HB 1081

1	A bill to be entitled
2	An act relating to discount medical plan organizations;
3	amending s. 636.202, F.S.; revising a definition; amending
4	s. 636.204, F.S.; revising provisions relating to
5	licensure requirements to do business as a discount
6	medical plan organization; creating s. 636.205, F.S.;
7	providing requirements for issuance of a license;
8	authorizing the Office of Insurance Regulation to deny a
9	license; amending s. 636.206, F.S.; providing that
10	discount medical plan organizations are not subject to the
11	Florida Insurance Code for purposes of examination and
12	investigation; creating s. 636.207, F.S.; providing for
13	applicability of pt. II of ch. 636, F.S.; amending s.
14	636.208, F.S.; revising provisions relating to
15	reimbursement of certain charges and fees upon
16	cancellation of membership in the plan; amending s.
17	636.210, F.S.; revising prohibitions relating to
18	advertising; amending s. 636.212, F.S.; revising
19	provisions relating to disclosures to prospective members;
20	amending s. 636.214, F.S.; revising provisions relating to
21	provider agreements; amending s. 636.216, F.S.; providing
22	conditions for approval of charges and forms; deleting a
23	provision relating to request for a hearing; amending s.
24	636.218, F.S.; revising requirements for information to be
25	included in annual reports; creating s. 636.223, F.S.;
26	providing for administrative penalties; amending s.
27	636.228, F.S.; specifying marketing requirements of
28	discount medical plans; providing limitations; amending s.
29	636.230, F.S.; specifying fee disclosure requirements for
30	bundling discount medical plans with other products;
31	amending s. 636.236, F.S.; requiring discount medical plan
32	organizations to maintain surety bonds; providing
33	conditions for substituting deposited securities for
34	surety bonds; amending s. 636.238, F.S.; revising
35	penalties; repealing s. 636.242, F.S., relating to civil
36	remedies; providing an effective date.
37
38	Be It Enacted by the Legislature of the State of Florida:
39
40	Section 1.  Subsection (2) of section 636.202, Florida
41	Statutes, is amended to read:
42	636.202  Definitions.--As used in this part, the term:
43	(2)  "Discount medical plan organization" means an entity
44	which, in exchange for fees, dues, charges, or other
45	consideration, provides access for plan members to providers of
46	medical services and the right to receive medical services from
47	those providers at a discount. The term "discount medical plan"
48	does not include any product regulated under chapter 627,
49	chapter 641, or part I of this chapter.
50	Section 2.  Subsections (1) and (2) of section 636.204,
51	Florida Statutes, are amended to read:
52	636.204  License required.--
53	(1)  Before doing business in this state as a discount
54	medical plan organization, an entity must be a corporation, a
55	limited liability company, or a limited partnership,
56	incorporated, organized, formed, or registered under the laws of
57	this state or authorized to transact business in this state in
58	accordance with chapter 607, chapter 608, chapter 617, chapter
59	620, or chapter 865 incorporated under the laws of this state
60	or, if a foreign corporation, authorized to transact business in
61	this state, and must be licensed by the office possess a license
62	as a discount medical plan organization or be licensed by the
63	office pursuant to chapter 624, part I of chapter 636, or
64	chapter 641 from the office.
65	(2)  An application for a license to operate as a discount
66	medical plan organization must be filed with the office on a
67	form prescribed by the commission. Such application must be
68	sworn to by an officer or authorized representative of the
69	applicant and be accompanied by the following, if applicable:
70	(a)  A copy of the applicant's articles of incorporation or
71	other organizing documents, including all amendments.
72	(b)  A copy of the applicant's corporation's bylaws.
73	(c)  A list of the names, addresses, official positions,
74	and biographical information of the individuals who are
75	responsible for conducting the applicant's affairs, including,
76	but not limited to, all members of the board of directors, board
77	of trustees, executive committee, or other governing board or
78	committee, the officers, contracted management company
79	personnel, and any person or entity owning or having the right
80	to acquire 10 percent or more of the voting securities of the
81	applicant. Such listing must fully disclose the extent and
82	nature of any contracts or arrangements between any individual
83	who is responsible for conducting the applicant's affairs and
84	the discount medical plan organization, including any possible
85	conflicts of interest.
86	(d)  A complete biographical statement, on forms prescribed
87	by the commission, an independent investigation report, and a
88	set of fingerprints, as provided in chapter 624, with respect to
89	each individual identified under paragraph (c).
90	(e)  A statement generally describing the applicant, its
91	facilities and personnel, and the medical services to be
92	offered.
