Senate Bill sb1432

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    Florida Senate - 2005                                  SB 1432

    By Senator Baker





    20-1082-05

  1                      A bill to be entitled

  2         An act relating to insurance administrators;

  3         amending s. 626.88, F.S.; redefining the term

  4         "administrator" and defining the terms

  5         "affiliate," "control," and "GAAP"; amending s.

  6         626.8805, F.S.; requiring additional

  7         information to accompany an application for a

  8         certificate of authority to act as an

  9         administrator; amending s. 626.8817, F.S.;

10         detailing the responsibilities of an insurance

11         company in its dealings with an administrator;

12         amending s. 626.89, F.S.; prescribing

13         information that must be submitted in an

14         administrator's annual report; authorizing the

15         Financial Services Commission to require

16         electronic submission of annual reports;

17         creating s. 626.8991, F.S.; directing the

18         commission to adopt rules; providing an

19         effective date.

20  

21  Be It Enacted by the Legislature of the State of Florida:

22  

23         Section 1.  Section 626.88, Florida Statutes, is

24  amended to read:

25         626.88  Definitions of "administrator" and "insurer".--

26         (1)  For the purposes of this part, the term:

27         (1)  an "Administrator" is any person who directly or

28  indirectly solicits or effects coverage of, collects charges

29  or premiums from, or adjusts or settles claims on residents of

30  this state in connection with authorized commercial

31  self-insurance funds or with insured or self-insured programs

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 1  which provide life or health insurance coverage or coverage of

 2  any other expenses described in s. 624.33(1) or any person

 3  who, through a health care risk contract as defined in s.

 4  641.234 with an insurer or health maintenance organization,

 5  provides billing and collection services to health insurers

 6  and health maintenance organizations on behalf of health care

 7  providers, other than any of the following persons:

 8         (a)  An employer or wholly owned direct or indirect

 9  subsidiary of an employer, on behalf of such employer's

10  employees or the employees of one or more subsidiary or

11  affiliated corporations of such employer.

12         (b)  A union on behalf of its members.

13         (c)  An insurance company which is either authorized to

14  transact insurance in this state or is acting as an insurer

15  with respect to a policy lawfully issued and delivered by such

16  company in and pursuant to the laws of a state in which the

17  insurer was authorized to transact an insurance business.

18         (d)  A health care services plan, health maintenance

19  organization, professional service plan corporation, or person

20  in the business of providing continuing care, possessing a

21  valid certificate of authority issued by the office, and the

22  sales representatives thereof, if the activities of such

23  entity are limited to the activities permitted under the

24  certificate of authority.

25         (e)  An entity that is affiliated with an insurer and

26  that only performs the contractual duties, between the

27  administrator and the insurer, of an administrator for the

28  direct and assumed insurance business of the affiliated

29  insurer. The insurer is responsible for the acts of the

30  administrator and is responsible for providing all of the

31  administrator's books and records to the insurance

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 1  commissioner, upon a request from the insurance commissioner.

 2  For purposes of this paragraph, the term "insurer" means a

 3  licensed insurance company, health maintenance organization,

 4  prepaid limited health service organization, or prepaid health

 5  clinic.

 6         (f)  A nonresident entity licensed in its state of

 7  domicile as an administrator if its duties in this state are

 8  limited to the administration of a group policy or plan of

 9  insurance and no more than a total of 100 lives for all plans

10  reside in this state.

11         (g)(e)  An insurance agent licensed in this state whose

12  activities are limited exclusively to the sale of insurance.

13         (h)  A person licensed as a managing general agent in

14  this state, whose activities are limited exclusively to the

15  scope of activities conveyed under such license.

16         (i)(f)  An adjuster licensed in this state whose

17  activities are limited to the adjustment of claims.

18         (j)(g)  A creditor on behalf of such creditor's debtors

19  with respect to insurance covering a debt between the creditor

20  and its debtors.

21         (k)(h)  A trust and its trustees, agents, and employees

22  acting pursuant to such trust established in conformity with

23  29 U.S.C. s. 186.

24         (l)(i)  A trust exempt from taxation under s. 501(a) of

25  the Internal Revenue Code, a trust satisfying the requirements

26  of ss. 624.438 and 624.439, or any governmental trust as

27  defined in s. 624.33(3), and the trustees and employees acting

28  pursuant to such trust, or a custodian and its agents and

29  employees, including individuals representing the trustees in

30  overseeing the activities of a service company or

31  administrator, acting pursuant to a custodial account which

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 1  meets the requirements of s. 401(f) of the Internal Revenue

 2  Code.

 3         (m)(j)  A financial institution which is subject to

 4  supervision or examination by federal or state authorities or

 5  a mortgage lender licensed under chapter 494 who collects and

 6  remits premiums to licensed insurance agents or authorized

 7  insurers concurrently or in connection with mortgage loan

 8  payments.

