69O-191.300. Health Maintenance Organization (HMO) Penalty Categories

(1) Purpose. The purpose of this rule is to establish penalty categories that specify varying ranges of monetary fines for willful and nonwillful violations of applicable provisions of the Florida Insurance Code, or rules promulgated thereunder, that are committed by HMOs.

(2) Scope. This rule applies to all HMOs licensed under Chapter 641, F.S. It applies to all violations of the provisions of the Florida Insurance Code, or rules promulgated thereunder, applicable to HMOs pursuant to Section 641.25, F.S.

(3) Definitions. The following terms have the following meanings for purposes of this rule:

(a) “Action” means an event or events leading to the commission of a violation.

(b) “Office” shall have the same meaning as Section 624.05, F.S.

(c) “Office Rules” means rules adopted by the Office which apply to HMOs.

(d) “Examination” means an inspection of an HMO as authorized by Section 641.27, F.S.

(e) “Florida Insurance Code” shall have the same meaning as Section 624.01, F.S.

(f) “HMO” means a health maintenance organization as defined in Section 641.19(13), F.S., and licensed pursuant to the provisions of Chapter 641, F.S.

(g) “Investigation” means any official departmental review, analysis, inquiry, or research into referrals, complaints, or inquiries to determine the existence of a violation.

(h) “Knowing and willful” means any act or omission, which is committed intentionally as opposed to accidentally and which is committed with knowledge of the act’s unlawfulness or with reckless disregard as to the unlawfulness of the act.

(i) “Repeat Violations” means a second or subsequent offense of any given violation under this rule within the preceding four years.

(j) “Violation” means any instance of noncompliance by an HMO with any applicable provisions of the Florida Insurance Code, rules or orders of the Office governing HMOs.

(4) General Provisions.

(a) Rule Not All-Inclusive. This rule contains illustrative violations. This rule does not, and is not intended to, encompass all possible violations of statute or Office rule that might be committed by an HMO. The absence of any violation from this rule shall in no way be construed to indicate that the HMO is not subject to penalty. In any instance wherein the violation is not listed in this rule, the penalty shall be determined by consideration of:

1. The aggravating and mitigating factors specified in this rule; and

2. Any similar or analogous violation that is listed in this rule, if applicable.

(b) Rule and Statutory Violations Included. This rule applies whether the violation is of an applicable statute or Office rule, or an order implementing such a statute or rule.

(c) Relationship to Other Rules. The provisions of this rule shall be subordinated in the event that any other rule more specifically addresses a particular violation or violations.

(d) Other Licensees. The imposition of a penalty upon any HMO in accordance with this rule shall in no way be interpreted as barring the imposition of a penalty upon any agent, adjuster, or other licensee in connection with the same conduct.

(5) Aggravating Factors. The following aggravating factors are considered in determining penalties for violations not listed in this rule, and, as to listed violations, the placement of the penalty within the range specified. The factors are not necessarily listed in order of importance.

(a) Willfulness and knowledge of the violation.

(b) Actual harm or damage to any member, claimant, applicant, or other person or entity caused by the violation, as determined by the Office’s financial examination, market conduct examination, or investigation.

(c) Degree of harm to which any member, claimant, applicant, or other person or entity was exposed by the violation, as determined by the Office’s financial examination, market conduct examination, or investigation.

(d) Whether the HMO reasonably should have known of the action’s unlawfulness.

(e) Financial gain or loss to the HMO or its affiliates from the violation.

(f) Whether the violation is a repeat violation.

(g) The number of occurrences of a violation found during an examination or investigation.

(6) Mitigating Factors. The following mitigating factors are considered in determining penalties for violations not listed in this rule, and, as to listed violations, the placement of the penalty within the range specified.

(a) Whether corrective activities were actually and substantially initiated (not just planned) and implemented by the HMO before the violation was noted by or brought to the attention of the Office and before the HMO was made aware that the Office was investigating the alleged violation. Such corrective activities must be implemented to assure that the violation does not recur and include but are not limited to the following: personnel changes, reorganization or discipline, and making any injured party whole as to harm suffered in relation to the violation.

(b) Destruction of records by fire, hurricane, or other natural disaster.

(c) Death of key personnel.

(7) Penalty Categories and Fines Assessed. Violations are divided into four categories. Category I violations are the most serious and Category IV violations are the least serious. The Office will use the factors in subsections (5) and (6) above, and any similar or analogous violation listed in this rule, if applicable, to determine, within the penalty ranges specified below, the fine for each violation within a category. The penalty amount does not include any examination costs that are assessed in addition to the fine.

