Reference is to the bill as introduced.
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/ SECTION 1. Section 38-2-10 of the 1976 Code is amended to read:
"Section 38-2-10.
(A) Unless otherwise
specifically provided by law, the following administrative
penalties apply for each violation of the insurance laws of this
State or federal insurance laws subject to enforcement by the
Department of Insurance:
(1)
If the violator is an insurer or a health maintenance
organization licensed in this State, the director or his
designee shall (a) fine the violator in an
amount not to exceed fifteen thousand dollars, or
(b) suspend or revoke the violator's authority to do
business in this State, or both. If the violation is wilful, the
director or his designee shall (a) fine the
violator in an amount not to exceed thirty thousand dollars,
or (b) suspend or revoke the violator's
authority to do business in this State, or both.
(2)
If the violator is a person, other than an insurer or a
health maintenance organization, licensed by the director or his
designee in this State, the director or his designee shall
(a) fine the person in an amount not to exceed
two thousand five hundred dollars, or (b)
suspend or revoke the license of the person, or both. If the
violation is wilful, the director or his designee shall
(a) fine the person in an amount not to exceed
five thousand dollars, or (b) suspend or revoke
the license of the person, or both.
(B) The
penalties in items (1) and (2) subsection
(A) are in addition to any criminal penalties provided by
law or any other remedies provided by law. The administrative
proceedings in items (1) and (2) subsection
(A) do not preclude civil or criminal proceedings from
taking place before, during, or after the administrative
proceeding."
SECTION 2. Section 38-13-70 of the 1976 Code is amended to read:
"Section 38-13-70.
Upon his own motion or upon written complaint filed by a
citizen of this State that an insurer, health maintenance
organization, or other person licensed or authorized to transact
business in this State has violated this title, the director
or his designee shall investigate the matter and, if necessary,
examine under oath the president and other officers or agents of
the insurer, health maintenance organization, or other
person and all books, records, and papers of the insurer,
health maintenance organization, or other person. The insurer,
health maintenance organization, or other person and its
representatives shall respond to the department's inquiries,
requests for information or investigations within seven calendar
days or within a larger timeframe granted by the director or his
designee. If the director or his designee finds upon
substantial evidence that a complaint against an
insurer is justified, the insurer, health
maintenance organization, or other person, in addition to
the penalties imposed for violation of this title, is liable for
the expenses of the investigation, and the director or his
designee shall promptly present the insurer with a statement of
the expenses. If the insurer, health maintenance
organization, or other person refuses or neglects to pay,
the director or his designee is authorized to revoke its license
and to bring civil action for the collection of the
expenses."
SECTION 3. Section 38-33-170(A) and (B) of the 1976 Code is amended to read:
"(A) The director
or his designee may make an examination of the affairs of a
health maintenance organization and providers with whom the
organization has contracts, agreements, or other arrangements as
often as is reasonably necessary for the protection of the
interests of the people of this State but not less frequently
than once every three five years. The
director or his designee may accept the report of an examination
made by the state where the health maintenance organization is
domiciled.
(B) The director or his
designee may make an examination concerning the quality of
health care service of a health maintenance organization and
providers with whom the organization has contracts, agreements,
or other arrangements as often as is reasonably necessary for
the protection of the interests of the people of this State but
not less frequently than once every three
five years."
SECTION 4. Section 38-33-230(A) of the 1976 Code is amended to read:
"(A) The director
or his designee may, in lieu of revocation or
suspension of a certificate of authority under Section
38-33-180, may levy an administrative penalty of not more
than fifteen thousand dollars for each violation of state or
federal laws the Department of Insurance is authorized to
enforce or ground as prescribed therein. A series of acts by
an organization which merely implement a basic violation and are
not separate and distinct violations of an independent nature
are considered to be part of the basic violation and only one
penalty may be imposed. A monetary penalty may be imposed under
this paragraph only after notice and an opportunity to be heard
have been afforded in accordance with Section 38-33-210."
SECTION 5. Section 38-61-20(A) and (C) of the 1976 Code is amended to read:
"(A) It is
unlawful for an insurer doing business in this State to issue or
sell in this State a policy, contract, or certificate until it
has been filed with and approved by the director or his
designee. The director or his designee may disapprove the form
if it:
(1)
does not meet the requirements of applicable state or
federal law the Department of Insurance is authorized to
enforce;
(2)
contains provisions which are unfair, deceptive,
ambiguous, misleading, or unfairly discriminatory; or
(3)
is solicited by means of advertising, communication, or
dissemination of information which is deceptive or misleading.
However, this subsection does not apply to surety contracts or
fidelity bonds, except as required in Section 38-15-10, or to
insurance contracts, riders, or endorsements prepared to meet
special, unusual, peculiar, or extraordinary conditions applying
to an individual risk or exempt commercial policies.
