South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

SCDOI vs. Universal Health Care Insurance Company, Inc.

South Carolina Department of Insurance

South Carolina Department of Insurance

Universal Health Care Insurance Company, Inc.



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.



Marvin F. Kittrell

Chief Administrative Law Judge

Columbia, South Carolina

February 8, 2008


Young Clement Rivers, LLP


Michael A. Molony, Esquire

Lea B. Kerrison, Esquire

28 Broad Street (P. O. Box 993)

Charleston, SC 29401 (29402)

(843) 724-6631

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


Brown Bldg.






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