 9         (n)(k)  A credit card issuing company which advances

10  for and collects premiums or charges from its credit card

11  holders who have authorized such collection if such company

12  does not adjust or settle claims.

13         (o)(l)  A person who adjusts or settles claims in the

14  normal course of such person's practice or employment as an

15  attorney at law and who does not collect charges or premiums

16  in connection with life or health insurance coverage.

17         (p)(m)  A person approved by the department who

18  administers only self-insured workers' compensation plans.

19         (q)(n)  A service company or service agent and its

20  employees, authorized in accordance with ss. 626.895-626.899,

21  serving only a single employer plan, multiple-employer welfare

22  arrangements, or a combination thereof.

23         (r)(o)  Any provider or group practice, as defined in

24  s. 456.053, providing services under the scope of the license

25  of the provider or the member of the group practice.

26         (s)(p)  Any hospital providing billing, claims, and

27  collection services solely on its own and its physicians'

28  behalf and providing services under the scope of its license.

29  

30  A person who provides billing and collection services to

31  health insurers and health maintenance organizations on behalf

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 1  of health care providers shall comply with the provisions of

 2  ss. 627.6131, 641.3155, and 641.51(4).

 3         (2)  "Affiliate" or "affiliated" means an entity or

 4  person who directly or indirectly through one or more

 5  intermediaries controls, is controlled by, or is under common

 6  control with a specified entity or person.

 7         (3)  "Control," including the terms "controlling,"

 8  "controlled by," and "under common control with," means the

 9  possession, direct or indirect, of the  power to direct or

10  cause the direction of the management and policies of a

11  person, whether through the ownership or voting securities, by

12  contract other than a commercial contract for goods or

13  nonmanagement services, or otherwise, unless the power is the

14  result of an official position with or corporate office held

15  by the person. Control shall be presumed to exist if any

16  person directly or indirectly owns, controls, holds with the

17  power to vote, or holds proxies representing 10 percent or

18  more of the voting securities of any other person.

19         (4)  "GAAP" means United States generally accepted

20  accounting principles consistently applied.

21         (5)(2)  For the purposes of this part, an "Insurer"

22  includes an authorized commercial self-insurance fund and

23  includes any person undertaking to provide life or health

24  insurance coverage or coverage of any of the other expenses

25  described in s. 624.33(1).

26         Section 2.  Subsection (2) of section 626.8805, Florida

27  Statutes, is amended to read:

28         626.8805  Certificate of authority to act as

29  administrator.--

30         (2)  The administrator shall file with the office an

31  application for a certificate of authority upon a form to be

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 1  adopted by the commission and furnished by the office, which

 2  application shall include or have attached the following

 3  information and documents:

 4         (a)  All basic organizational documents of the

 5  administrator, such as the articles of incorporation, articles

 6  of association, partnership agreement, trade name certificate,

 7  trust agreement, shareholder agreement, and other applicable

 8  documents, and all amendments to those documents.

 9         (b)  The bylaws, rules, and regulations or similar

10  documents regulating the conduct or the internal affairs of

11  the administrator.

12         (c)  The names, addresses, official positions, and

13  professional qualifications of the individuals who are

14  responsible for the conduct of the affairs of the

15  administrator, including all members of the board of

16  directors, board of trustees, executive committee, or other

17  governing board or committee, the principal officers in the

18  case of a corporation, the partners or members in the case of

19  a partnership or association, and any other person who

20  exercises control or influence over the affairs of the

21  administrator.

22         (d)  Audited annual financial statements for the 2 most

23  recent fiscal years which prove that the applicant has a

24  positive net worth. If the applicant has been in existence for

25  less than 2 fiscal years, the application must include

26  financial statements or reports, certified by an officer of

27  the applicant and prepared in accordance with GAAP, for any

28  completed fiscal years and for any month during the current

29  fiscal year for which such financial statements or reports

30  have been completed. An audited financial statement or report

31  prepared on a consolidated basis must include a columnar

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 1  consolidating or combining worksheet that shall be filed with

 2  the report and must comply with the following:

 3         1.  Amounts shown on the consolidated audited financial

 4  report must be shown on the worksheet;

 5         2.  Amounts for each entity shall be stated separately;

 6  and

 7         3.  Explanations of consolidating and eliminating

 8  entries.