(a) CATEGORY I. When a fine is imposed within this category for a knowing and willful violation, the amount shall not be less than $5000 nor exceed $20,000. Additionally, fines for knowing and willful violations may not exceed an aggregate amount of $250,000 for all such violations arising out of the same action. When a fine is imposed for a nonwillful violation within this category, the fine shall not be less than $500, nor exceed $2,500. Additionally fines for non-willful violations may not exceed an aggregate amount of $25,000 for all such violations arising out of the same action.

1. Violation by the HMO of any lawful order of the Office.

2. Failure by the HMO to take corrective actions or other measures as agreed to in writing by the HMO with the Office, pursuant to Section 641.23, F.S.

3. Failure by the HMO to take corrective actions or other measures which cure any formal written criticism made by the Office in a previous financial or market conduct examination report, after that report becomes final and within the timeframe prescribed by the Office, pursuant to Sections 641.23 and 641.27, F.S.

4. Failure of the HMO or any of its officers or directors to respond to or cooperate with the Office in reporting, or providing information to the Office, or producing or making reasonably available, any of its accounts, records, or files, as requested by the Office, pursuant to Section 641.27, F.S.

5. Use by the HMO of an unlicensed managing general agent, broker, agent, representative, or third party administrator, pursuant to Section 641.386, F.S.

6. Filing or causing to be filed any materially incorrect financial report with the Office pursuant to Section 641.26, F.S.

7. Reporting assets not in compliance with Section 641.35, F.S., on financial statements required by the Office.

8. Transacting any business subject to the Florida Insurance Code other than that authorized under a certificate of authority issued by the Office.

9. Engaging in an unfair or deceptive act, advertisement or practice, pursuant to Sections 641.385, 641.3901 and 641.3903, F.S.

10. Use by the HMO of unfiled or disapproved rates or forms, pursuant to Sections 641.21(1), 641.221, 641.31(3) and 627.6699, F.S., and Rules 69O-149 and 69O-191, F.A.C.

11. Failure by the HMO to comply with and maintain surplus requirements, pursuant to Section 641.225, F.S.

12. Failure by the HMO to comply with limits on investments, without a special consent from the Office pursuant to Section 641.35, F.S.

13. Failure by the HMO to comply with the requirements of Sections 641.255 and 628.4615, F.S., pertaining to the voting securities of a health maintenance organization.

14. Failure by an HMO participating in the small group market to offer guarantee issue health coverage to eligible small employers and eligible employees/dependents pursuant to Section 627.6699(5), F.S.

15. Failure by an HMO participating in the small group market to market health benefit plans to small employers, pursuant to Sections 627.6699(5), (12) and (13), F.S.

16. Failure by the HMO to offer policies pursuant to Section 641.3921, F.S.

17. Failure by the HMO to give adequate notice of termination pursuant to Section 641.3108, F.S.

18. Entering into a commission arrangement that is varied depending upon health status, claims experience, industry or occupation for small groups, pursuant to Section 627.6699(13)(d), F.S.

19. Payment of dividends by the HMO in excess of guidelines established in Section 641.365, F.S., without prior written approval of the Office.

20. Inducing an employer to separate or exclude an eligible employee, pursuant to Section 627.6699(13)(g), F.S.

21. Failure by the HMO to provide comprehensive health care services pursuant to Sections 641.3007, 641.31, 641.31071, 641.31094, 641.31095 and 641.31096, F.S.

22. Failure by the HMO to offer minimum medical benefits, pursuant to Section 641.31, F.S.

23. Failure by the HMO to timely pay a claim pursuant to Section 641.3155(2), F.S. Assignment by the HMO of claim processing and/or payment to a third party administrator or other entity does not relieve the HMO of its responsibilities for timely claim payment.

24. Failure by the HMO to pay interest on a late paid claim pursuant to Section 641.3155(3), F.S.

25. Failure by the HMO to exclude non-admitted assets as defined in and required by Section 641.35, F.S.

(b) CATEGORY II. Failure to timely file annual and quarterly financial reports pursuant to and in compliance with Sections 641.26 and 641.35, F.S., and Rule 69O-191.075, F.A.C. The fine will be calculated as follows:

1. The day after the due date, the Office will impose a fine of not less than $750, nor more than $1,000 per day for each day thereafter through day 10.