93	(f)  A copy of the form of all contracts made or to be made
94	between the applicant and any providers or provider networks
95	regarding the provision of medical services to members.
96	(g)  A copy of the form of any contract made or arrangement
97	to be made between the applicant and any person listed in
98	paragraph (c).
99	(h)  A copy of the form of any contract made or to be made
100	between the applicant and any person, corporation, partnership,
101	or other entity for the performance on the applicant's behalf of
102	any function, including, but not limited to, marketing,
103	administration, enrollment, investment management, and
104	subcontracting for the provision of health services to members.
105	(i)  A copy of the applicant's most recent financial
106	statements audited by an independent certified public
107	accountant. An applicant that is a subsidiary of a parent entity
108	that is publicly traded and that prepares audited financial
109	statements reflecting the consolidated operations of the parent
110	entity and the subsidiary may petition the office to accept, in
111	lieu of the audited financial statement of the applicant, the
112	audited financial statement of the parent entity and a written
113	guaranty by the parent entity that the minimum capital
114	requirements of the applicant required by this part will be met
115	by the parent entity.
116	(j)  A description of the proposed method of marketing.
117	(k)  A description of the subscriber complaint procedures
118	to be established and maintained.
119	(l)  The fee for issuance of a license.
120	(m)  Such other information as the commission or office may
121	reasonably require to make the determinations required by this
122	part.
123	Section 3.  Section 636.205, Florida Statutes, is created
124	to read:
125	636.205  Issuance of license; denial.--
126	(1)  Following receipt of an application filed pursuant to
127	s. 636.204, the office shall review the application and notify
128	the applicant of any deficiencies contained therein. The office
129	shall issue a license to an applicant who has filed a completed
130	application pursuant to s. 636.204 upon payment of the fees
131	specified in s. 636.204 and upon the office being satisfied that
132	the following conditions are met:
133	(a)  The requirements of s. 636.204 have been fulfilled.
134	(b)  The entity has the required minimum capital
135	requirements.
136	(c)  The ownership, control, and management of the entity
137	are competent and trustworthy and possess managerial experience
138	that would make the proposed operation beneficial to the
139	subscribers. The office shall not grant or continue to grant
140	authority to transact the business of a discount medical plan
141	organization in this state at any time during which the office
142	has good reason to believe that the ownership, control, or
143	management of the organization includes any person whose
144	business operations are or have been marked by business
145	practices or conduct that is detrimental to the public,
146	stockholders, investors, or creditors.
147	(d)  The discount medical plan organization has a complaint
148	procedure that will facilitate the resolution of subscriber
149	grievances and that includes both formal and informal steps
150	available within the organization.
151	(e)  Any deficiencies identified by the office have been
152	corrected.
153	(f)  All requirements of this part have been met.
154	(2)  If the application for a license is denied, the office
155	shall notify the applicant and shall specify the reasons for
156	denial in the notice.
157	Section 4.  Section 636.206, Florida Statutes, is amended
158	to read:
159	636.206  Examinations and investigations.--
160	(1)  The office may examine or investigate the business and
161	affairs of any discount medical plan organization. The office
162	may order any discount medical plan organization or applicant to
163	produce any records, books, files, advertising and solicitation
164	materials, or other information and may take statements under
165	oath to determine whether the discount medical plan organization
166	or applicant is in violation of the law or is acting contrary to
167	the public interest. The expenses incurred in conducting any
168	examination or investigation must be paid by the discount
169	medical plan organization or applicant. Examinations and
170	investigations must be conducted as provided in chapter 624, and
171	discount medical plan organizations are subject to all
172	applicable provisions of the insurance code.
173	(2)  Failure by the discount medical plan organization to
174	pay the expenses incurred under subsection (1) is grounds for
175	denial or revocation.
176	Section 5.  Section 636.207, Florida Statutes, is created
177	to read:
178	636.207  Applicability of part.--Except as otherwise
179	provided in this part, discount medical plan organizations are
180	governed by the provisions of this part and are exempt from the
181	Florida Insurance Code unless specifically referenced.
182	Section 6.  Section 636.208, Florida Statutes, is amended
183	to read:
184	636.208  Fees; charges; reimbursement.--
185	(1)  A discount medical plan organization may charge a
186	periodic charge as well as a reasonable one-time processing fee
187	for a discount medical plan and a periodic charge. If a discount
188	medical plan charges for a time period in excess of 1 month, the
189	plan must, in the event of cancellation of the membership by
190	either party, make a pro rata reimbursement of the fees to the
191	member.
