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Indicates Matter Stricken
Indicates New Matter
Indicates Matter Stricken
Indicates New Matter
AMENDED
April 25, 2006
H. 3711
S. Printed 4/25/06--H.
Read the first time March 8, 2005.
TO AMEND CHAPTER 17, TITLE 37, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE REGULATION OF PRESCRIPTION DRUG DISCOUNT CARDS, SO AS TO ENACT THE PRESCRIPTION DRUG DISCOUNT CARD REGISTRATION ACT, PROVIDING FOR REGISTRATION WITH THE DEPARTMENT OF CONSUMER AFFAIRS OF PERSONS AND REPRESENTATIVES ENGAGED IN THE SALE, MARKETING, PROMOTION, ADVERTISEMENT, OR DISTRIBUTION OF PRESCRIPTION DRUG DISCOUNT CARDS OR OTHER PURCHASING DEVICES; EXEMPTIONS FROM REGULATION UNDER THE ACT; REMEDIES FOR VIOLATIONS OF THE ACT, IN ADDITION TO, AND CUMULATIVE OF, OTHER PENALTIES IN TITLE 37 AND IN THE SOUTH CAROLINA UNFAIR TRADE PRACTICES ACT; AND AUTHORITY OF THE DEPARTMENT OF CONSUMER AFFAIRS TO PROMULGATE REGULATIONS TO EFFECTUATE THE PURPOSES OF THIS ACT.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 17 of Title 37 of the 1976 Code is amended to read:
Section 37-17-10. (A) It is unlawful for a person to sell, market, promote, advertise, or distribute a card or other purchasing mechanism or device which is not insurance that purports to offer discounts or access to discounts from pharmacies for prescription drug purchases unless:
(1) the person is registered with the Department of Consumer Affairs for this express purpose;
(2) the card or other purchasing mechanism or device expressly states in bold and prominent type, prominently placed, that the discounts are not insurance;
(3) documentation is provided to the Department of Consumer Affairs that the discounts are specifically authorized and the person has a separate contract with each pharmacy or pharmacy chain listed in conjunction with the card or other purchasing mechanism or device; and
(4) the discounts or access to discounts offered, or the range of discounts or access to the range of discounts offered, are not misleading, deceptive, or fraudulent.
(B)(1) A person who sells, markets, promotes, advertises, or distributes a card or other purchasing mechanism or device which is not insurance that purports to offer discounts or access to discounts from pharmacies for prescription drug purchases in this State shall designate a resident of this State as an agent for service of process and register the agent with the Secretary of State.
(2) In the absence of proper registration under subsection (B)(1), the Secretary of State is designated as an agent upon whom process may be served. Service of any process on the Secretary of State may be made by delivering to and leaving with the Secretary of State, or with any person designated by him to receive such service, duplicate copies of the process, notice, or demand. The Secretary of State shall forward one of the copies by registered or certified mail, return receipt requested, to the person required to register under subsection (B)(1) at the last known physical address to the party serving process. Refusal to sign the return receipt does not affect the validity of the service. Service is effective under this subsection as of the date shown on the return receipt or five days after its deposit in the mail, whichever is earlier. The Secretary of State may charge a fee of ten dollars for the service. This subsection does not affect the right to serve process in any manner otherwise provided by law.
(C)(1) A person who violates subsection (A) is guilty of a misdemeanor and, upon conviction, must be imprisoned for not more than six months or fined not more than one thousand dollars, or both; for a second or subsequent violation a person must be imprisoned for not more than two years or fined not more than five thousand dollars, or both.
(2) Notwithstanding subsection (C)(1), a person who violates this chapter is subject to all civil and administrative remedies available in this title.
(D) This section does not apply to:
(1) a pharmacy holding a permit issued pursuant to Title 40, Chapter 43;
(2) eye or vision care services or glasses or contact lenses provided by an optometrist or ophthalmologist;
(3) any benefit or program offered in conjunction with a health insurance plan administered by a health insurer, health care service contractor, or health maintenance organization regulated under Title 38; or
(4) an insured benefit administered by, or under contract with, the State of South Carolina.
(E) For purposes of this section, "person" means an individual, corporation, partnership, or any other business entity, including, but not limited to, a health maintenance organization, an insurance company, or a third party payor. Representatives of corporations, partnerships, or other business entities must be registered before they shall offer services under this section.
(F) The department may promulgate regulations as necessary to assist in administering this chapter including, but not limited to, regulations concerning assessment of registration fees and standards for corporate and individual representative registration. This chapter may be cited as the Discount Medical Plan Organization Registration Act.
Section 37-17-20. As used in this chapter:
(1) 'Administrator' means the administrator of the South Carolina Department of Consumer Affairs.
