The Issue Whether the State of Florida through its Employees Group Health Self Insurance Plan is responsible for paying medical expenses incurred by Petitioner's newborn child where Petitioner had only individual coverage in effect at the time of that child's birth?
Findings Of Fact The State of Florida makes available to its employees several group insurance programs. In the area of health insurance, employees may choose to participate in the State of Florida Employees Group Health Self Insurance Plan, or they may enroll in a number of different HMOs depending upon the county in which each employee resides. The State of Florida Employees Group Health Self Insurance Plan (hereinafter "the Plan") is a plan of self insurance established by the State, specifically described in a Benefit Document, and administered by Blue Cross/Blue Shield. In addition to the provisions of the Plan embodied in the Benefit Document, the self insurance plan is regulated by those rules contained in Chapter 22K, Florida Administrative Code. If an employee voluntarily chooses to participate in the Plan, the State as the employer contributes to the employee's costs by paying a portion of the premium for each employee. HMOs wishing to capture a portion of the State employee insurance market may participate in bidding procedures whereby the winner(s) can offer insurance to State employees in particular geographical locations. Winning HMOs must comply with many of the rules and provisions involved in the Plan but are still able to establish additional benefits and requirements for coverage. If an employee voluntarily chooses to participate in an HMO insurance program, the State will assist with the employee's costs by contributing to that employee's insurance premium expense. At the time that they commence employment with the State, employees may elect to participate in the Plan, in one of the HMOs approved for that particular geographical location, or may choose to not participate in any of the voluntary insurance programs offered through the State. Thereafter, employees may only join one of the insurance programs or switch between programs during an annual open enrollment period. An employee may purchase individual coverage, insuring only himself or herself, or an employee may purchase family coverage, insuring that employee and one or more of his or her eligible dependents. During an open enrollment period, an employee may switch between individual coverage and family coverage for the following year. Under the State Plan, there is an exception to the restriction that employees may only change coverage and health plans during the open enrollment period. An employee having individual coverage may change to family coverage within 31 days after the date of acquisition of any eligible dependent. In that event, coverage for the eligible dependent does not relate back to the date of acquisition but rather will commence on some future date following the payment of the additional premium required for the additional family coverage. Similarly, an employee with only individual coverage may begin family coverage prior to acquiring eligible dependents and may obtain coverage for those dependents effective on the actual date the dependent is acquired by making application in time for a complete month's premium to be deducted prior to the first day of the month during which the dependent(s) will be acquired. In other words, payment must be made prior to the acquisition of an eligible dependent and the change to family coverage with its increased premium must be made prior to the acquisition of the dependent in order that coverage can be effective as of the date of acquisition. During open enrollment periods, all employees (even those not currently participating in any of the insurance programs offered by the State) are given summary information regarding the various programs in which they are being given an opportunity to participate. Brochures giving summarized comparisons of the Plan and the relevant HMOs are provided to all employees. Employees are advised, if they have questions regarding the Plan, to contact their personnel officer or the Division of State Employees' Insurance. After the employee makes a selection as to which health plan he or she wishes to participate in, if any, the employee will subsequently receive more detailed information about that plan. For example, an employee choosing to participate in the Plan will subsequently receive a copy of the State of Florida Employees Group Health Self Insurance Plan Brochure. The first page of that Brochure specifically advises the employee that the brochure does not include all of the provisions, definitions, benefits, exclusions, and limitations of the Plan. The Brochure specifically advises the employee that it is a summary of the benefits and that any questions the employee might have should be presented to the employee's agency personnel offices or the Office of State Employees' Insurance, and provides that latter office's address and telephone numbers. The Plan itself is a lengthy document which is not distributed to each individual employee but rather is made available to each agency's personnel office for reference by any interested employee. Under the Plan, a woman with individual coverage is entitled to maternity or pregnancy benefits. As part of those benefits, charges for "well baby care," i.e., the charges for the nursery for the baby, are covered under the Plan as part of the maternity benefit of the mother. In well-baby care, charges are not incurred by the baby as a separate patient. On the other hand, if a baby is ill and is admitted to the hospital as a patient in its own right, well-baby care coverage does not apply, and family coverage must be in effect or the infant will be an uninsured individual under the State Plan. The Dade County Public Defender's Office has approximately 265 employees. Faith Quincoses, an Administrative Assistant in that office, began her employment there in 1981 when the office had approximately 165 employees. As the number of office personnel increased, it was determined that someone within that Office should be responsible for employee benefits. That assignment was given to Quincoses, who at the time had duties related to payroll. Quincoses had no training in employee benefits, particularly employee insurance benefits, prior to her assuming responsibility for those duties at the Dade County Public Defender's Office. After she assumed those duties, the Public Defender's Office provided her with no training, and that office did not send her to any of the training sessions regularly conducted by Respondent for employees with and without personnel duties, including those seminars related to employee insurance benefits. When Quincoses would receive informational brochures and memoranda from Respondent regarding employee insurance benefits, she would read them but intentionally did not study them. She did not believe it was her responsibility to assist employees in selecting a particular insurance plan, or in advising employees as to which plan best met that employee's needs, or in answering any specific questions regarding coverage that any employee may have other than routine questions. Although many, if not most, of the informational brochures received from time to time by Quincoses advised employees (including Quincoses) to contact the Division of State Employees' Insurance with any questions regarding benefits and coverage, Quincoses did not contact that office when she had questions about the several insurance plans offered by the State to its employees. She very seldom contacted the Division of State Employees' Insurance to ask questions; rather, she discussed insurance benefits and coverage questions on an almost daily basis with a payroll clerk who worked for the Justice Administrative Commission, an agency belonging to the judicial branch of government with no responsibility or authority for administering the various insurance programs for state employees. Although Quincoses knew that she did not posses a copy of the State of Florida Employees Group Health Self Insurance Plan and had never read a copy, she made no effort to obtain a copy other than to once request a copy from the payroll clerk she daily contacted at the Justice Administrative Commission. When told by that payroll person that she did not have a copy of the Plan, Quincoses made no further efforts to obtain a copy and never requested a copy from the Division of State Employees' Insurance. Quincoses knew she was not an insurance expert and did not feel the need to become one. She believed that her responsibilities regarding the various insurance programs made available to employees by the State of Florida was to simply disseminate information provided to her, fill out the appropriate forms for payroll deductions, answer routine questions, and refer specific questions to the Division of State Employees' Insurance. She rightfully believed that each employee's decision as to which of the individual plans that employee should select was the employee's responsibility. Petitioner Annemarie Harris is an attorney employed as an Assistant Public Defender by the Dade County Public Defender's Office since October, 1983. As a new employee, she chose to enroll in one of the group health insurance programs approved by the State. She chose to join an approved HMO plan rather than enroll in the State of Florida Employees Group Health Self Insurance Plan. Thereafter, and up through December of 1987, each year during the open enrollment period, Petitioner