Section 26-A3515. REGULATION OF HMO PRODUCERS

 

3515.1No person shall act or hold himself to be an HMO producer unless duly licensed and appointed as such in accordance with these rules.

 

3515.2No HMO doing business in the District of Columbia shall pay, directly or indirectly, any commission for any reason or purpose to any person, other than as may be permitted hereunder, nor shall any such HMO pay, directly or indirectly, any commission, or other valuable consideration, to any person for services as an HMO producer within the District of Columbia, unless such person shall hold a currently valid license to act as an HMO producer as required by the Act and these rules and is appointed by such HMO under that license. Neither shall any person, other than a duly licensed HMO producer or any person permitted hereunder, accept any such commission or other valuable consideration; provided, however, that the provisions of this section shall not prevent the payment or receipt of renewal or other deferred commissions to or by any person solely because such person has ceased to hold a license to act as an HMO producer.

 

3515.3No HMO producer shall pay, allow, give or offer to pay, allow or give, directly or indirectly, any rebate of premiums or membership fees payable, any commission, any paid employment or contract for service of any kind, or any valuable consideration or inducement whatever, that is not specified in the policy or contract for health services, for or on account of the solicitation or negotiation of such contracts or policies, other than to another HMO producer.

 

3515.4None of the following shall be required to hold an HMO producer license:

 

(a)Any regular salaried officer or employee of an HMO who devotes substantially all of his or her time to activities other than the taking or transmitting of applications or membership fees or premiums for HMO membership, and who receives no commission or other compensation directly dependent upon the business obtained and who does not solicit or accept from the public applications for HMO membership;

 

(b)Employers or their officers or employees, or the trustees of any employee benefit plan, to the extent that such employers, officers, employees, or trustees are engaged in the administration or operation of any program of employee benefits involving the use of HMO memberships; provided that such employers, officers, employees or trustees are not in any manner compensated directly or indirectly by the HMO issuing such HMO memberships;

 

(c)Banks or their officers and employees to the extent that such banks, officers and employees collect and remit charges by debiting the charges against accounts of depositors on the orders of such depositors; or

 

(d)Any person or the employee of any person who has contracted to provide administrative, management or health care services to an HMO and who is compensated for those services by the payment of an amount calculated as a percentage of the revenues, net income or profit of the HMO, if that method of compensation is the sole basis for subjecting that person or the employee of that person, to the licensure provisions of this Act.

 

3515.5An individual applying for an HMO producer license shall pass a written examination to the satisfaction of the Commissioner for life and health licensure unless exempt pursuant to subsection 3515.10 or subsection 3515.24.

 

3515.6The Commissioner may make arrangements, including contracting with an outside testing service, for administering examinations and collecting the fee for the examination.

 

3515.7Each individual applying for an examination shall remit the fee as prescribed by the Commissioner in accordance with the provisions of subsection 3515.36.

 

3515.8A new examination fee shall be paid for each examination. The examination fee shall not be returned for any reason other than for failure to appear and take the examination after the applicant has given at least twenty-four (24) hours notice to the Commissioner of an emergency situation and received the Commissioner's written approval.

 

3515.9An individual who files a letter of clearance with the Commissioner certifying that he held a license in good standing to act as an HMO producer in his prior state of licensure, which license was obtained by passing a written examination relating to the conduct of HMO business, shall take an examination pertaining only to the District of Columbia's laws and rules relating to the conduct of HMO business.

 

3515.10No examination shall be required of a partnership or a corporation.

 

3515.11When any individual, partnership or corporation desires to obtain a license as an HMO producer, that person shall file an application with the Department.

 

3515.12Upon receipt of an acceptable application for an HMO producer license, the Commissioner shall issue a license to the applicant, unless such application is denied under subsection 3510.37, if it finds that the applicant is:

 

(a)An individual who:

 

(1)is at least eighteen (18) years of age;

 

(2)has completed a prelicensing course of study approved by the Commissioner;

 

(3)has paid the fee as prescribed in subsection 3515.36; and

 

(4)has successfully passed the examination required under subsection 3515.5; or

 

(b)A general partnership, of which all persons interested as partners are duly licensed as HMO producers under the Act and these rules; or

 

(c)A District of Columbia corporation which:

 

(1)Is organized and existing under the District of Columbia corporation statutes;

 

(2)Has its principal place of business in the District of Columbia;

 

(3)Has as one of its purposes the authority to act as an HMO producer;

 

(4)Has each of its officers, directors and shareholders duly licensed as HMO producers;

 

(5)Has agreed to notify the Commissioner of any change in officers, directors or shareholders not later than thirty (30) days after the date on which the change becomes effective; and

 

(6)Has designated an officer responsible for demonstrating the corporation's compliance with the applicable laws of the District of Columbia relating to the conduct of HMO business.

