Senate Bill No. 458

(By Senators Minard and Kessler)

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[Introduced January 31, 2002; referred to the Committee

on Banking and Insurance; and then to the Committee on the Judiciary.]

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A BILL to amend and reenact section twenty-three, article twenty-five-a, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to empowering the commissioner to impose a civil penalty for violators of health maintenance organization contracts as defined in section seven-a of said article.

Be it enacted by the Legislature of West Virginia:
That section twenty-three, article twenty-five-a, chapter thirty-three of the code of West Virginia, one thousand nine hundred and thirty-one, as amended, be amended and reenacted to read as follows:
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-23. Penalties and enforcement.
(1) The commissioner may, in lieu of suspension or revocation of a certificate of authority under section nineteen of this article, levy an administrative penalty in an amount not less than one hundred dollars nor more than five thousand dollars, if reasonable notice in writing is given of the intent to levy the penalty and the health maintenance organization has a reasonable time within which to remedy the defect in its operations which gave rise to the penalty citation. The commissioner may augment this penalty by an amount equal to the sum that he calculates to be the damages suffered by enrollees or other members of the public.
(2) Any person who violates any provision of this article shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than one thousand dollars nor more than ten thousand dollars, or imprisoned in the county jail not more than one year, or both fined and imprisoned provider in violation of section seven-a of this article may be subject to a civil money penalty to be imposed by the commissioner. Upon a determination that there is probable cause to believe that any provider has violated section seven-a of this article, the commissioner may provide written notice to the alleged violator stating the nature of the alleged violation and the time and place at which the alleged violator shall appear to show good cause why a civil penalty should not be imposed. If, after notice and hearing, the commissioner determines that a violation of section seven-a of this article has occurred, the commissioner may assess a civil penalty of not less than the amount charged the subscriber but not more than one thousand dollars. Subsequent violations of section seven-a of this article shall result in fines of not less than two thousand dollars. Any provider so assessed shall be notified of the assessment in writing and the notice shall specify the reasons for the assessment. Any provider may waive the right to a hearing and receive a reduction in penalties of twenty-five percent.
(3)(a) If the commissioner shall for any reason have cause to believe that any violation of this article or regulations promulgated pursuant thereto has occurred or is threatened, prior to the levy of a penalty or suspension or revocation of a certificate of authority, the commissioner shall give notice to the health maintenance organization and to the representatives, or other persons who appear to be involved in such suspected violation, to arrange a conference with the alleged violators or their authorized representatives for the purpose of attempting to ascertain the facts relating to such suspected violation, and, in the event it appears that any violation has occurred or is threatened, to arrive at an adequate and effective means of correcting or preventing such violation.
(b) Proceedings under this subsection shall not be governed by any formal procedural requirements, and may be conducted in such manner as the commissioner may deem appropriate under the circumstances. Enrollees shall be afforded notice by publication of proceedings under this subsection (3) and shall be afforded the opportunity to intervene.
(4)(a) The commissioner may issue an order directing a health maintenance organization or a representative of a health maintenance organization to cease and desist from engaging in any act or practice in violation of the provisions of this article or regulations promulgated pursuant thereto.
(b) Within ten days after service of the order of cease and desist, the respondent may request a hearing on the question of whether acts or practices in violation of this article have occurred. Such hearings shall be conducted pursuant to chapter twenty-nine-a of this code, and judicial review shall be available as provided by chapter twenty-nine-a of this code.
(5) In the case of any violation of the provisions of this article or regulations promulgated pursuant thereto, if the commissioner elects not to issue a cease and desist order, or in the event of noncompliance with a cease and desist order issued pursuant to subsection (4) of this section, the commissioner may institute a proceeding to obtain injunctive relief, or seek other appropriate relief, in the circuit court of the county of the principal place of business of the health maintenance organization.
(6) Any enrollee of or resident of the service area of the health maintenance organization may bring an action to enforce any provision, standard or regulation enforceable by the commissioner. In the case of any successful action to enforce this article, or accompanying standards or regulations, the individual shall be awarded the costs of the action together with a reasonable attorney's fee as determined by the court.


NOTE: The purpose of this bill is to authorize the commissioner to impose a money penalty against an HMO for failing to pay fees for services rendered to a subscriber which the HMO owes under contract with a provider.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.