chose to participate in one of the approved HMOs rather than the State's Self Insurance Plan. In December of 1987, the contract between the HMO of which Petitioner was a member and the State of Florida was being terminated, and Petitioner therefore had the option of selecting to participate in one of the other group health insurance programs offered through the State of Florida. In December of 1987, Petitioner was three months pregnant. Her baby was due to be born approximately June 20, 1988. Petitioner was, therefore, very interested in the most extensive coverage which she could obtain for her maternity benefits. Petitioner advised Quincoses that her expected delivery date was June 20, 1988, and that she wished her newborn to be covered by the insurance policy to be selected by Petitioner. Quincoses advised Petitioner that the baby's expenses would be covered if Petitioner added the newborn baby to Petitioner's coverage within 31 days after the date the baby was born. Quincoses did not advise Petitioner that waiting until after the baby's birth would mean that the baby would not be an individual insured until after Petitioner had paid the premium in time for the baby to be added as an insured by the first day of a month subsequent to the baby's birth, since Quincoses did not understand that distinction. The information Quincoses gave Petitioner was wrong and is not contained in any of the written materials describing the Plan which had been transmitted by the State to Quincoses or Petitioner, and is contrary to the information contained in Chapter 22K, Florida Administrative Code. Petitioner then conducted her own investigation of which health plan she wished to choose by asking her friends that worked in the Public Defender's Office about their personal experiences. Further, as Petitioner testified at the final hearing in this cause, Petitioner's husband strongly insisted that she choose the State's Self Insurance Plan in which Plan he had previously participated as a State employee and with which he therefore had some familiarity. Petitioner did not contact the Division of State Employees' Insurance regarding her specific questions and specific situation, did not consult the Benefit Document itself and did not--although both she and her husband are attorneys--consult the rules and regulations regarding coverage contained within Chapter 22K, Florida Administrative Code. Petitioner voluntarily selected the State's Self Insurance Plan and purchased only individual coverage, insuring herself at a lower premium than family coverage which would have covered the newborn infant as of the date of the baby's birth. It is unknown whether Petitioner relied solely on the advice of Quincoses in choosing to purchase individual coverage rather than family coverage, whether Petitioner relied instead on the advice she obtained from questioning her friends or whether she relied upon her husband's desires, in choosing to participate in the State Plan or in choosing to purchase only individual coverage. Although the basis for Petitioner's decision is unknown, her intentions at the time are clear. She planned to, and took steps to, initiate the paperwork necessary to switch to family coverage and pay the additional premium required early enough so that insurance for the baby would be in place on June 1, 1988, prior to the baby's expected arrival date. During April of 1988, Petitioner caused Quincoses to begin filling out the appropriate forms so that Petitioner would have family coverage in place as of June 1, 1988. Since Quincoses had earlier advised Petitioner that Petitioner could switch to family coverage after the baby's birth (which would make the baby's coverage effective subsequent to the baby's birth) but Petitioner chose instead to attempt to convert to family coverage prior to the baby's birth (which was contrary to Quincoses' advice and would have established coverage immediately upon the baby's birth), it can be reasonably inferred that Petitioner understood that the difference between converting to family coverage prior to the baby's birth rather than subsequent to the baby's birth involved the sole issue of the date on which the baby's coverage would become effective. Although Quincoses initiated the paperwork to have family coverage in place for Petitioner prior to the baby's birth expected to occur on June 20, 1988, Petitioner experienced complications with her pregnancy causing the baby to be delivered prematurely on April 24, 1988, prior to Petitioner signing and processing the paperwork started by Quincoses. Almost immediately after the baby's birth, the baby was transferred from the hospital in which her mother was a patient to another hospital where the baby was admitted as a separate patient. The baby remained in that hospital for some time, incurring medical expenses of approximately $180,000.00. Petitioner's medical expenses were paid by the Plan pursuant to her individual coverage. The baby's medical expenses were submitted to the Plan. Petitioner's claim for payment of the baby's medical expenses was denied for the reason that the baby was admitted to a different hospital than the mother as a separate patient but was not an insured under any insurance policy as of the date of the baby's birth, the date on which the baby commenced incurring her own personal medical expenses. When Petitioner converted her individual coverage to family coverage subsequent to the baby's birth, her claims for payment of the baby's medical expenses incurred subsequent to the date upon which the baby became an insured under the State Plan were denied since they arose from a condition pre-existing the date of commencement of insurance coverage. On April 24, 1988, Petitioner's newborn child was not an insured under the State Plan since Petitioner only had individual coverage on that date.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered denying Petitioner's claims for payment of medical expenses incurred by Petitioner's newborn baby which are the subject of this proceeding. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 27th day of October, 1989. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of October, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO 88-5519 Petitioner's proposed Findings of Fact numbered 1-4, 7-9, 15-18, 34, 35, 37, 38, and 40-42 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed Findings of Fact numbered 5, 6, 10-12, 21, and 33 have been rejected as not being supported by the weight of the credible evidence in this cause. Petitioner's proposed Findings of Fact numbered 13, 14, 39, 44, and 45 have been rejected as being subordinate to the issues for determination herein. Petitioner's proposed Findings of Fact numbered 19 and 22-25 have been rejected as not constituting findings of fact but rather as constituting recitation of the testimony, argument of counsel, or conclusions of law. Petitioner's proposed Findings of Fact numbered 20, 26-31, and 43 have been rejected as being irrelevant to the issues under consideration herein. Petitioner's proposed Finding of Fact numbered 32 has been rejected as being contrary to the weight of the totality of the evidence in this cause. Petitioner's proposed Finding of Fact numbered 36 has been rejected as being unnecessary for determination of the issues involved herein. Respondent's proposed Findings of Fact numbered 1-5, 7-18, the second 19-24, the first 27, the second 26, the second 27, and 28 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed Findings of Fact numbered 6, the first 19, 25, and the first 26 have been rejected as being subordinate to the issues required to be determined in this proceeding. COPIES FURNISHED: James N. Hurley, Esquire William P. Harris, Jr., Esquire Mitchell, Harris, Horr & Associates 2650 Biscayne Boulevard Miami, Florida 33137-4590 William A. Frieder, Esquire Department of Administration Office of the General Counsel 440 Carlton Building Tallahassee, Florida 32399-1550 A. J. McMullian, III Interim Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Augustus D. Aikens, Jr. General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 =================================================================
The Issue This case involves a dispute as to whether the Petitioner underpaid the premiums due on his health insurance coverage and, if so, what action should be taken by the Department of Administration as a result of any premium underpayments. By notice dated March 18, 1988, the Department of Administration notified the Petitioner that the Department records "show a total underpayment of $1,117.81 for the coverage periods 9/86 through 9/87." At the formal hearing, over the objection of the Petitioner, the Department was permitted to offer evidence regarding the Petitioner's premium history (both the amounts due and the amounts actually paid) for the entire period of the Petitioner's employment with the State of Florida, a period which runs from May 1978 until October 1988. At the formal hearing the Department of Administration presented the testimony of one witness and offered several exhibits, all of which were received. The Petitioner did not present any evidence, but did present oral argument on his own behalf. The parties were allowed 10 days from November 3, 1988, within which to file their post-hearing submissions with the Hearing Officer. The Department of Administration timely filed Proposed Findings Of Fact. Those findings are specifically addressed in the appendix to this recommended order. The Petitioner did not file any post-hearing submission.
