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IN RE:
HCH ADMINISTRATION
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CONSENT AGREEMENT
Docket No. MCINS 98-15

This document is a Consent Agreement, authorized by 5 M.R.S.A. § 9053(2) entered into by and among HCH Administration (also "HCH") and the Superintendent of the Maine Bureau of Insurance (hereafter also the "Superintendent"). Its purpose is to resolve, without resort to an adjudicatory proceeding, violations of Title 24-A M.R.S.A. §§ 1902, 2153, 2808-B, 2843 and 2850.

FACTS

1. HCH has been licensed as a Maine Third Party Administrator, Licensee # 48394, since December 12, 1997, when a name change from Kepple & Company, Inc. to HCH was approved. Kepple & Company, Inc. (hereafter also "Kepple & Company" and "Kepple") was first licensed as a Maine TPA on January 28, 1997.

2. The Superintendent of Insurance is the official charged with administering and enforcing Maine's insurance laws and regulations.

3. Maine Health Alliance, (hereafter also "MHA"), has been registered as a Maine registered Preferred Provider Arrangement, registration # PPD49054, since March 21, 1997.

4. Reliance National Insurance Company (hereafter also "Reliance"), Licensee # PCF38297 has been licensed as a Life and Health Insurer since November 9, 1993.

5. In December 1995, HCH, then doing business as Kepple & Company, contracted with MHA to, among other things, provide MHA access to small group health insurance products for fully-insured employers through existing relationships with insurers licensed in Maine. Under that agreement, HCH agreed to use its best efforts to contract for claim administration, utilization review, network administration and direct sales on behalf of those fully-insured plans, agreed to obtain any license necessary to conduct these activities, and agreed to provide or arrange for the provision of marketing, advertising and promotional materials for the purpose of promoting health plans contemplated by the agreement.

6. On July 1, 1997, Kepple & Company employee Cece Walls contacted the Bureau and spoke with Staff Attorney Kathryn Davis. Attorney Davis advised Kepple that licensees are prohibited from doing business under any name other than the name under which they are licensed.

7. On or about October 17, 1998, Community Health Plan marketing letters were sent under MHA member hospital letterhead to northern Maine businesses inviting them to a November 3, 1997 presentation on the new health plan offering.

8. Community Health Plan plan descriptions and producer manuals distributed at the November 3, 1997 presentation identified the administrator of the Plan as HCH. As of November 3, 1997, HCH had had not filed a name change from Kepple & Company, Inc., the entity licensed by the Bureau as an insurance administrator.

9. The Community Health Plan plan descriptions and producer manuals distributed at the November 3, 1997 presentation included many provisions at odds with the requirements of Maine law. Provisions in the distributed producer manuals which violate the requirements of Maine's Community Rating Law, 24-A M.R.S.A. § 2808-B included: a) inappropriate participation requirements; b) an "actively at work" requirement for coverage eligibility; c) the requirement that participants in the health plan also participate in the life insurance program; d) failing to properly define an eligible small group as one comprised of 50 or less eligible employees; e) impermissibly denying small group coverage for classes of employers; and, f) requiring employers to contribute 25% of total premiums. The Producer Manual described benefits for mental health inpatient services which do not comply with Maine's mental health mandate at 24-A M.R.S.A. § 2843. The Producer Manual also indicated an 18 month preexisting condition exclusion for late enrollees inconsistent with the requirements of Maine's Continuity Law at 24-A M.R.S.A. § 2850.

CONCLUSIONS OF LAW

10. HCH violated Title 24-A M.R.S.A. § 1902 by doing business under an unlicensed name and holding itself out as a properly licensed administrator.

11. HCH violated Title 24-A M.R.S.A. § 2153, which prohibits the circulation of any statement misrepresenting the terms of any policy to be issued or the benefits or advantages promised thereby. As described in paragraph 9 above, several elements of the coverage descriptions distributed by HCH violated the requirements of Maine law. Because statutory requirements supersede coverage provisions inconsistent with the law, the improper descriptions did not accurately reflect the coverage being marketed.

12. As described in paragraph 9(a)-(f) above, HCH violated 24-A M.R.S.A. § 2808-B by imposing improper eligibility criteria on small group applicants for coverage.

13. HCH violated 24-A M.R.S.A. § 2843 by marketing coverage with improper benefits for mental health inpatient services.

14. HCH violated 24-A M.R.S.A. § 2850 by marketing coverage with a preexisting condition exclusion of improper duration.

COVENANTS

15. A formal hearing in this matter is waived and no appeal will be taken. This Consent Agreement is an enforceable final agency action of the Superintendent of Insurance within the meaning of the Maine Administrative Procedure Act.

16. At the time of executing this Agreement, HCH shall pay to the Maine Bureau of Insurance a penalty in the amount of six thousand dollars ($6,000.00) payable to the Treasurer of the State of Maine.

MISCELLANEOUS

17. HCH understands and acknowledges that this Agreement will constitute a public record within the meaning of 1 M.R.S.A. § 402 and will be available for public inspection and copying as provided for by 1 M.R.S.A. § 408.

18. It is understood by the parties to this Agreement that nothing herein shall affect any rights or interests that any person not a party to this Agreement may possess.

19. This Consent Agreement may only be modified by the written consent of the parties.

20. HCH has been advised of its right to consult with counsel and has, in fact, consulted with counsel before executing this Agreement.

FOR HEALTH CARE HORIZONS, INC.
Dated: __________, 1998 By: _____________________________
Signature
For:

_____________________________
Typed Name

_____________________________
Typed Title

Subscribed and Sworn to before me

this _______ day of ________, 1998.

___________________________________
Notary Public

FOR THE MAINE
BUREAU OF INSURANCE
Dated: __________, 1998 _____________________________
Alessandro A. Iuppa
Superintendent of Insurance

STATE OF MAINE
KENNEBEC, SS.

Subscribed and sworn to before me
this _____________ day of __________, 1998.

__________________________________
Notary Public/Attorney-at-Law

FOR THE MAINE
ATTORNEY GENERAL
Dated: _____________, 1998 ____________________________________
Judith Shaw Chamberlain
Assistant Attorney General

 


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Last Updated: October 22, 2013