 

3515.13An HMO producer must demonstrate financial responsibility to the satisfaction of the Commissioner that the HMO producer has reasonably provided for the protection of its customers in the event of some negligent act, error or omission. Such financial responsibility may be demonstrated by a bond or a deposit.

 

3515.14Nothing herein shall be construed to permit any unlicensed employee of any licensed individual, partnership or corporate HMO producer to perform any act of an HMO producer without such employee's first obtaining an HMO producer license.

 

3515.15If at any time, any individual, partnership or corporation holding an HMO producer license does not maintain the qualifications necessary to obtain such a license, the HMO producer's license may be revoked under the provisions of subsection 3515.37; provided, however, that should any person who is not a licensed HMO producer obtain shares in such a corporation by devise or descent, the person shall have a period of thirty (30) days from date of acquisition within which to obtain a license as an HMO producer, unless exempted under subsection 3515.20.

 

3515.16The Commissioner shall require any document reasonably necessary to verify the information contained in a person's application for licensure.

 

3515.17The Commissioner shall cause to be issued to qualified HMO producers a license which shall contain the producer's legal name, address of record, license identification number and license expiration date.

 

3515.18Persons holding an HMO producer's license shall inform the Department in writing promptly, not to exceed thirty (30) days, of any change in the address at which the Commissioner shall be able to send official notifications.

 

3515.19Persons holding an HMO producer's license shall notify the Commissioner on a form specified by the Department of all office locations maintained for the purpose of operating as an HMO producer, and of all names other than such person's exact legal name in which such person intends to act as an HMO producer. A fee as specified in subsection 3510.36 shall accompany any such filing. No HMO producer may operate from any location or under any name other than the HMO producer's legal name prior to making the filing provided herein. An HMO producer shall promptly notify the Commissioner in writing when it ceases to do business under a particular trade name or from a particular location.

 

3515.20In the event an individual who is duly licensed as an HMO producer conveys some or all of his interest in his business, while living, to his children or dependents or to a trust for such children or dependents or, upon death, to his surviving spouse, children or dependents or to a trust for such surviving spouse, children or dependents, such spouse, children, dependents or trusts may participate in the profits of such business during their lifetime without first qualifying as an HMO producer, subject to the following conditions:

 

(a)That such business shall be continued by a duly qualified and licensed HMO producer;

 

(b)That such surviving spouse, children, dependents or trusts shall perform no act of an HMO producer without first becoming duly licensed as an HMO producer;

 

(c)That all trustees of any trusts as described herein must be duly licensed as HMO producers; and

 

(d)That the individual HMO producer conveying such interest is either:

 

(1)A sole proprietor;

 

(2)A partner in a licensed partnership, where a written partnership agreement or, in the absence of such agreement, an agreement between the surviving partner or partners and the surviving children or dependents, as appropriate, provides for such conveyance; or

 

(3)A shareholder in a licensed corporation, where a contract entered into by and between all of the shareholders and the corporation provides for such conveyance.

 

3515.21Unless suspended, revoked or cancelled pursuant to subsection 3515.37, each license issued to an HMO producer shall expire on the 30th day of April of each odd numbered year, unless an application for renewal of any such license is filed with the Commissioner and the required fee is paid on or before such date. Once such application for renewal is received, such license shall continue in full force unless, pursuant to subsection 3510.37, the application for renewal is denied.

 

3515.22A request for license continuation which is received by the Commissioner within 30 days after the expiration date may be effectuated if accompanied by a continuation fee two (2) times the amount otherwise required, except that the Commissioner may waive imposition of the additional fee based on good cause shown for the delay.

 

3515.23If a license has been expired for longer than one (1) year, it may not be renewed. A new license may be obtained by complying with the requirements and procedures for obtaining an original license, including passing the examination required in subsection 3515.5.

 

3515.24A person who is not a resident of the District may apply for licensing as an HMO producer if such person otherwise complies with the Act and these rules.