(C) At any time after
having given written approval, and after an opportunity for a
hearing for which at least thirty days' written notice has been
given, the director or his designee may withdraw approval,
impose the penalties pursuant to Section 38-2-10 if the insurer
continues use of the form after it has been ordered withdrawn,
or both, if he finds that the form:
(1)
does not meet the requirements of applicable state or
federal law the Department of Insurance is authorized to
enforce;
(2)
contains provisions which are unfair, deceptive,
ambiguous, misleading, or unfairly discriminatory; or
(3)
is solicited by means of advertising, communication, or
dissemination of information which is deceptive or
misleading."
SECTION 6. Section 38-71-90 of the 1976 Code is amended to read:
"Section 38-71-90. An insurer, health maintenance organization, or its officer or agent that issues or delivers to any person in this State any policy in wilful violation of any of the provisions of this chapter or any other applicable state or federal law governing the transaction of business of insurance the Department of Insurance is authorized to enforce is subject to the provisions of Section 38-2-10 for each offense."
SECTION 7. Sections 38-51-20 and 38-51-30 of the 1976 Code is amended to read:
"Section 38-51-20.
No person may act as an administrator in this State
without first being licensed by the director or his
designee.
Any person who acts as an administrator
without a license is guilty of a misdemeanor and upon conviction
must be fined not more than ten thousand dollars or imprisoned
for not more than two years, or both, and is subject to
revocation of any insurance licenses issued by the director or
his designee.
Application for a license must be upon
forms prescribed by the director or his designee and must be
accompanied by an initial license fee of one hundred dollars,
annual financial statements or reports for the two preceding
calendar years, and any other documents that the director or his
designee may require to ensure that the administrator meets the
requirements for licensure set forth in this section.
Thereafter, the administrator shall pay to the department a
license renewal fee of one hundred dollars by March first of
each year.
Before granting any license, the director
or his designee must be satisfied that the administrator is
competent, trustworthy, financially responsible, has a good
personal and business reputation, has not had an insurance
license revoked, suspended, or denied in any jurisdiction within
the preceding five years, and has not been convicted of a crime
involving fraud, dishonesty, or moral turpitude in any
jurisdiction. For purposes of this section, 'convicted' includes
a plea of guilty or a plea of nolo contendere.
The director or his designee may revoke or
suspend any license issued to an administrator when he finds
that any condition exists which would have prohibited issuance
of the original license, that the administrator has violated any
provision of this chapter, or that the administrator has
deceived or dealt unjustly with the citizens of this State. In
lieu of revocation or suspension of license, the director or his
designee may impose an administrative monetary penalty not to
exceed one thousand dollars for each offense.
Section 38-51-30. Every administrator shall file and maintain with the department a surety bond in favor of the state executed by a surety company authorized to transact business in this State. In lieu of bond, the administrator may file with the department letters of credit, certificates of deposit of building and loan associations or federal savings and loan associations located within the state in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, not to exceed the amount of insurance, or of banks located within the state in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount covered by insurance or any other financial instrument that the director or his designee deems appropriate. The director or his designee may also in his sole discretion accept in lieu of a bond or certificates of deposit or letter of credit a corporate guaranty by an insurer licensed to transact business in this State. The corporate guaranty must meet any requirements the director or his designee requires. The director or his designee may withdraw his acceptance of a corporate guaranty in lieu of bonds or certificates of deposit at any time. The amount of the bond, certificates of deposit, corporate guaranty letter of credit, or any other instrument the director or his designee deems appropriate, filed with the department must be in the amount of seventy-five thousand dollars for initial applicants. Upon renewal, the applicant shall submit a surety bond in an amount that represents ten percent of the total premiums handled or managed in South Carolina for the previous calendar year. The amount of the surety bond for renewal applications must not be less than seventy-five thousand dollars and may not exceed five hundred thousand dollars. All bonds must include a provision requiring a thirty day advance notification of cancellation to the department. The bond must be on a form approved by the director or his designee. Any of the above-described financial instruments must be conditioned to pay any person who sustains a loss as a result of: (a) the administrator's violation of or failure to comply with any requirement of this chapter; (b) the administrator's failure to transmit properly any payment received by it for transmission to an insurer or other person; (c) the administrator's misapplication or misappropriation of funds received by it; or (d) any act of fraud or dishonesty committed by the administrator in the administration of an insurance benefit plan. Any aggrieved person may institute an action in the county of his residence against the administrator or his surety, or both, to recover on the bond or to recover from the certificates of deposit or corporate guaranty or letters of credit. Nothing in this section may be construed to prohibit agreements between administrators and insurers providing for additional bonds. The director or his designee may waive the bonding requirements of this section in whole or in part to the extent that funds handled by the administrator are handled on behalf of a licensed insurance company, if the administrator has furnished a bond or other security to the insurance company which meets the purposes of this section. Under no circumstances may the director or his designee waive the bonding requirements of this section with respect to funds handled by the administrator on behalf of self-insured persons, groups, or entities."
SECTION 8. This act takes effect upon approval by the Governor. /
Renumber sections to conform.
Amend title to conform.