(2) 'Discount medical plan organization' means an entity that, in exchange for fees, dues, charges, or other consideration, provides access for plan members to providers of health care services and the right to receive health care services from those providers at a discount.
(3) 'Health care services' means any care, service or treatment of an illness or dysfunction of, or injury to, the human body. Health care services includes, but is not limited to, physician care, inpatient care, hospital surgical services, emergency medical services, ambulance services, dental care services, vision care services, mental health care services, substance abuse services, chiropractic services, podiatric services, laboratory test services, the provision of medical equipment or supplies, and pharmaceutical supplies or prescriptions;
(4) 'Department' means the South Carolina Department of Consumer Affairs.
(5) 'Person' means an individual, corporation, partnership or other business entity including, but not limited to, a health maintenance organization, an insurance company, or third party payor, who sells, markets, promotes, advertises, or distributes a discount medical plan or other purchasing mechanism or device that purports to offer discounts or access to discounts from the health care providers described in (3) in this State.
(6) 'Representative' means an individual who is designated by a person, as defined in this section, and acts or aids on behalf of the person in the solicitation, negotiation, or renewal of a discount medical plan with respect to South Carolina citizens.
(7) 'Customer' means an individual who pays for the right to receive the benefits of a discount medical plan.
Section 37-17-30. (A) It is unlawful for a person to sell, market, promote, advertise, or distribute a discount medical plan or other purchasing mechanism or device that is not insurance which purports to offer discounts or access to discounts from discount medical plans unless:
(1) the person is organized pursuant to the laws of this State or authorized to transact business in this State;
(2) the person is registered with the department for this express purpose;
(3) the plan or other purchasing mechanism or device expressly states in bold and prominent type, prominently placed, that the discounts are not insurance;
(4) documentation is provided to the department that the discounts are specifically authorized and the person has a separate contract with each health care service provider, pharmacy, or pharmacy chain listed in conjunction with the plan or other purchasing mechanism or device; and
(5) the discounts or access to discounts offered, or the range of discounts or access to the range of discounts offered, are not misleading, deceptive, or fraudulent.
(B)(1) A person who sells, markets, promotes, advertises, or distributes a discount medical plan or other purchasing mechanism or device that is not insurance that purports to offer discounts or access to discounts from discount medical plans in this State shall designate a resident of this State as an agent for service of process and register the agent with the Secretary of State.
(2) In the absence of proper registration pursuant to subsection (B)(1), the Secretary of State is designated as an agent upon whom process may be served. Service of process on the Secretary of State may be made by delivering to and leaving with the Secretary of State, or with a person designated by him to receive service, duplicate copies of the process, notice, or demand. The Secretary of State shall forward one of the copies by registered or certified mail, return receipt requested, to the person required to register pursuant to subsection (B)(1) at the last physical address known to the party service process. Refusal to sign the return receipt does not affect the validity of the service. Service is effective pursuant to this subsection as of the date shown on the return receipt or five days after its deposit in the mail, whichever is earlier. The Secretary of State may charge a fee of ten dollars for the service. This subsection does not affect the right to serve process in a manner otherwise provided by law.
(3) Persons selling, distributing, advertising, marketing, or promoting discount medical plans shall register with the department. A contact with South Carolina citizens, including personal contact, telemarketing, direct mail or Internet/electronic mail solicitation, requires registration with the department, and business must not be conducted until the person is approved by the department.
(4) Representatives of corporations, partnerships, or other business entities must be registered before they offer services pursuant to this chapter.
(5) A company offering a discount medical plan shall make available the plan and its terms for public inspection and provide to each of its customers a complete list of facilities at which the plan may be used and the range of its benefits. At the time of the sale of the plan, the company shall provide the customer with a written list of participating facilities in the customer's local area. After that, on an ongoing basis, the company shall make available, upon request, through a toll-free telephone number, the Internet, and in writing, a complete listing of all participating facilities in this State.
(6) Advertised discounts are those that are actually available to customers. Disclaimers or terms of limitation must be no less prominent than those of the discount offer. One-time or short-time promotions may be offered only if limiting terms are as prominent as the special offer. All advertisements must contain the name and address of the company offering the service and must conform to the name on file with the department.
Section 37-17-40. (A) A person applying for an initial registration must submit:
(1) a formal application in the form and detail the administrator requires;
(2) if a corporation:
(a) articles of incorporation;
(b) proof of existence and good standing from the Secretary of State's office; and
(c) an affidavit or sworn statement from each individual officer, director, or principal that the person is eligible for individual representative status;
(3) a bond in a form to be prescribed by the department in the amount of fifty thousand dollars denoting the department as beneficiary;
(4) the most recent financial statement prepared in accordance with generally accepted accounting principles and certified by two principal officers of the applicant or, if the applicant is not a corporation, other persons the administrator requires;
(5) a filing fee of eight hundred dollars;
(6) a description of the offered plan, advertising and solicitation brochures, any cards or other purchasing mechanisms, and consumer enrollment materials the person uses or intends to use; and
(7) other relevant material information required by the administrator.