192	(2)  If the member cancels his or her membership in the
193	discount medical plan organization within the first 30 days
194	after the effective date of enrollment in the plan, the member
195	shall receive a reimbursement of all periodic charges upon
196	return of the discount card to the discount medical plan
197	organization.
198	(3)  If the discount medical plan organization cancels a
199	membership for any reason other than nonpayment of fees by the
200	member, the discount medical plan organization shall make a pro
201	rata reimbursement of all periodic charges to the member.
202	(4)  In addition to the reimbursement of periodic charges
203	for the reasons stated in subsections (2) and (3), a discount
204	medical plan organization shall also reimburse the member for
205	any portion of a one-time processing fee that exceeds $30 per
206	year.
207	Section 7.  Paragraphs (a) and (b) of subsection (1) of
208	section 636.210, Florida Statutes, are amended to read:
209	636.210  Prohibited activities of a discount medical plan
210	organization.--
211	(1)  A discount medical plan organization may not:
212	(a)  Use in its advertisements, marketing material,
213	brochures, and discount cards the term "insurance" except as
214	otherwise provided in this part or as a disclaimer of any
215	relationship between discount medical plan organization benefits
216	and insurance;
217	(b)  Use in its advertisements, marketing material,
218	brochures, and discount cards the terms "health plan,"
219	"coverage," "copay," "copayments," "preexisting conditions,"
220	"guaranteed issue," "premium," "enrollment," "PPO," "preferred
221	provider organization," or other terms in a manner that could
222	reasonably mislead a person into believing the discount medical
223	plan was health insurance;
224	Section 8.  Section 636.212, Florida Statutes, is amended
225	to read:
226	636.212  Disclosures.--The following disclosures must be
227	made in writing to any prospective member and must be on the
228	first page of any advertisements, marketing materials, or
229	brochures relating to a discount medical plan. The disclosures
230	must be printed in not less than 12-point type or no smaller
231	than the largest type on the page if larger than 12-point type:
232	(1)  That the plan is not a health insurance policy.
233	(2)  That the plan provides discounts at certain health
234	care providers for medical services.
235	(3)  That the plan does not make payments directly to the
236	providers of medical services.
237	(4)  That the plan member is obligated to pay for all
238	health care services but will receive a discount from those
239	health care providers who have contracted with the discount plan
240	organization.
241	(5)  The corporate name and address the locations of the
242	licensed discount medical plan organization.
243
244	If the initial contract is made by telephone, the disclosures
245	required by this section shall be made orally and provided in
246	the initial written materials that describe the benefits under
247	the discount medical plan provided to the prospective or new
248	member.
249	Section 9.  Subsections (2) and (4) of section 636.214,
250	Florida Statutes, are amended to read:
251	636.214  Provider agreements.--
252	(2)  A provider agreement between a discount medical plan
253	organization and a provider must provide the following:
254	(a)  A list of the services and products to be provided at
255	a discount.
256	(b)  The amount or amounts of the discounts or,
257	alternatively, a fee schedule which reflects the provider's
258	discounted rates.
259	(c)  That the provider will not charge members more than
260	the discounted rates.
261	(4)  The discount medical plan organization shall maintain
262	a copy of each active provider agreement into which it has
263	entered.
264	Section 10.  Subsection (4) of section 636.216, Florida
265	Statutes, is amended to read:
266	636.216  Charge or form filings.--
267	(4)  A charge or form is considered approved on the 60th
268	day after its date of filing unless it has been previously
269	disapproved by the office. The office shall disapprove any form
270	that does not meet the requirements of this part or that is
271	unreasonable, discriminatory, misleading, or unfair. If such
272	filings are disapproved, the office shall notify the discount
273	medical plan organization and shall specify in the notice the
274	reasons for disapproval. The discount medical plan organization
275	has 21 days from the date of receipt of notice to request a
276	hearing before the office pursuant to chapter 120.
277	Section 11.  Subsection (2) of section 636.218, Florida
278	Statutes, is amended to read:
279	636.218  Annual reports.--
280	(2)  Such reports must be on forms prescribed by the
281	commission and must include:
282	(a)  Audited financial statements prepared in accordance
283	with generally accepted accounting principles certified by an
284	independent certified public accountant, including the
285	organization's balance sheet, income statement, and statement of
286	changes in cash flow for the preceding year. An organization
287	that is a subsidiary of a parent entity that is publicly traded
288	and that prepares audited financial statements reflecting the
289	consolidated operations of the parent entity and the
290	organization may petition the office to accept, in lieu of the
291	audited financial statement of the organization, the audited
292	financial statement of the parent entity and a written guaranty
293	by the parent entity that the minimum capital requirements of
294	the organization required by this part will be met by the parent
295	entity.
