case of allocation, whichever is greater; or for a period exceeding
that required by their contract or 30 days in the case of open
enrollment, whichever is greater.
(f) Failure to comply with an order pursuant to this section shall
constitute a violation of this section.