Findings Of Fact Based on the evidence received at the formal hearing, I make the following findings of fact. From May 1, 1978, until August 1, 1978, the Petitioner requested and received family coverage under the State Group Health Self-insurance Plan. From November 1, 1978, until November 1, 1985, the Petitioner requested and received individual coverage under the State Group Health Self-Insurance Plan. From November 1, 1985, until the date of the hearing, the Petitioner requested and received family coverage under the State Group Health Self-Insurance Plan. From May 1, 198, until July 1, 1984, the Petitioner was a part-time employee of the State of Florida, working .25 of a full-time equivalent position. Accordingly, his premiums for health insurance coverage under the State Group Health Self-Insurance Plan during this period should have been paid on the basis of employment in a .25 full-time equivalent position. From July 1, 1984, until at least the date of the hearing, the Petitioner has been a part-time employee of the State of Florida, working .20 of a full-time equivalent position. Accordingly, his premiums for health insurance coverage under the State Group Self-Insurance Plan during this period should have been paid on the basis of employment in a .20 full-time equivalent position. During the period beginning May 1, 1988, and continuing through October of 1988, the amount by which the Petitioner underpaid his health insurance coverage premiums totals S1,116.36. 1/ During the period beginning March 1, 1986, and continuing through October of 1988, the amount by which the Petitioner underpaid his health insurance coverage premiums totals $861.74. During the thirteen-month period beginning with September 1986 and ending with (but including) September 1987, the amount by which the Petitioner underpaid his health insurance coverage premiums totals $258.36.
Recommendation Based on all of the foregoing, I recommend the entry of a Final Order to the following effect: Finding the Petitioner to be in debt to the State of Florida in the amount of $258.36 by reason of underpayment of premiums during the period of September 1986 through September 1987. Providing that the Petitioner's health insurance coverage under the State Group Health Self-Insurance Plan will be cancelled unless within thirty (30) days following the entry of the final order the Petitioner either pays the full amount of $258.36 or enters into an installment payment program consistent with Rule 22K-1.049(1)(a)2., Florida Administrative Code. DONE AND ENTERED this 23rd day of November, 1988, at Tallahassee, Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of November, 1988.
The Issue This case concerns the issue of whether the Petitioner should be required to pay back premiums for chiropractic coverage under his family health insurance with the State of Florida Employees Group Health Self Insurance Plan for the period August, 1981, to December, 1982. At the formal hearing, the Petitioner testified on his own behalf and the Respondent called one witness, Ms. Barbara Power. Petitioner had marked for identification eight exhibits. Exhibits 1 through 5 and Exhibit 7 were admitted and Exhibit 6 was withdrawn. Petitioner's Exhibit No. 8 was a copy of Rule 22K-1.20, Florida Administrative Code, and it was marked for identification only. The Respondent had marked for identification 10 exhibits. Respondent offered and had admitted Respondent's Exhibit Nos. 2, 3, 7, 8, 9, and 10. Both the Petitioner and Respondent submitted proposed findings of fact and conclusions of law for consideration by the undersigned Hearing Officer. The proposed findings of fact and conclusions of law were considered by the Hearing Officer and to the extent that those proposed findings of fact and conclusions of law are inconsistent with the facts contained herein, they were considered to be not supported by the evidence or were rejected as being unnecessary to the disposition of this cause.
Findings Of Fact In April, 1978, the Petitioner, Owen Sellers, enrolled in the State of Florida Employees Group Health Self Insurance Plan (hereafter referred to as the Plan) . At the time of his enrollment, the Petitioner elected coverage for himself and his eligible dependents, including coverage for chiropractic services. Under the Plan, a portion of the premium for the health insurance coverage is paid by the state agency who employs the individual and the remaining portion is paid by the employee through payroll deduction. In approximately November, 1980, the Petitioner'S spouse also became a full time state employee entitled to the health insurance benefit. As a result of the entitlement of both family members, the state began paying the entire cost of the Plan, except for chiropractic coverage. In order to obtain chiropractic coverage, an employee in 1981 and 1982 was required to pay an additional premium for such coverage. From August, 1981, to December 1, 1982, the Petitioner and his family were covered by the Plan including chiropractic coverage. On or about November 4, 1982, the Petitioner, Owen Sellers, submitted a Change of Information form dropping chiropractic coverage. This change became effective December 1, 1982. At no time prior to this had the Petitioner requested such a change. Because of an error on the part of the employing agency, the premium for chiropractic coverage was not deducted from Mr. Sellers' pay from August, 1981, through October, 1982. The total amount of premiums due for that period for chiropractic coverage is $92.20. The error was discovered in November, 1982, and at that time, the Petitioner was notified of the underpayment. Petitioner refused to pay the $92.20 and requested an administrative hearing. During the time period August, 1981, through October, 1982, the Petitioner did not file a claim for any benefits under the chiropractic coverage. However, claims were submitted for non-chiropractic medical treatment received by the Petitioner or other members of his family.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent enter a Final Order directing the Petitioner to pay the sum of ninety-two dollars and twenty cents ($92.20) within ninety (90) days of entry of the Final Order. In the event Petitioner fails to make timely payment, that Respondent cancel his coverage under the State of Florida Employees Group Health Self Insurance Plan DONE and ENTERED this 3rd day of August, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1983. COPIES FURNISHED: Mr. Owen Sellers 1874 Woodleigh Drive West Jacksonville, Florida 32211 Daniel C. Brown, Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Mr. Nevin G. Smith Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301
The Issue Whether Respondent has violated the following statutes as charged within the Administrative Complaint: Count I: Sections 627.6425(1), 627.6425(3)(a)2., and 624.418(2)(a), Florida Statutes. Count II: Sections 626.9521, 626.9541(1)(a)1., 626.9541(1)(e)2., 626.9541(1)(g) 2., and 624.418(2)(a), Florida Statutes. Count III: Sections 626.9521, 626.9541(1)(g)2., and 624.418(2)(a), Florida Statutes. Count IV: Sections 626.9521, 626.9541(1)(a)1., 626.9541(1)(e)2., 626.9541(1)(g)2., 626.418(2)(a), and 627.6425(3), Florida Statutes. Count V: Sections 624.418(2)(a), 626.9521, 626.9541(1)(a)1., 626.9541(1)(e)2., and 626.9541(1)(g)2., Florida Statutes. Count VI: Sections 624.418(2)(a), 626.9521, 626.9541(1)(a)1., 626.9541(1)(e)2., and 626.9541(1)(g)2., Florida Statutes. Count VII: Sections 624.418(2)(a), 626.9521, 626.9541(1)(a)1., 626.9541(1)(e)2., and 626.9541(1)(g)2., Florida Statutes Count VIII: Sections 624.418(2)(a), 626.9521, 626.9541(1)(a)1., 626.9541(1)(e)2., and 627.6675(17), Florida Statutes.2
Findings Of Fact At all times material, Respondent United Wisconsin was a foreign insurer domiciled in the State of Wisconsin and operating under a subsisting certificate of authority to transact the business of insurance in the State of Florida. At all times material, American Medical Security, Inc. (AMS) was a Florida-licensed administrator authorized to market and administer United Wisconsin's out-of-state group health insurance plans in Florida. United Wisconsin and AMS are wholly-owned subsidiaries of American Medical Security Group, Inc. Section 627.6515(2), Florida Statutes, is found in Part VII (7) of the Florida Insurance Code, and provides, in pertinent part: 627.6515 Out-of-state groups. - Any group health insurance policy issued or delivered outside this state under which a resident of this state is provided coverage shall comply with the provisions of this part in the same manner as group health policies issued in this state. This part does not apply to a group health insurance policy issued or delivered outside this state under which a resident of this state is provided coverage if: (a) The policy is issued to . . . an association group to cover persons associated in any other common group, which common group is formed primarily for purposes other than providing insurance; a group that is established primarily for the purpose of providing group insurance. . . * * * In or about May 1993, United Wisconsin, through AMS, filed with the Department, pursuant to Section 627.6515(2), Florida Statutes, an out-of-state group health insurance policy to be offered through an Alabama-sitused Trust, formed primarily for the purpose of providing group insurance. In June 1993, the Department accepted this filing as meeting the requirements