§432D-14 - Suspension, revocation, or denial of certificate of authority.

[§432D-14] Suspension, revocation, or
denial of certificate of authority. (a) Any certificate of authority
issued under this chapter may be suspended or revoked, and any application for
a certificate of authority may be denied, if the commissioner finds that any of
the conditions listed below exist:

(1) The health maintenance organization is operating
significantly in contravention of its basic organizational document or in a
manner contrary to that described in any other information submitted under section
432D-2, unless amendments to such submissions have been filed with and approved
by the commissioner;

(2) The health maintenance organization does not
provide or arrange for basic health care services;

(3) The health maintenance organization is no longer
financially responsible and may reasonably be expected to be unable to meet its
obligations to enrollees or prospective enrollees;

(4) The health maintenance organization has failed to
correct, within the time prescribed by subsection (c), any deficiency occurring
due to the health maintenance organization's prescribed minimum net worth being
impaired;

(5) The health maintenance organization, or any
person on its behalf, has advertised or merchandised its services in an untrue,
misrepresentative, misleading, deceptive, or unfair manner;

(6) The continued operation of the health maintenance
organization would be hazardous to its enrollees; or

(7) The health maintenance organization has otherwise
failed substantially to comply with this chapter.

(b) In addition to, or in lieu of, suspension
or revocation of a certificate of authority pursuant to this section, the
commissioner, after hearing, may levy an administrative fine upon the health
maintenance organization in an amount not less than $500 and not more than
$50,000 pursuant to section 431:3-221.

(1) Whenever the commissioner finds that the net
worth maintained by any health maintenance organization subject to this chapter
is less than the minimum net worth required, the commissioner shall give
written notice to the health maintenance organization of the amount of the
deficiency and require the health maintenance organization to:

(A) File with the commissioner a plan for
correction of the deficiency acceptable to the commissioner; and

(B) Correct the deficiency within a reasonable
time, not to exceed sixty days, unless an extension of time, not to exceed
sixty additional days, is granted by the commissioner. Such a deficiency shall
be deemed an impairment, and failure to correct the impairment in the
prescribed time shall be grounds for suspension or revocation of the
certificate of authority or for placing the health maintenance organization in
conservation, rehabilitation, or liquidation; and

(2) Unless allowed by the commissioner, no health
maintenance organization or person acting on its behalf, directly or
indirectly, may renew, issue, or deliver any certificate, agreement, or
contract of coverage in this State, for which a premium is charged or
collected, when the health maintenance organization writing such coverage is
impaired, and the fact of such impairment is known to the health maintenance
organization or to such person. However, the existence of an impairment shall
not prevent the issuance or renewal of a certificate, agreement, or contract
when the enrollee exercises an option granted under the plan to obtain a new,
renewed, or converted coverage.

(d) A certificate of authority shall be
suspended or revoked or an application for a certificate of authority denied,
or an administrative penalty imposed, only after compliance with the
requirements of this section.

(1) Suspension or revocation of a certificate of
authority, denial of an application, or imposition of an administrative penalty
pursuant to this section shall be by written order and shall be sent to the
health maintenance organization or applicant by certified or registered mail.
The written order shall state the grounds, charges, or conduct on which
suspension, revocation, denial, or administrative penalty is based. The health
maintenance organization or applicant, in writing, may request a hearing
pursuant to section 431:2-308; and

(2) If the health maintenance organization or
applicant requests a hearing pursuant to this section, the commissioner shall
issue a written notice of hearing and send it to the health maintenance
organization or applicant by certified or registered mail and to the director
of labor and industrial relations stating:

(A) A specific time for the hearing, which may
not be less than twenty nor more than thirty days after mailing of the notice
of hearing; and

(B) A specific place for the hearing.

(e) When the certificate of authority of a
health maintenance organization is suspended, the health maintenance
organization shall not, during the period of such suspension, enroll any
additional enrollees except newborn children or other newly acquired dependents
of existing enrollees, and shall not engage in any advertising or solicitation
whatsoever.

(f) When the certificate of authority of a
health maintenance organization is revoked, such organization, immediately
following the effective date of the order of revocation, shall proceed to wind
up its affairs, and shall conduct no further business except as may be
essential to the orderly conclusion of the affairs of such organization. It
shall engage in no further advertising or solicitation whatsoever. The
commissioner, by written order, may permit such further operation of the
organization as the commissioner may find to be in the best interest of
enrollees, to the end that enrollees will be afforded the greatest practical
opportunity to obtain continuing health care coverage. [L 1995, c 179, pt of
§1]