 

(a)If the state in which such applicant resides requires HMO producers to hold a license and to qualify for such license by passing a written examination covering HMO topics, substantially similar to the examination required under section 3515.5 of these rules, the appropriate official of the other state must certify that the applicant holds a currently valid license to act as an HMO producer in such state by passing a written examination or holds a currently valid license issued because of the applicant's exemption from the requirements of an examination. If a person holds an HMO producer's license issued by another state in accordance with the requirements as set forth in this paragraph, such person shall be eligible to receive a license by waiver without taking the Commissioner's examination.

 

(b)If the state in which such applicant resides requires HMO producers to hold a license, but does not require such producers to qualify by passing a written examination covering HMO topics, the appropriate official of the other state must certify that the applicant holds a currently valid license to act as an HMO producer, and the applicant must pass the Commissioner's examination as prescribed in subsection 3515.5.

 

(c)If the state in which such applicant resides does not require HMO producers to hold a license, the applicant must pass the examination as prescribed in subsection 3515.5.

 

3515.25The applicant shall file with the Commissioner the required forms appointing the Commissioner and his successor in office as such nonresident's agent upon whom all lawful process in any legal or administrative proceeding against the nonresident may be served, and shall agree that any such lawful process has the same legal force and validity as personal service of process upon such nonresident. The Commissioner shall, within five (5) working days after receiving process, forward a copy of such process by registered or certified mail to the person for whom he has received such process at the nonresident's address of record.

 

3515.26The state in which the applicant resides shall permit a resident HMO producer of the District of Columbia to obtain a similar license in that other state under conditions substantially equivalent to the above, and without discrimination in favor of the residents of that other state; provided, however, that whenever, by the laws or regulations of any other state, any limitation of rights and privileges, conditions precedent, fees, or any other requirements are imposed upon residents of the District who are nonresidents or licensees of such other state in addition to, or in excess of, those imposed on nonresidents under this section, the same such requirements shall be imposed upon such residents of such other state. The Commissioner may enter into reciprocal agreements with the appropriate official of any state wherein such eligibilities are stipulated and recognized.

 

3515.27No HMO producer shall claim to be a representative of, an authorized or appointed producer of, or other term implying a contractual relationship with a particular HMO or solicit or accept applications for HMO membership for such HMO, unless such HMO producer becomes appointed by that HMO pursuant to this section.

 

3515.28In order to appoint an HMO producer the HMO shall, immediately upon executing a producer contract or upon accepting the first HMO membership application from a licensed HMO producer, whichever is earlier, file with the Commissioner a written notice of appointment on a form prescribed by the Commissioner.

 

(a)Two or more HMOs in an affiliated group may appoint a licensed HMO producer by filing a single notice of appointment on a form prescribed by the Department.

 

(b)Each notice of appointment delivered to the Commissioner shall be accompanied by an appointment fee, in the amount set forth in subsection 3510.36 for each HMO appointing the HMO producer.

 

(c)HMOs appointing an HMO producer under this subsection shall, not later than five (5) days after filing the required notice of appointment with the Commissioner, deliver a copy of such notice of appointment to the HMO producer.

 

3515.29Upon receipt of the notice of appointment, the Commissioner shall, within thirty (30) business days, send written verification to the appointing HMO or HMOs of whether the licensed HMO producer is eligible for appointment; provided, however, that if such verification is not sent by the Commissioner within thirty (30) business days from the date the notice of appointment was received by the Department, the appointing HMO or HMOs may consider the appointment approved, and the licensed HMO producer, if so advised by the HMO or HMOs, may act as an appointed HMO producer of such HMO or HMOs unless and until subsequently advised that the appointment is disapproved.

 

3515.30The appointing HMO or HMOs shall, within five (5) days of receipt of verification of an HMO producer's appointment status from the Commissioner, forward a copy of such verification to the licensed HMO producer. If the licensed HMO producer does not receive from the HMO a copy of verification of approval of such appointment or appointments within thirty (30) days from the date the notice of appointment is filed by the HMO, then the HMO producer shall immediately discontinue acting as an HMO producer on behalf of such HMO or HMOs until such verification of approval is received.

 

3515.31Thirty (30) days prior to the renewal date, every HMO shall remit, in a manner prescribed by the Commissioner, a renewal appointment fee in the amount set forth in subsection 3510.36.