of Section 627.6515(2), Florida Statutes. In November 1996, United Wisconsin, through AMS, filed with the Department, pursuant to Section 627.6515(2), Florida Statutes, an out-of-state group health insurance policy (the MedOne Choice plan) to be offered through an Ohio-sitused association called the Taxpayers' Network, Inc. (TNI), formed primarily for purposes other than providing insurance. In January 1997, said filing was accepted by the Department as meeting the requirements of Section 627.6515(2), Florida Statutes. On or about September 22, 1998, United Wisconsin notified the Department that the Alabama-sitused Trust plans in Florida were being discontinued, effective as of each certificate holder's 1999 renewal date. On or about September 25, 1998, United Wisconsin notified all certificate holders issued coverage through the Alabama-sitused Trust that the Alabama-sitused Trust plans in Florida were being discontinued, effective as of each certificate holder's 1999 renewal date. Upon discontinuance of the Alabama-sitused Trust plans, the only United Wisconsin health insurance plans available in Florida were the MedOne Choice plans offered through the Ohio- sitused association TNI, to members of TNI. Membership in TNI was available to anyone, conditioned upon submitting an application form and paying the membership fee. Via the September 25, 1998 notice, (see Finding of Fact No. 7), United Wisconsin guaranteed each Trust certificate holder that, upon joining TNI and upon request, s/he would be issued coverage under the Classic Benefit Plan (one of the TNI MedOne Choice plans) without regard to his or her health status. Certificate holders were also advised that, if they desired coverage under a MedOne Choice plan other than the guaranteed issue Classic Benefit Plan, they could apply for any of the other TNI MedOne Choice plans. If the applicant met the underwriting guidelines of the plan they applied for, he or she would be issued coverage under that MedOne Choice plan. After the September 22, 1998 notice (see Finding of Fact 6) from United Wisconsin, the Department raised questions and concerns about United Wisconsin's decision to discontinue the Trust plans and whether the plan of discontinuance was in compliance with Section 627.6425, Florida Statutes. Section 627.6425, Florida Statutes, provides, in pertinent part, that an insurer discontinuing an individual policy form must offer the option of coverage by another of its policies uniformly, without regard to any health-status-related factor, to all enrolled individuals. Section 627.6425, Florida Statutes, addresses "renewability of individual coverage" and is located within Part VI (6) of the Florida Insurance Code. It arguably does not apply to out-of-state group insurers registered in Florida, pursuant to Section 627.6515, Florida Statutes, because such out-of-state insurers are only bound by Section 627.6515, Florida Statutes, to comply with Part VII (7) of the Florida Insurance Code. It also arguably does not apply to a discontinuance of coverage where the entity discontinuing a policy form has no other policy to offer. (See Conclusions of Law.) United Wisconsin corresponded with, and met with, Department representatives between October 1998 and early January 1999. Ultimately, United Wisconsin met with James J. Bracher, the Department's Chief of the Bureau of Life & Health Forms & Rates, on January 14, 1999, and entered into an agreement with the Department to offer to Trust certificate holders an additional guaranteed issue TNI plan, and to cap the rate for the guaranteed issue plans at no more than twice (200%) the rate (premium) currently being paid by Trust certificate holders for the discontinued Trust plan. In accordance with the foregoing agreement, on or about January 19, 1999, United Wisconsin notified Trust certificate holders of the additional guaranteed issue option available to them. In 1999, United Wisconsin discontinued the Trust plans in accordance with the agreement negotiated with Mr. Bracher. At the time of the discontinuance of the Trust plans, the TNI association coverage was the only health insurance coverage United Wisconsin had qualified through the Department for sale in Florida. Accordingly, the TNI association's plan(s) were the only health insurance coverage United Wisconsin could legally offer in the Florida market. The discontinued Trust certificate holders were offered alternative coverage through TNI. They were not given the option to renew or continue their prior coverage through the Trust because the Trust had been discontinued. Only one Trust policy form was discontinued. All discontinued Trust certificate holders were invited to join TNI and get coverage under the association group policy issued to TNI. United Wisconsin's offer continued to be to TNI, and through TNI, to that association's members. There were approximately 11,800 Trust certificate holders who were Florida residents in 1998-1999 when the Trust was discontinued. Of these 11,800 discontinued Trust certificate holders, 4,498 applied for continued coverage through the TNI plan. Trust certificate holders qualified for membership in the TNI association, and thus qualified for its insurance plan(s) by completing a membership application, agreeing to pay $5.00 per month in association dues, and sending it all to TNI by a date established relative to their renewal date for their discontinued Trust policy. The Department was fully informed, in 1998-1999, before the Trust coverage was discontinued, as to the type of coverage United Wisconsin offered through TNI, including the fact that individuals wanting coverage through TNI would be required, as a prerequisite, to become TNI association members. There is no evidence any Trust certificate holder was not allowed to join TNI. There is no evidence any Trust certificate holder who wanted to obtain coverage through TNI was refused by United Wisconsin. United Wisconsin had a conversion policy available. The Department has determined that United Wisconsin's rate for the conversion policy is within 200% of the standard risk rate, as was agreed between United Wisconsin and the Department, and that the statutorily required notice of conversion privilege (to convert from group to individual coverage) was contained in the certificates of coverage issued to Florida residents. Throughout 1999, the Department received various consumer inquiries about United Wisconsin's discontinuance of the Alabama-sitused Trust certificates in Florida and defended to consumers United Wisconsin's right to discontinue the Trust policies as agreed between United Wisconsin and the Department. In its responses, the Department consistently reiterated that United Wisconsin had adhered to underwriting guidelines; had violated no Florida statutes or administrative rules; and was not discriminating against individual certificate holders, because this was a situation in which an entire plan (policy form) was being cancelled/discontinued. The Department also asserted that the new insurance was "being offered on a guarantee issue basis," and that United Wisconsin had a right to underwrite and charge an additional premium on such a basis. Moreover, the Department repeatedly stated that it had no regulatory power over the rates of out-of-state insurers, such as United Wisconsin. Even now, the Department concedes that it has no authority to set premiums for out-of-state insurers like United Wisconsin. On March 30, 2000, the Department questioned the implementation of the January 1999 agreement in correspondence sent to United Wisconsin. At least partly on the theory that the Department had focused on capping the overall premium of previous Trust policyholders to the exclusion of every other consideration, the Department notified United Wisconsin that in March 2000, the Department now believed the discontinuance of the Trust plans, in accordance with the January 1999 agreement between United Wisconsin and the Department, may have violated Section 627.6425, Florida Statutes. The Department reached this conclusion only after United Wisconsin had relied on the agreement, fully complied with the agreement, and changed its position so as to fulfill the agreement. Beginning approximately August 2000, the Department pursued this matter, framed by a variety of legal theories, through at least an Order to Show Cause and an Amended Order to Show Cause, each voluntarily dismissed. The instant Administrative Complaint was referred to the Division of Administrative Hearings on or about June 7, 2001, and is largely directed to rate-setting practices that occurred in 1999 and 2000, for the TNI coverage. The factual charges originally were that "illegal tier blocking" occurred during the switchover in 1999 and again in the year 2000, at each certificate holder's annual renewal date. It is general insurance industry practice to adjust (usually increase) premiums by class when the time for renewal occurs, if loss experience justifies the premium increase. The Department would not oppose United Wisconsin's raising premiums across an entire class of health insureds. It is permissible underwriting practice in the health insurance industry to consider health, among a host of other actuarial considerations, when initially developing premium rates. It is not uncommon in the health insurance industry for members of a group to be divided into classes based on risk. The riskiest group (substandard) pay premiums higher