 9  

10  The applicant shall also include such other information as the

11  office requires in order to review the current financial

12  condition of the applicant. Annual statements or reports for

13  the 3 most recent years, or such other information as the

14  office may require in order to review the current financial

15  condition of the applicant.

16         (e)  A statement describing the business plan,

17  including information on staffing levels and activities

18  proposed in this state and nationwide. The plan must provide

19  details setting forth the applicant's capability for providing

20  a sufficient number of experienced and qualified personnel in

21  the areas of claims processing, recordkeeping, and

22  underwriting.

23         (f)(e)  If the applicant is not currently acting as an

24  administrator, a statement of the amounts and sources of the

25  funds available for organization expenses and the proposed

26  arrangements for reimbursement and compensation of

27  incorporators or other principals.

28         Section 3.  Section 626.8817, Florida Statutes, is

29  amended to read:

30         626.8817  Responsibilities of insurance company with

31  respect to administration of coverage insured.--

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 1         (1)  If an insurer uses the services of an

 2  administrator, the insurer is responsible for determining the

 3  benefits, premium rates, underwriting criteria, and claims

 4  payment procedures applicable to the coverage and for securing

 5  reinsurance, if any. The rules pertaining to these matters

 6  shall be provided, in writing, by the insurer to the

 7  administrator. The responsibilities of the administrator as to

 8  any of these matters shall be set forth in the written

 9  agreement between the administrator and the insurer.

10         (2)  It is the sole responsibility of the insurer to

11  provide for competent administration of its programs.

12         (3)  In cases in which an administrator administers

13  benefits for more than 100 certificateholders on behalf of an

14  insurer, the insurer shall, at least semiannually, conduct a

15  review of the operations of the administrator. At least one

16  such review must be an on-site audit of the operations of the

17  administrator.

18         (4)  For purposes of this section, the term "insurer"

19  means a licensed insurance company, health maintenance

20  organization, prepaid limited health service organization, or

21  prepaid health clinic. As to the administration of coverage

22  insured by an insurance company, the insurance company, and

23  not the administrator, shall be responsible for determining

24  the benefits, rates, underwriting criteria, and claims payment

25  procedures applicable to such coverage and for securing

26  reinsurance, if any.

27         Section 4.  Section 626.89, Florida Statutes, is

28  amended to read:

29         626.89  Annual financial statement and filing fee;

30  notice of change of ownership.--

31  

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 1         (1)  Each authorized administrator shall file with the

 2  office a full and true statement of its financial condition,

 3  transactions, and affairs. The statement shall be filed

 4  annually on or before March 1 or within such extension of time

 5  therefor as the office for good cause may have granted and

 6  shall be for the preceding calendar year. The statement shall

 7  be in such form and contain such matters as the commission

 8  prescribes and shall be verified by at least two officers of

 9  such administrator.

10         (2)  The annual report must include an audited

11  financial statement performed by an independent certified

12  public accountant. An audited financial or annual report

13  prepared on a consolidated basis must include a columnar

14  consolidating or combining worksheet that shall be filed with

15  the report and must comply with the following:

16         (a)  Amounts shown on the consolidated audited

17  financial report must be shown on the worksheet;

18         (b)  Amounts for each entity must be stated separately;

19  and

20         (c)  Explanations of consolidating and eliminating

21  entries must be included.

22         (3)(2)  At the time of filing its annual statement, the

23  administrator shall pay a filing fee in the amount specified

24  in s. 624.501 for the filing of an annual statement by an

25  insurer.

26         (4)(3)  In addition, the administrator shall

27  immediately notify the office of any material change in its

28  ownership.

29         (5)  The commission may by rule require all or part of

30  the reports or filings required under this section to be

31  submitted by electronic means in a computer-readable form

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 1  compatible with the electronic data format specified by the

 2  commission.

 3         Section 5.  Section 626.8991, Florida Statutes, is

 4  created to read:

 5         626.8991  Adoption of rules.--The commission shall

 6  adopt rules necessary to administer this part.

 7         Section 6.  This act shall take effect October 1, 2005.

 8  

 9            *****************************************

10                          SENATE SUMMARY

11    Redefines and defines terms for purposes of regulation of
      insurance administrators. Requires an applicant for a
12    certificate to act as an administrator to submit
      specified financial information and a description of the
13    business plan. Provides additional details of an
      insurance company's responsibilities in dealing with an
14    administrator. Requires additional financial information
      to be included in an administrator's annual statement.
15    Allows the Financial Services Commission to require
      submission of the report, or portions of it,
16    electronically. Directs the commission to adopt necessary
      rules.
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