2. If the violation continues past day 10, an additional fine of not less than $1500, nor more than $2,000 per day will be added to the total for day eleven and each day thereafter until the report(s) is received, not to exceed $100,000 for each report.

3. If the violation continues past day 10, suspension of enrollment to new subscribers is immediate upon written notification by the Office pursuant to Section 641.26(4), F.S.

(c) CATEGORY III. If the violation is knowing and willful, the fine assessed shall be not less than $2,500 and not more than $10,000 per violation. If the violation is nonwillful, the fine assessed shall be not less than $500 and not more than $1,000 per violation.

1. Use of an agent by the HMO who is licensed but not properly appointed pursuant to Section 641.386, F.S.

2. Failure by the HMO to provide a health care provider with a written reason for the termination of the provider’s contract pursuant to Section 641.315(7), F.S.

3. Failure by the HMO to provide 45 days notice of cancellation or non-renewal of an HMO subscriber contract or failure to state in writing the reason or reasons for the cancellation, termination, or non-renewal pursuant to Section 641.3108, F.S.

4. Use by the HMO of any form which has a title, heading, or other indication of its provisions which is misleading pursuant to Section 641.31(3)(c)3., F.S.

5. Failure by the HMO to make delivery of the HMO contract pursuant to Sections 641.31(1) and 641.3107, F.S.

6. Failure by the HMO to maintain a fidelity bond pursuant to Section 641.22(7), F.S.

7. Failure by the HMO to maintain a sufficient insolvency deposit pursuant to Section 641.285, F.S.

8. Failure by the HMO to file small employer advertising with the Office as required by Section 627.6699(12)(d)4., F.S.

9. Failure by the HMO to submit translations of forms pursuant to Section 641.305(1)(b), F.S.

10. Failure by the HMO to include a provision in provider contracts which holds the subscriber harmless pursuant to Sections 641.315(1) and 641.3154, F.S.

11. Failure by the HMO to maintain an investment approval mechanism pursuant to Section 641.35(7), F.S.

12. In order to be considered as a timely filing, the reports required under Chapter 641.26, F.S., must be verified by the oath of two officers of the organization, or, if not a corporation, of two persons who are principal managing directors of the affairs of the organization. The signatures of such officers or principal managing directors must be properly notarized.

(d) CATEGORY IV. If the violation is knowing and willful, the fine assessed will range from $1,500 to $2,500. If the violation is non-willful, the fine assessed will range from $500 to $1,000.

1. Failure by the HMO to provide Medicare stickers pursuant to Section 641.31(13), F.S.

2. Failure by the HMO to secure a signed statement from a prospect before issuing a small group plan pursuant to Section 627.6699(12)(d), F.S.

3. Failure by the HMO to notify the Office of a change in its name pursuant to Rule 69O-191.094, F.A.C.

4. Failure by the HMO to maintain an advertising file pursuant to Rule 69O-191.063, F.A.C.

5. Use by the HMO of prohibited terms, such as “insurance”, “casualty”, “surety”, “mutual”, pursuant to Section 641.33, F.S.

6. Failure by the HMO to include a provision in provider contracts for 60 days advance written notice to the provider and the Office before canceling, without cause, the contract with the provider pursuant to Section 641.315(2), F.S.

7. Failure by the HMO to properly notify the Office of the termination of a contracted provider pursuant to Section 641.315(2), F.S.

8. Failure by the HMO to include a contractual provision for the Office’s termination of administrative contracts pursuant to Section 641.234(3), F.S.

9. Failure by the HMO, whenever a contract exists between an HMO and a provider, to disclose to the provider:

(a) The mailing address or electronic address where claims should be sent for processing;

(b) The telephone number that a provider may call to have questions and concerns regarding claims addressed; or

(c) The address of any separate claims processing centers for specific types of services, in violation of Section 641.315(4), F.S.

10. Failure by the HMO to provide to its contracted providers no less than 30 calendar days prior written notice of any changes in the information required in Section 641.315(4), F.S.

11. Failure by the HMO to establish written procedures for a contract provider to request authorization for utilization of health care services in contravention of Section 641.315(8), F.S.

12. Failure by the HMO to establish written procedures for the HMO to grant authorization for utilization of health care services in contravention of Section 641.315(8), F.S.

13. Failure by the HMO to give written notice to the contract provider prior to any change in these procedures, in violation of Section 641.315(8), F.S.

Specific Authority 641.25, 641.36 FS. Law Implemented 641.25 FS. History–New 1-7-01, Formerly 4-191.300.