than those with average health risks (manual), who pay more than those policy holders who are designated "preferred." Insureds may be designated "preferred" because they are either very healthy or because they make the fewest claims. This rating system is variously called "tier rating," "tier blocking," or "tier pricing." The terms are synonymous. The parties agree that the 1999 discontinuance of the Trust certificates was a "guaranteed renewable" situation, but they disagree as to the meaning of that term. As of the date of hearing herein, the Department's position was that an out-of-state insurer may not tier block premiums on a "guaranteed renewable" policy at any time other than at the initiation of the policy, when the original underwriting is done. The Department also asserted that United Wisconsin's underwriting methodology is discriminatory, due to its ranking of health hazards and lack of oversight/review of its underwriters, whose discretion is allegedly too broad. The evidence did not establish that United Wisconsin did any reclassification by tiers of premium levels of any of the Trust certificate holders at the switchover. It is now conceded by the Department that tier blocking did not occur during 1999, as specifically alleged in paragraph 19 of the instant Administrative Complaint. See greater detail in Finding of Fact 56, infra. This Administrative Complaint also makes allegations with regard to the federal Health Insurance Portability and Accountability Act (HIPAA). Chapter 96-223, Laws of Florida, created Section 627.6425, Florida Statutes, effective May 25, 1996. Chapter 97- 179, Laws of Florida, substantially amended Section 627.6425, Florida Statutes, effective May 30, 1997. This statute, along with Sections 627.6571 and 627.6487, Florida Statutes, are among those state statutes adopted to implement HIPAA. HIPAA was created primarily to preclude discrimination in insurance premiums and coverage on the basis of race and gender, but for purposes of the instant case, the basic theory of HIPAA, and the derivative State statutes, is that an insurance company cannot simply cancel a health insurance policy without providing other options. HIPAA provides for continuation of an insured's health policy, but does not limit the premiums the insurer can charge for health coverage. An individual who, through no fault of his own, loses his group health insurance coverage, is guaranteed by the statutes an opportunity to obtain substitute coverage. HIPAA laws do not regulate premium rates or have anything to do with what rates are allowable. No Trust certificate holders subject to the 1999 discontinuation process, authorized by the Department in January 1999 and followed by United Wisconsin, were HIPAA-eligible. This Administrative Complaint further asserts, however, that conditioning the new TNI association policy on a requirement that certificate holders join the TNI association and pay a TNI membership fee offends the concept of "guaranteed renewable" coverage, that including the requisite notice of conversion privilege in the certificates of coverage was insufficient, and that such notice should have been sent to inquiring certificate holders. United Wisconsin made full disclosure to the Department as to how TNI membership worked and its dues before the Department entered into the January 1999 agreement with United Wisconsin. The Department did not protest the imposition of the TNI fee and membership conditions prior to United Wisconsin's complying with their agreement and did not raise these issues until it initiated the first administrative action in August 2000. Departmental concern about a failure to fully advise in relation to the conversion notice is even more recent. Ms. Shaneen Wahl, a former Trust certificate holder, testified that she protested having to join TNI to get coverage after the Trust discontinuance, but this protest was apparently oral and occurred while the Department was still defending United Wisconsin's actions in accord with their agreement. Ms. Wahl also made a lot of phone calls to her insurance agent and to United Wisconsin, over some indeterminate period of time, during which she asked "almost everybody" she talked to whether there was anything else she could do besides take a guaranteed issue TNI plan at twice the premium of her Trust coverage, whether there was another policy, and whether she could be put in a different group. She never specifically asked for information about a conversion policy, because she had never heard that term (despite the notice of conversion privilege in her Trust certificate). This testimony falls short of clear notice to United Wisconsin that Ms. Wahl was considering applying for a conversion policy. Except for repeated premium increases, allegedly based on their individual health status and medical claims, both Ms. Wahl and Ms. Arlene Shallan testified that they had overall good coverage and service from Respondent. The evidence shows that only one eligible individual requested information about conversion policies, and United Wisconsin provided that person the required forms. He did not apply for a conversion policy. During the 1999 discontinuing of Trust certificates and issuing of TNI association coverage, all 4,498 Floridians who obtained coverage through TNI were given coverage irrespective of their health status. About 85% of the 4,498 Trust certificate holders who switched over to TNI in 1999 had the same health risk factor they had with the Trust carried over for the TNI association coverage, without reference to updated health information. The other 15% of Trust certificate holders who switched over were those that the Department now primarily seeks to protect from allegedly grossly inflated premiums due to perceived uninsurability. Nonetheless, despite the perception that due to current health status (potentially high claims), this 15% was essentially uninsurable, United Wisconsin guaranteed them health insurance coverage through TNI at the 1999 switchover under two different plan options, pursuant to its January 1999 agreement with the Department. However, at the switchover, each TNI application required certain information on eight underwriting factors, including, but not limited to, the applicant's medical history, geographic location, age, gender, and smoker or non-smoker status. TNI/United Wisconsin continues to request similar information prior to each annual renewal date. At each renewal date, United Wisconsin uses such information to set premiums by tiers based, in part, on health/claim history. The Department hired Dennis Fagin, an expert life and health underwriter, to perform an on-site audit of United Wisconsin's 1999 discontinuance of Trust certificates and switchover to TNI insurance. The Department has complained that there was a lack, or complete absence, of underwriting worksheets associated with the 1999 switchover, but the thrust of Mr. Fagin's testimony was that worksheets were unnecessary because the situation in 1999 had been controlled by the terms of United Wisconsin's January 1999 agreement with the Department, that United Wisconsin's underwriting manual was used in this initial review in accord with that agreement, and that the underwriting manual was consistently applied among the Trust certificate holders under consideration for TNI association coverage. The Department's on-site audit confirmed that in 1999, United Wisconsin considered health status solely to answer one question: whether the Trust certificate holder would otherwise qualify for TNI coverage at all. If the applicant did qualify, s/he was accepted into a preferred tier. If s/he did not qualify, the premium was capped at two times (200%) the Trust policy's premium, in accord with United Wisconsin's agreement with the Department. Trust certificate holders who had purchased after the effective date of Section 627.6425(3) had been provided certificates that expressly stated that premium levels could be adjusted by United Wisconsin in the future. It was not demonstrated that any of the policies involved in this case contain any language guaranteeing original premium classifications or guaranteeing a level premium, or any "guaranteed renewable" language. The TNI brochure provided in 1998 to Trust certificate holders contains no "guaranteed renewability" language, but does state "We have the right to change the premium rate once it is in effect for 12 consecutive months." The TNI certificates of coverage repeat this language. The TNI certificates of coverage provide that premiums may change at any time after one year. After an individual's premium rate has been in effect for one year, United Wisconsin determines an annual renewal premium rate but guarantees renewed coverage at that renewal premium rate. United Wisconsin changes its TNI base rates quarterly, based on medical costs, changes in technology, medical care utilization, and historic claim utilization, but covered individuals' premiums are only adjusted on an annual basis at their respective 12 months' renewal date. United Wisconsin considers all Florida TNI certificate holders to constitute a single class of business, its "actuarially supportable class." Its "actuarially supportable premium" overall is established by considering three factors: estimated claims, expenses, and reasonable profit. United Wisconsin's practice in the year 2000 became to move insureds between tiers. For instance, a person in the preferred tier who