ORDERS:
Consent Order Lifting Suspension of Certificate of Authority and Dismissing
Contested Case Proceedings
This matter comes before the Court pursuant to agreement of the parties
for an Order: (1) lifting the suspension of the Certificate of Authority
permitting Universal Health Care Insurance Company, Inc. (“Universal”) to
transact the business of insurance in South Carolina, and (2) dismissing the
above-captioned action. The parties agree as follows:
1. The Court has jurisdiction over the matters set forth herein.
2. Universal is an insurer licensed and domesticated pursuant to the laws
of the State of Florida and licensed to transact insurance business in the
State of South Carolina.
3. On July 20, 2007,
the South Carolina Department of Insurance (the “Department”) issued an order
styled “Order of Suspension of Certificate of Authority” (the “South Carolina
Order”), indefinitely suspending Universal’s authority to transact the business
of insurance in the State of South Carolina pursuant to S.C. Code Ann. § 38-5-120
(2002).
4. In that Order, the
Department found that (a) Universal had experienced excessive premium growth
rendering its operations hazardous to the public or its enrollees, see S.C. Code Ann. § 38-5-120(A)(3)(n) (2002) (“The insurer has grown so rapidly
and to an extent that it lacks adequate financial and administrative capacity
to meet its obligations in a timely manner”); and, (b) on February 21, 2007, a
“Consent Order for Public Administrative Supervision and Contingent Order of
Liquidation” was entered in the Office of Insurance Regulation (the “OIR”) of
the State of Florida (the “Florida Order”).
5. The statutory authority cited by the Department for the suspension of
Universal’s certificate of authority was S.C. Code Ann. § 38-5-120(A) (2002), which provides, in
pertinent part, that “[t]he director or his designee shall revoke or suspend
certificates of authority granted to an insurer and its officers and agents if
he is of the opinion upon examination or other evidence” that, among other
things, “(1) [t]he insurer is in an unsound condition,” or “(3) [t]he insurer’s
condition renders its proceedings hazardous to the public or to its
policyholders.”
6. S.C. Code Ann. §
38-5-120(B) (2002) requires, in pertinent part, that “[n]o new business may be
done by the insurer or its agents in this State while the default or disability
[giving rise to an order of revocation or suspension] continues nor until its
authority to transact business is restored by the director or his designee.”
7. Moreover, as
noted in the South Carolina Order, by letter dated February 23, 2007, the
Centers for Medicare & Medicaid Services (“CMS”) of the U.S. Department of
Health & Human Services determined that, under 42 C.F.R. § 422.510(a)(5),
Universal no longer met the requirements for being a contracting Medicare
Advantage (MA) organization, citing the Florida proceedings. As a result, CMS imposed
“intermediate sanctions” prohibiting Universal from “Enrolling Medicare
beneficiaries and conducting any marketing activities.”
8. Universal contested the Florida Order in proceedings before the courts
of that state and the United States District Court for the Northern District of
Florida.
9. In addition, in response the South Carolina Order, Universal timely requested
a contested case hearing before this Court on August 22, 2007.
10. On December 21,
2007, Universal and the OIR entered into a consent order resolving all issues
between those parties, subject to compliance by Universal with certain
conditions, including the infusion of additional capital or obtaining
reinsurance, as well as the termination of all legal and administrative proceedings
relating to the “matters addressed” in that order. A copy of that consent order
is attached hereto as Exhibit “A”.
11. By letter dated
January 3, 2008, a copy of which is attached hereto as Exhibit “B”, the OIR
notified the CMS that Universal “has complied with the provisions identified in
paragraph 15(n) [of Exhibit A] and that the OIR “would not object if CMS
permitted [Universal] to resume marketing and writing new business” pursuant to
the Medicare Modernization Act of 2003 (“MMA”).
12. By letter dated
January 4, 2008, a copy of which is attached hereto as Exhibit “C”, the OIR (a)
informed the Florida Department of Financial Services (the “FDFS”) that
Universal “has accomplished an infusion of $66 million cash; which together
with an executed reinsurance treaty, raises the company’s surplus level into
compliance with the Florida Insurance Code,” and (b) withdrew its request of
the FDFS to institute delinquency proceedings against Universal.
13. All CMS-imposed intermediate sanctions against Universal, as described in CMS’s letter to
A.M. Desai, MD, MPH, dated February 23, 2007, have been lifted, as
evidenced by letter of CMS, dated February 6, 2008, a copy of which is attached
hereto as Exhibit “D”.
14. In light of the
resolution of all proceedings in Florida and with CMS, the infusion of
additional cash and acquisition of reinsurance, and the lifting of intermediate
sanctions, the parties agree that the “default or disability” giving rise to
the South Carolina Order suspending Universal’s Certificate of Authority to do
business in this State has discontinued and that the suspension should be
lifted.
NOW,
THEREFORE, IT IS HEREBY ORDERED that the indefinite suspension of Universal’s
Certificate of Authority is lifted.
IT IS FURTHER
ORDERED that, effective immediately, Universal’s authority to transact
business as an insurer in State of South Carolina is restored.
IT
IS FURTHER ORDERED that the South Carolina Order is superseded by this
Order.
IT
IS FURTHER ORDERED that, in addition to all reports required by the
insurance laws of this State, Universal shall in a timely manner provide the
Department with copies of all reports filed with the OIR in accordance with
paragraphs 15(e) and (f) of Exhibit “A” and shall notify the Department
immediately of any adverse action taken by the OIR or the FDFS.
IT IS FURTHER
ORDERED that this contested case proceeding is dismissed.
AND
IT IS SO ORDERED.
________________________________
Marvin F. Kittrell
Chief Administrative Law Judge
Columbia, South Carolina
February
8, 2008
WE
CONSENT:
Young Clement Rivers, LLP
By:
Michael A. Molony, Esquire
Lea B. Kerrison, Esquire
28 Broad Street (P. O. Box 993)
Charleston, SC 29401 (29402)
(843) 724-6631
mmolony@ycrlaw.com
lkerrison@ycrlaw.com
Attorneys for Universal
Health Care Insurance Company, Inc.
South
Carolina Department of Insurance
By:
______________________________________________
Geoffrey
R. Bonham
Associate
General Counsel
P.O.
Box 100105
Columbia, SC 29201-3105
(803)
737-6219
gbonham@doi.sc.gov
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