(B) Registration is annually on a form prescribed by the department. An annual filing fee of eight hundred dollars must accompany each filing and be retained by the department for purposes of administering the filings. The registration runs from September first until August thirty-first, and the annual renewal period begins August first and ends on August thirty-first. A person who files its renewal on a timely basis may continue operating unless the registration is denied or revoked by the department.
(C) A person shall provide annually the department with a list of all active agents by August thirty-first of each year and shall notify the department of a change in status.
Section 37-17-50. (A) An individual may not act as a representative of a person, as defined in Section 37-17-20(5), without the person having registered the representative with the department. Registration as a representative must be made to the department upon forms prescribed and furnished by the administrator.
(B) The representative shall furnish information concerning his identity, business address, personal history, business experience, and other information the administrator considers pertinent and germane. An annual filing fee of thirty dollars must accompany each individual representative's filing and be retained by the department for purposes of administering the filings. Initial and renewal filings are considered incomplete until the filing fee is received. Filings are good for one year and run from September first until August thirty-first. The annual renewal period begins August first and ends August thirty-first.
(C) Representative status may be denied or revoked if the applicant is convicted of a felony, crime of moral turpitude or deceit or dishonesty within ten years before the filing. Evidence of any license suspension or revocation or administrative disciplinary actions based on criminal activities or acts of moral turpitude or deceit or dishonesty within ten years may serve as grounds for registration revocation or denial. Violations of Title 37 within ten years may serve as grounds for denial or revocation licensing status.
Section 37-17-60. This chapter does not apply to:
(1) a pharmacy holding a permit or a company that owns one or more pharmacies holding a permit issued pursuant to Title 40, Chapter 43, that offers prescription discounts only from its pharmacies;
(2) a benefit or program offered in conjunction with a health insurance plan administered by a health insurer, health care service contractor, or health maintenance organization regulated pursuant to Title 38; or
(3) an insured benefit administered by, or under contract with, the State of South Carolina.
(4) a patient access program voluntarily sponsored by a pharmaceutical manufacturer, or a consortium of pharmaceutical manufacturers that provides free or discounted products directly to individuals either through a discount or direct shipment.
Section 37-17-70. An appeal concerning disciplinary action, a denial of an application for a new or renewal license, a revocation or suspension of a license, or a determination that a representative is unqualified must be made pursuant to the Administrative Procedures Act and the rules governing practice before the Administrative Law Court. A contested hearing pursuant to this chapter is before the Administrative Law Court, with notice to, and an opportunity for a hearing by, the affected person or representative.
Section 37-17-80. (A) The department may file a request for a contested case hearing with the Administrative Law Court for an order requiring a person to cease and desist or an order revoking, suspending, or vacating the certificate of authority of a person, if the Administrative Law Court finds, after a hearing that the person:
(1) has violated or failed to comply with a provision of this chapter or a regulation promulgated pursuant to the authority of this chapter;
(2) has obtained a certificate of authority through wilful misrepresentation or fraud;
(3) has engaged in a fraudulent or deceptive practice;
(4) has wilfully, orally or in writing, misrepresented the terms, benefits, privileges, and provisions of a service contract issued or to be issued by it;
(5) is unable to meet is obligations as determined by generally accepted accounting principles;
(6) has, after notice to the person of an alleged occurrence of any of items (1) through (5) of this section, refused without just cause to submit relevant information to the administrator with respect to its services within this State.
(B) Instead of revocation, suspension, or refusal to continue a certificate of authority for a violation or violations of items (1) through (6) of subsection (A), the administrative law judge may assess an administrative penalty of not less than one hundred nor more than ten thousand dollars for each violation. These penalties may be assessed in connection with orders to cease and desist.
Section 37-17-90. Upon satisfactory evidence that a representative has violated or failed to comply with a provision of this chapter or regulation promulgated pursuant to the authority of this chapter, the administrator may issue an order requiring the representative to cease and desist from engaging in the violation or may revoke or suspend the representative's authority.
Section 37-17-100. If a license is revoked or renewal is denied, the affected licensee may request a reinstatement hearing after a minimum of one year. The department may reinstate or renew the license only if the cause of the nonrenewal or revocation has been corrected.
Section 37-17-110. A licensee who is found to be engaged in unlawful conduct may be assessed the reasonable costs necessary to the investigation, disciplinary proceedings, court proceedings, or other actions to enforce the provisions of this chapter.
Section 37-17-120. The department may promulgate regulations necessary to effectuate the purposes of this chapter."
SECTION 2. This act takes effect upon approval by the Governor.
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