experienced costly medical services in the preceding year might be moved to a manual or substandard tier, resulting in that person paying a greatly increased premium. It is theoretically possible that one can move into a decreased risk category based on giving up smoking, changing geographical location, or making fewer claims, but it is unlikely, since one factor always considered is an insured's inevitably increasing age. As is the nature of group insurance, the result of United Wisconsin's rating methodology is that there is cross- subsidization of less healthy insureds by healthy insureds. Overall, for TNI coverage, United Wisconsin pays out 21 cents per premium dollar in claims by the healthiest individuals; 48 cents per premium dollar in claims by less healthy individuals, and $1.71 per premium dollar in claims by the least healthy individuals. The thrust of the Department's concern with tier- blocking relates to a potential "death spiral." This term is not defined by a Florida Statute or rule. It refers to the belief, widely held in the insurance industry, that the practice of moving insureds among classes means that when a substandard class becomes populated with persons experiencing costly claims, premiums can increase to the point that substandard class members cannot afford the premium, or if they can afford the premium, premiums for the other less costly classes may still increase to the point the members of those "actuarially better" classes may seek insurance elsewhere. If premiums inflate to the point that benefits utilization in relation to the amount of premiums paid cause enough of the healthy members to leave the plan, the plan will become economically unsound, will perish, and no one will be able to purchase health insurance coverage. The "death spiral" concept seems logical, and an enormous amount of energy has been devoted to nationwide discussion of it. There is some evidence to the effect that most insurers have a 20-25% lapse rate and United Wisconsin's lapse rate is 30-35%, but there is no guarantee that lapse rate is the result solely of changed health factors United Wisconsin rated at renewal. Likewise, there is no definitive proof that a "death spiral" will be the inevitable outcome of United Wisconsin's actions here complained of. The Department's approach to proving that a death spiral will be the inevitable result of United Wisconsin's tier methodology at renewal is anecdotal and limited to one or two prior TNI members (Ms. Wahl and Ms. Shallan) who did not renew due to premiums which increased as much as 60% at their respective annual renewals. United Wisconsin has undertaken a study to prove a death spiral cannot happen and that its rating method could result in the retention of more healthy people as plan members. However, as presented at hearing, this study is flawed and neither weighty nor credible. Accordingly, there is no persuasive evidence herein that United Wisconsin's tier blocking of premiums at annual renewal will result in a death spiral or that it will minimize the incentive for healthy people to leave TNI to seek coverage elsewhere. The Administrative Complaint charges that United Wisconsin's 2000 tier blocking constituted a "knowing and willful" unfair insurance trade practice, pursuant to Sections 626.9521 and 626.9541, Florida Statutes, because the Department allegedly warned United Wisconsin it was illegal to tier block and United Wisconsin promised that it would never tier block. On February 8, 1996, the Department extended time for review of the Alabama Trust's then-pending rate filing to allow United Wisconsin time to provide additional information and included the following language: This filing also has the problems of tier rating at the time of renewal to solve (P-1). This missive cited Rule 4-149.005(10), Florida Administrative Code. On February 28, 1996, the rate filing was disapproved for several reasons, including: Your follow-up material of February 22, 1996, has been reviewed. The problem of tier rating has not been addressed . . . The methodology described in Exhibit H is considered an Unfair Practice in accord with Florida Statute 626.9541. In addition, the rating practice described is considered to be a prohibition under Florida Rule 4- 149.005(10) (P-1). Florida Rule 4-149.005(10), Florida Administrative Code, is not applicable to out-of-state insurers such as United Wisconsin. It applies to rate filings of in-state insurers. See Part I, Chapter 4-149, particularly, Rule 4-149.002(1)(b), Florida Administrative Code. By a November 1996 revised MedOne rate filing, United Wisconsin attempted to settle an administrative action challenging the Department's disapproval of a prior rate filing, and therein stated that it had eliminated the tier rating approach of the disapproved filing. The Department questioned language in the new filing, which still sounded like a tier ranking approach, and advised that the product involved was covered by HIPAA so as to restrict underwriting options. United Wisconsin withdrew its new rate filing. Whether or not that rate filing involved HIPAA considerations or not is debatable. However, the instant case clearly does not. By a January 27, 1997, letter, American Medical Security, Inc., referring to plans at that time to close out the Alabama Trust book of business in Florida and issue only through TNI by May 1997 advised the Department: . . . we will underwrite at new business and assign a risk factor to those we accept, as we do now, which will not change at renewal. We will not tier rate at renewal: a person's underwriting factor will never be adversely changed . . . (P-2). The foregoing "promise" not to tier rate at renewal was clearly conditioned upon United Wisconsin being able to reject some applicants and assign a new risk factor for those who were accepted. However, the Alabama Trust business was not closed out in 1997, pursuant to this offer, and new negotiations ensued. Subsequent 1998 correspondence (P-8) indicates that as of February 1, 1997, United Wisconsin had ceased tier rating at renewal by agreement with the Department (P-7), but this is hardly an everlasting promise for the future regardless of changed circumstances. The foregoing 1996-1998 correspondence amounts to United Wisconsin sequentially devising a variety of tier rating systems, each of which was, in turn, rejected by the Department for reasons (Rule 4-149.005(10), Florida Administrative Code, and HIPAA) not necessarily applicable to United Wisconsin as an out-of-state insurer or to the situation at bar. While United Wisconsin might legitimately disagree with the Department's legal analysis in this correspondence and could guess it might be prosecuted for an unfair practice if it tier rated in any form, the foregoing correspondence does not amount to the Department giving United Wisconsin notice it could not annually review and adjust TNI premiums by tiers after the 1999 switchover or a promise from United Wisconsin not to tier block upon renewal of TNI coverage in 2000. It was neither pled nor proven that the Department (Mr. Bracher) relied on any of this correspondence in entering into the January 1999 agreement with United Wisconsin. By all accounts, tier rating at renewal was never discussed in relation to that agreement. The January 1999 agreement, for reasons more properly discussed in the Conclusions of Law, superceded all prior negotiations. Finally, subsequent pronouncements by the Department have amounted to admissions that the current statutes do not prohibit tier blocking at renewal by out-of-state insurers. (See Finding of Fact 94.) It is also alleged that United Wisconsin failed to inform certificate holders during the 1999 switchover that tier blocking would occur in the year 2000, as each policy came up for renewal, and that this failure to inform that United Wisconsin would annually "re-underwrite" on the basis of individual health status factors constituted a "knowing misrepresentation," a "knowing material omission," and a "knowing omission of a true statement," by United Wisconsin, pursuant to Sections 624.418, 626.9541, and 626.9521, Florida Statutes. However, the Department did not demonstrate that any requirement exists at law or through the Department's January 1999 agreement with United Wisconsin which affirmatively required United Wisconsin to make such a disclosure stating it would "tier block" based on health/claims. The term "tier block" and its permutations are not even statutory terms. The Department did not demonstrate that any requirement exists at law or by the agreement that required United Wisconsin to advise certificate holders if it intended annual underwriting of premiums beginning in 2000. (See Conclusions of Law.) Moreover, the Department offered no plausible explanation how, based on the contents of the new offering and solicitation of health information, the Department or certificate holders could have failed to expect that United Wisconsin would make annual premium alterations. (See Findings of Fact 57-59.) The Department admits United Wisconsin disclosed its intent to reclassify certificate holders coming into TNI in 1999. The Department views it as appropriate for United Wisconsin to establish different premium rates for individuals upon the factors utilized by United Wisconsin at the outset of coverage, but objects to increased premiums by tier blocking based on certificate holders' current health status on the respective renewal anniversary