HRS § 432-1-308 - Suspension, revocation, or denial of certificate of authority

(a) Any certificate of authority issued under this chapter may be suspended or revoked and any application for a certificate of authority may be denied if the commissioner finds that any of the conditions listed below exists: (1) The mutual benefit society is operating significantly in contravention of its basic organizational document or in a manner contrary to that described in any other information submitted under section 432:1-301, unless amendments to the submissions have been filed with and approved by the commissioner; (2) The mutual benefit society is no longer financially responsible and may reasonably be expected to be unable to meet its obligations to its members and beneficiaries or prospective members; (3) The mutual benefit society has failed to correct, within the time prescribed by subsection (c), any deficiency occurring due to the mutual benefit society's prescribed minimum net worth being impaired; (4) The mutual benefit society, or any person on its behalf, has advertised or merchandised its services in an untrue, misrepresentative, misleading, deceptive, or unfair manner; (5) The continued operation of the mutual benefit society would be hazardous to its members; or (6) The mutual benefit society has otherwise failed to substantially comply with this chapter. (b) In addition to, or in lieu of, suspension or revocation of a certificate of authority pursuant to this section, the commissioner may levy an administrative fine upon the mutual benefit society in an amount not less than $500 and not more than $50,000 pursuant to section 431:3-221. (c) The following shall pertain when insufficient net worth is maintained: (1) Whenever the commissioner finds that the net worth maintained by any mutual benefit society subject to this chapter is less than the minimum net worth required, the commissioner shall give written notice to the mutual benefit society of the amount of the deficiency and require the mutual benefit society to: (A) File with the commissioner a plan for correction of the deficiency acceptable to the commissioner; and (B) Correct the deficiency within a reasonable time, not to exceed sixty days, unless an extension of time, not to exceed sixty additional days, is granted by the commissioner. The deficiency shall be deemed an impairment, and failure to correct the impairment in the prescribed time shall be grounds for suspension or revocation of the certificate of authority or for placing the mutual benefit society in conservation, rehabilitation, or liquidation; and (2) Unless allowed by the commissioner, no mutual benefit society or person acting on its behalf, directly or indirectly, may renew, issue, or deliver any certificate, agreement, or contract of coverage in this State for which a premium is charged or collected, when the mutual benefit society writing the coverage is impaired and the fact of the impairment is known to the mutual benefit society or to the person; provided that the existence of an impairment shall not prevent the issuance or renewal of a certificate, agreement, or contract when the member exercises an option granted under the plan to obtain a new, renewed, or converted coverage. (d) A certificate of authority shall be suspended or revoked, an application for a certificate of authority denied, or an administrative fine imposed, only after compliance with the requirements of this section, including the following: (1) Suspension or revocation of a certificate of authority, denial of an application, or imposition of an administrative fine pursuant to this section shall be by written order and shall be sent to the mutual benefit society or applicant by certified or registered mail. The written order shall state the grounds, charges, or conduct on which suspension, revocation, denial, or administrative penalty is based. The mutual benefit society or applicant, in writing, may request a hearing pursuant to section 431:2-308; and (2) If the mutual benefit society or applicant requests a hearing pursuant to this section, the commissioner shall issue a written notice of hearing and send it to the mutual benefit society or applicant by certified or registered mail and to the director of labor and industrial relations stating: (A) A specific time for the hearing, which may not be less than twenty nor more than thirty days after mailing of the notice of hearing; and (B) A specific place for the hearing. (e) When the certificate of authority of a mutual benefit society is suspended, the mutual benefit society shall not, during the period of the suspension, enroll any additional members except newborn children or other newly acquired dependents of existing members and shall not engage in any advertising or solicitation whatsoever. (f) When the certificate of authority of a mutual benefit society is revoked, the society, immediately following the effective date of the order of revocation, shall proceed to wind up its affairs and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the society. The mutual benefit society shall engage in no further advertising or solicitation whatsoever. The commissioner, by written order, may permit further operation of the society as the commissioner may find to be in the best interest of the members, to the end that members will be afforded the greatest practical opportunity to obtain continuing coverage and benefits. [L 2015, c 63, §23]