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

(1)  The health maintenance organization is operatingsignificantly in contravention of its basic organizational document or in amanner contrary to that described in any other information submitted under section432D-2, unless amendments to such submissions have been filed with and approvedby the commissioner;

(2)  The health maintenance organization does notprovide or arrange for basic health care services;

(3)  The health maintenance organization is no longerfinancially responsible and may reasonably be expected to be unable to meet itsobligations to enrollees or prospective enrollees;

(4)  The health maintenance organization has failed tocorrect, within the time prescribed by subsection (c), any deficiency occurringdue to the health maintenance organization's prescribed minimum net worth beingimpaired;

(5)  The health maintenance organization, or anyperson 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 maintenanceorganization would be hazardous to its enrollees; or

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

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

(c)  The following shall pertain wheninsufficient net worth is maintained:

(1)  Whenever the commissioner finds that the networth maintained by any health maintenance organization subject to this chapteris less than the minimum net worth required, the commissioner shall givewritten notice to the health maintenance organization of the amount of thedeficiency and require the health maintenance organization to:

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

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

(2)  Unless allowed by the commissioner, no healthmaintenance organization or person acting on its behalf, directly orindirectly, may renew, issue, or deliver any certificate, agreement, orcontract of coverage in this State, for which a premium is charged orcollected, when the health maintenance organization writing such coverage isimpaired, and the fact of such impairment is known to the health maintenanceorganization or to such person.  However, the existence of an impairment shallnot prevent the issuance or renewal of a certificate, agreement, or contractwhen the enrollee exercises an option granted under the plan to obtain a new,renewed, or converted coverage.

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

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

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

(A)  A specific time for the hearing, which maynot be less than twenty nor more than thirty days after mailing of the noticeof hearing; and

(B)  A specific place for the hearing.

(e)  When the certificate of authority of ahealth maintenance organization is suspended, the health maintenanceorganization shall not, during the period of such suspension, enroll anyadditional enrollees except newborn children or other newly acquired dependentsof existing enrollees, and shall not engage in any advertising or solicitationwhatsoever.

(f)  When the certificate of authority of ahealth maintenance organization is revoked, such organization, immediatelyfollowing the effective date of the order of revocation, shall proceed to windup its affairs, and shall conduct no further business except as may beessential to the orderly conclusion of the affairs of such organization.  Itshall engage in no further advertising or solicitation whatsoever.  Thecommissioner, by written order, may permit such further operation of theorganization as the commissioner may find to be in the best interest ofenrollees, to the end that enrollees will be afforded the greatest practicalopportunity to obtain continuing health care coverage. [L 1995, c 179, pt of§1]