date of each TNI policy. Despite United Wisconsin's completely fulfilling the January 1999 agreement at the switchover, the Department now considers it illegal tier-blocking and discriminatory if insureds were reclassified based on current claim/medical health history subsequent to their having been initially placed in a class (in this case by the Trust) based on claim/medical health history. United Wisconsin's expert actuaries and underwriter testified that TNI certificate holders with the "same health hazard" are treated the same at annual renewals. The Department presented no evidence that United Wisconsin's review of health status at the 2000 renewals has resulted in disparate premiums between individuals with "essentially the same hazard." In the course of the onsite audit, Mr. Fagin reviewed the underwriting manual utilized by United Wisconsin for the 2000 anniversary renewals and annual premium calculations. Mr. Fagin acknowledged that United Wisconsin's renewal process selectively gives the largest premium increases to those who have made claims within the last year or who have the expectation of claims in the next year. However, Mr. Fagin opined that the underwriting manual used by United Wisconsin "was generally reasonable; it's flawed in certain respects; generally consistent with the kind that might have been used by other companies as well." The derivation of United Wisconsin's underwriting manual was originally from another insurance company. Its major aspects are not unique to United Wisconsin, although United Wisconsin uses tiers in a different way from other companies. Mr. Fagin stated that for some health conditions, United Wisconsin's underwriting manual had a narrow range of points; for other conditions, it had a broad range of points; for some conditions, such as the health risk presented by blood pressure, much instruction was provided to underwriters by the manual; and for other conditions, the underwriters had to rely on their education, training, and experience, with only general directions provided in the manual itself. In Mr. Fagin's opinion, it is "not a good business practice" if underwriters have broad latitude in arriving at diagnostic factors for premium renewal with little further underwriting review. A "bad business practice" does not necessarily equate with a statutorily proscribed "unfair competitive practice" or "unfair or deceptive insurance trade practice." In Mr. Fagin's opinion, if underwriters have broad latitude in arriving at diagnostic factors for premium renewal it can potentially lead to arbitrary, capricious decision- making, but he presented no proof that United Wisconsin's underwriters actually had made arbitrary, capricious decisions in setting renewal diagnostic factors or premiums, nor did any other witness. Mr. Fagin questioned a "limited" number of the diagnostic factors assigned by United Wisconsin underwriters, but did not pronounce any TNI renewal customer as wrongly underwritten or discriminated against by commonly accepted underwriting standards. At the switchover in 1999 and at renewals in 2000, some certificate holders may have revised coverage levels, added or subtracted dependents, moved to another geographical area and/or made other changes to their TNI coverage. There was no evidence tying specific amounts of premium increases and decreases to each factor, so it is impossible to determine which factors actually resulted in premium differences or to what extent United Wisconsin's TNI premiums changed due to any single specific factor, including current health status. What effect health or claims factors played in the 2000 renewal premiums was not calculated by Mr. Fagin. The Department agrees with United Wisconsin that for TNI coverage, the entire block of Florida business is the single "actuarially supportable class." (See Finding of Fact 60.) Frank Dino, agency representative and Chief Actuary for the Department, even conceded that the statutory term "actuarially supportable class" does not mean that all certificate holders must be charged the same premium and that there may be legitimate different premium levels within a class, based on how (and probably when) the insureds came into the class. Mr. Dino defined a "hazard" as "a specific situation that increases the probability of the occurrence of a loss arising from a peril," only because Merit Publishing's Glossary of Insurance Terms defines it that way. No statute or rule containing that definition was put forth. Mr. Dino also believes that because the term "actuarially supportable class and essentially the same hazard" is used in Section 626.9541, Florida Statutes, the entire body of actuarial literature, including the Code of Conduct and Standards of Practice, bears on that statutory term. Furthermore, Mr. Dino believes that because some actuarial literature introduced at hearing states, or may be interpreted to mean, that the "same hazard" can only be assessed at the initiation of the policy and may not be reassessed during the life of the policy, that also means that the Florida statute prohibits an out-of-state insurer from raising premiums based on health, in tiers within the single class, at annual renewal. United Wisconsin's expert actuaries disagreed with Mr. Dino's actuarial opinion. Mr. Dino does not administer the statutes under which United Wisconsin is charged in this Administrative Complaint. One of the so-called "professional standards" introduced by the Department is ambiguous. All of the professional literature is subject to interpretation. None of this literature has been adopted into a Florida statute or a rule of the Department which would apply to this case. In May 2001, the Department circulated an official publication for insurance agents and adjusters throughout Florida. That document posed the question, "What kind of practices in use would be prohibited if Florida's rating laws applied to out-of-state coverage?" (emphasis supplied.) It also gave the answer: "Tier rating, whereby carriers move your clients from the underwriting basis or class in which they were issued coverage to one that is of a lesser standard and subject to higher renewal rate." Although the date of this document means it could not have been relied upon by United Wisconsin in 1996-2000, the document still constitutes an admission of the Department that as of May 2001, it had no statutory authority over out-of-state insurers who tier rate. At a minimum, it demonstrates that Mr. Dino's opinion is not the only statutory interpretation within the Department. Mr. Fagin, Mr. Dino, and Mr. Jerry Fickes, an outside consultant who was accepted as an expert in insurance regulatory matters and practice of the insurance industry, defined "guaranteed renewable" as a continuation of an existing form of coverage at the option of the insured. United Wisconsin does not dispute that limited definition. However, all of the foregoing Department witnesses further understand the term "guaranteed renewable" to also mean that the premium may not be changed unless it is changed for everyone in the same class, by the same amount. No Florida statute or rule adopts or specifies their definition. Respondent's experts disagree with their definition. No expert denied that premiums can legitimately change with new coverage and with each renewal. Various treatises relied on by the Department's experts were introduced in evidence. Some of the literature is old. Some applies to individual or disability insurance. All describe common, usual, and general meanings of the term "guaranteed renewable." These items purportedly support the Department's definition that a "guaranteed renewable" policy cannot change premiums except identically across an entire class after the initial underwriting at the inception of the policy. However, all these treatises vary in one respect or another from agreed, stipulated, or proven components of the present situation, and most of them recognize that laws are not uniform among all the states and that each state's law is controlling. Not all of these Codes, Standards, or treatises are universally accepted in the insurance industry. None have been adopted by a Departmental rule or by statute. Although Section 627.6425, Florida Statutes, does not contain the phrase, "guaranteed renewable," its gist is that, except under specified circumstances, if an insured has an individual health insurance policy, that person has a right to continued coverage, at his option. The Department contends that there also can be no reclassification or movement between classes at the time of renewal, i.e. no adjustment of premiums except for an entire class. The Department has not presented or argued any adopted rule containing or defining the phrase "guaranteed renewable." Apparently, the Department concedes that none of its rules governs the present situation, including those rules it has adopted to define "guaranteed renewable" and "discrimination." Neither has either party referred to any statute or rule adopting a "standards of the insurance industry" test for how the term "guaranteed renewable" is to be interpreted.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that all Counts of the Administrative Complaint be dismissed. DONE AND ENTERED this 25th day of April, 2002, in Tallahassee, Leon County, Florida. ELLA JANE P. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with Clerk of the Division of Administrative Hearings this 25th day of April, 2002.