 

3515.32An HMO producer's appointment with a specific HMO shall be terminated upon the filing of written notification in such form as the Commissioner may prescribe by:

 

(a)The HMO producer, upon delivering such notification to the Commissioner and to the HMO; or

 

(b)The HMO, upon delivering such notification to the Commissioner and to the HMO producer.

 

3515.33Upon the termination of an appointed HMO producer by an HMO, the HMO shall provide the Commissioner with a statement of the facts relative to the termination of the appointment and the date and reason for such termination. If the HMO producer was terminated for cause, the HMO shall further provide such additional information, documents, records or other data pertaining to the termination which may be used by the Commissioner in any action taken pursuant to section 3510.37 of these rules.

 

3515.34Any information, documents, records or statements provided to the Commissioner pursuant to this section shall be deemed to be a confidential and privileged communications unless or until introduced as evidence in an administrative hearing or admitted into evidence in a court action or proceeding pursuant to subpoena of a court of record.

 

3515.35There shall be no liability on the part of, nor shall a cause of action of any nature arise against the Commissioner, the HMO or an authorized representative of either, or any other person, so long as they are acting in good faith and without malice, relative to the transmission of any information, documents, records or statements required to be disclosed pursuant to this section.

 

3515.36The Commissioner shall collect the following nonrefundable fees:

 

(a)Initial HMO producer license fee, $ 100.00.

 

(b)Duplicate HMO producer license fee, $ 50.00.

 

(c)HMO producer license renewal fee, $ 100.00.

 

(d)Initial HMO producer appointment fee, $ 25.00.

 

(e)HMO producer appointment renewal fee, $ 25.00.

 

3515.37The licensure of any HMO producer may be denied, or a license duly issued may be suspended or revoked or the renewal thereof denied by the Commissioner if, after notice and hearing as provided in section 10 of the District of Columbia Administrative Procedure Act, D.C. Code § 1-1509, the Commissioner finds that the applicant for or holder of such license, whether individually or through any officer, director, shareholder, partner or employee:

 

(a)Has violated any provision of District law, any federal law, any law of another state law, or any regulation or order of the Commissioner, except for violation which the Commissioner determines would be inappropriate reasons for suspending or revoking the producer's license;

 

(b)Has intentionally made a material misstatement in the application for such license;

 

(c)Has obtained, or attempted to obtain, such license by fraud or misrepresentation;

 

(d)Has misappropriated or converted to his, her, or an HMO's own use, or illegally withheld, money belonging to an applicant for HMO membership or to an HMO member or enrollee;

 

(e)Has shown himself or herself to be financially irresponsible or has otherwise demonstrated lack of trustworthiness or competence to act as an HMO producer;

 

(f)Has been guilty of fraudulent or dishonest practices relative to the conduct of HMO business;

 

(g)Has materially misrepresented the terms and conditions of HMO membership contracts;

 

(h)Has made or issued, or caused to be made or issued, any false statement or misrepresentation of a material nature regarding the terms or conditions of any health coverage contract issued by an insurer or HMO, for the purpose of inducing or attempting to induce the owner of such contract to forfeit or surrender such contract or allow it to lapse for the purpose of replacing such contract with an HMO membership contract;

 

(i)Has obtained, or attempted to obtain such license, not for the purpose of holding himself out to the public as an HMO agent, but primarily for the purpose of soliciting, negotiating or procuring HMO membership contracts covering himself or members of his family or his business associates; or

 

(j)Has been convicted of a felony.

 

3515.38In lieu of, or in addition to suspension, revocation, or noncontinuation of a license, the Commissioner may impose a civil penalty of not more than $ 5,000 upon a licensee whose license is subject to suspension, revocation, or noncontinuation under this section, and may additionally require restitution to any person who has suffered financial injury or damage as a result of the violation of any provision of the Act.

 

3515.39No applicant or licensee whose licensure has been denied, refused or revoked under subsection 3510.37 is entitled to file another application for a license as an HMO producer within three (3) years from the date on which such denial, refusal or revocation becomes final. Such application, when filed after three (3) years, may be denied by the Commissioner unless the applicant shows good cause why the denial, refusal or revocation of his license should not be considered a bar to the issuance of a new license.

 

3515.40The Department shall adopt a procedure for certifying and shall certify continuing education programs for HMO producers by fiscal year 2000. No HMO producer shall be required to complete more than 16 hours of continuing education during any twenty-four month period for maintenance of its HMO producer license.

 

source

Final Rulemaking published at 46 DCR 7291(September 17, 1999).