296	(b)  If different from the initial application or the last
297	annual report, a list of the names and residence addresses of
298	all persons responsible for the conduct of the organization's
299	affairs, together with a disclosure of the extent and nature of
300	any contracts or arrangements between such persons and the
301	discount medical plan organization, including any possible
302	conflicts of interest.
303	(c)  The number of discount medical plan members in the
304	state.
305	(d)  Such other information relating to the performance of
306	the discount medical plan organization as is reasonably required
307	by the commission or office.
308	Section 12.  Section 636.223, Florida Statutes, is created
309	to read:
310	636.223  Administrative penalty.--In lieu of suspending or
311	revoking a certificate of authority whenever any discount
312	medical plan organization has been found to have violated any
313	provision of this part, the office may:
314	(1)  Issue and cause to be served upon the organization
315	charged with the violation a copy of such findings and an order
316	requiring such organization to cease and desist from engaging in
317	the act or practice that constitutes the violation.
318	(2)  Impose a monetary penalty of not less that $100 for
319	each violation, but not to exceed an aggregate penalty of
320	$75,000.
321	Section 13.  Subsection (2) of section 636.228, Florida
322	Statutes, is amended to read:
323	636.228  Marketing of discount medical plans.--
324	(2)  The discount medical plan organization shall have an
325	executed written agreement with a marketer prior to the
326	marketer's marketing, promoting, selling, or distributing the
327	discount medical plan. Such agreement shall prohibit the
328	marketer from using marketing materials, brochures, and discount
329	cards without the approval in writing by the discount medical
330	plan organization. The discount medical plan organization shall
331	be bound by and shall be responsible and financially liable for
332	any acts of its marketers, within the scope of the marketers'
333	agency, that do not comply with the provisions of this part.
334	Section 14.  Section 636.230, Florida Statutes, is amended
335	to read:
336	636.230  Bundling discount medical plans with other
337	insurance products.--When a marketer or discount medical plan
338	organization sells a discount medical plan together with any
339	other product, the fees for the discount medical plan each
340	individual product must be provided in writing to the member if
341	the fees exceed $30 and itemized.
342	Section 15.  Section 636.236, Florida Statutes, is amended
343	to read:
344	636.236  Surety bond or security deposit.--
345	(1)  Each discount medical plan organization licensed
346	pursuant to the provisions of this part must maintain in force a
347	surety bond in its own name in an amount not less than $35,000
348	to be used at the discretion of the office to protect the
349	financial interests of members who may be adversely affected by
350	the insolvency of a discount medical plan organization. The bond
351	must be issued by an insurance company that is licensed to do
352	business in this state.
353	(2)(1)  In lieu of the bond specified in subsection (1), a
354	licensed discount medical plan organization may must deposit and
355	maintain deposited in trust with the department securities
356	eligible for deposit under s. 625.52, having at all times a
357	value of not less than $35,000, for use by the office in
358	protecting plan members. If a licensed discount medical plan
359	organization substitutes its deposited securities under this
360	subsection with a surety bond authorized in subsection (1), such
361	deposited securities shall be returned to the discount medical
362	plan organization no later than 45 days following the effective
363	date of the surety bond.
364	(3)(2)  No judgment creditor or other claimant of a
365	discount medical plan organization, other than the office or
366	department, shall have the right to levy upon any of the assets
367	or securities held in this state as a deposit under subsections
368	subsection (1) and (2).
369	Section 16.  Section 636.238, Florida Statutes, is amended
370	to read:
371	636.238  Penalties for violation of this part.--
372	(1)  Except as provided in subsection (2), a person who
373	willfully violates any provision of this part commits a
374	misdemeanor of the second degree, punishable as provided in s.
375	775.082 or s. 775.083.
376	(2)  A person who operates as or willfully aids and abets
377	another operating as a discount medical plan organization in
378	violation of s. 636.204(1) commits a felony punishable as
379	provided for in s. 624.401(4)(b), as if the unlicensed discount
380	medical plan organization were an unauthorized insurer, and the
381	fees, dues, charges, or other consideration collected from the
382	members by the unlicensed discount medical plan organization or
383	marketer were insurance premium.
384	(3)  A person who collects fees for purported membership in
385	a discount medical plan but purposefully fails to provide the
386	promised benefits commits a theft, punishable as provided in s.
387	812.014.
388	Section 17.  Section 636.242, Florida Statutes, is
389	repealed.
390	Section 18.  This act shall take effect upon becoming a
391	law.

CODING: Words stricken are deletions; words underlined are additions.