The Issue The issue in this case is whether Respondent properly rejected Petitioner's insurance Policy Form No. SL-94.
Findings Of Fact Petitioner submitted Policy Form No. SL-94 (hereinafter referred to as "the Policy") to Respondent for approval as a stop loss policy pursuant to Section 627.410, Florida Statutes, on or about August 15, 1995. The Policy, standing alone, meets all applicable requirements for approval as a stop loss policy under Section 627.410, Florida Statutes. The Policy obligates Petitioner to pay benefits to an employer, or the trust established by or for the employer, which employer is responsible for the payment of benefits to its employees or their dependents under a self-funded employee welfare benefit plan (hereinafter referred to as "the Plan") qualified under the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Policy purports to provide insurance only to the employer. On its face, the Policy does not assume any of the employer's obligations under the Plan to provide insurance directly to the employer's employees. Under the Policy, Petitioner is obligated to reimburse the employer only after the employer pays a limited amount of benefits under the Plan to any person who is covered under the Plan, i.e. employees or their dependents. The amount of Plan benefits that an employer must pay before Petitioner is obligated to begin reimbursement is determined by specific and aggregate attachment points or deductibles as defined in the Policy's Schedule of Insurance. The specific attachment point is the Plan benefit amount which is wholly retained by the employer for all claims incurred by each covered person during each contract year. The Plan benefit amount does not include deductibles, coinsurance amounts or any other expense or claims which are not reimbursable under the terms of the Plan nor does it include expenses which are reimbursable from any other source. The aggregate attachment point or deductible is the Plan benefit amount which is wholly retained by the employer for all covered persons during a contract year. The Policy's Schedule of Insurance does not specify what the specific and aggregate attachment points will be. However, record evidence indicates that Petitioner intends to market the policy with a specific attachment point as low as $500. Therefore, if the Plan has a deductible of $250 and the Policy has a specific attachment point of $500, the employee would pay the first $250 of eligible expenses, the employer would pay the next $500 of eligible expenses, and Petitioner would reimburse the employer for 100 percent of any excess eligible expenses, for each covered person during a contract year. The Policy's eligible expenses are the covered charges or expenses which are incurred by a covered person while covered under the Plan in the course of treatment for an injury or illness and paid under the Plan subject to the terms, conditions and limitations of the Plan document. In other words, the eligible expenses under the Policy will mirror the eligible expenses of the Plan. Record evidence indicates that Petitioner intends to market the Policy to employers with less than fifty (50) employees. The Policy does not contain provisions related to the following protections: guaranteed availability for any small group employer regardless of whether its employees are sick or have preexisting conditions; guaranteed renewability unless the policyholder fails to pay the premium or commits fraud; limitations on exclusions for pre- existing conditions; portability which allows employees to move from one employer to another regard- less of preexisting conditions; community rated premiums; and, periods of open enrollment. ERISA self-funded benefit plans are not regulated by the state regardless of their terms and conditions. They are not required to include the above referenced protections. If the Plan excludes specific health risks or preexisting conditions such as AIDS, emphysema, heart disease, or cancer, neither the employer nor the Petitioner would be obligated to pay benefits for those risks. Additionally, the Plan is subject to whatever deductible limits the small employer wishes to set. Respondent disapproved the Policy by letter dated August 21, 1995. Respondent correctly rejected the Policy as being inappropriate for the small group health insurance market. The Policy is inappropriate because Petitioner intends to market it to self-insured small group employers with attachment points so low ($500) that it becomes a de facto health insurance policy instead of a stop loss policy. Respondent would not approve a stop loss policy for a small group employer's Plan with specific attachment points at $5,000 or less. Respondent would approve a stop loss policy for a small group employer's Plan with specific attachment points as low as $9,000 or $10,000, regardless of the terms and conditions of that Plan. In that instance, the employer assumes significant risk of loss as a self-funded insurer and the stop loss policy operates to limit that loss. However, an ERISA benefit plan combined with a stop loss policy having specific attachment points as low as $500, such as the one at issue here, substantially limits the self-insured employer's risk of loss to a nominal amount and substitutes Petitioner as a small group health insurer with none of the protections required by Section 627.6699, Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore recommended that Respondent enter a Final Order disapproving Petitioner's Policy Form No. SL-94, for use in Florida's small group health insurance market. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 15th day of March, 1996. SUZANNE F. HOOD, Hearing Officer Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1996. APPENDIX The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Petitioner's Proposed Findings of Fact Accepted in Findings of Fact 3. Accepted in substance as restated in Findings of Fact 4. Accepted in substance as restated in Findings of Fact 4. Accepted in substance as restated in Findings of Fact 4. Accepted in Findings of Fact 5-7. Accepted as restated in Findings of Fact 4. Not a finding of fact. More like a conclusion of law. Reject the first sentence as contrary to more persuasive evidence. Second sentence accepted as restated in Conclusions of Law 19-21 and 26-27. Rejected. It is a question of fact whether the Policy is a stop loss policy or a health insurance policy regardless of its denomination. Specifically reject Petitioner's finding that the Policy does not violate public policy as expressed in Section 627.6699, Florida Statutes. See Conclusions of Law 24-27. Accepted in Conclusion of Law 23. Accepted in part as restated in Findings of Fact 15-16. See also Conclusions of Law 22, 24-27. Not a finding of fact. More like a conclusion of law and legal argument which is not persuasive as applied to the facts of this case. Not a finding of fact. More like a conclusion of law. Not a finding of fact. More like a conclusion of law. First sentence rejected as contrary to more persuasive evidence. Next five sentences are not findings of fact. Specifically reject any implication that the Policy is a stop loss policy. See Findings of Fact 15-16 and Conclusions of Law 24-27. First two sentences are not findings of fact. Reject any implication that there is no public policy "relating to the issuance of a stop loss policy in the State of Florida to a Florida employer employing 50 or fewer employees." Accept that the state does not regulate employer self-funded medical benefit programs. See Finding of Fact 12. Accept the last sentence as restated in Finding of Fact 15 and Conclusion of Law 24. Rejected. Petitioner's Exhibit 3 shows the legislature was aware that "the bill could increase the likelihood that an employer would choose to self- insure and due to ERISA would be able to avoid state regulation of the insurance product provided to employees." However, the referenced exhibit is rejected as evidence of legislative intent to exclude "related insurance products" from "the statute's regulatory or public policy purview." Rejected for the reasons set forth in the ruling above. Rejected. See Conclusions of Law 24. Substance accepted as restated in Findings of Facts 12 and Conclusions of Law 24. Substance accepted as restated in Findings of Facts 16. First sentence not a finding of fact. Second sentence rejected as contrary to more persuasive evidence; See Findings of Fact 15-16 and Conclusions of Law 24-27. Accept in part as restated in Findings of Fact 15-16 and Conclusions of Law 24-27. A recitation of the testimony is not a finding of fact; substance accepted as restated in Finding of Fact 16. Accept that the state has no specific statutes or rules regulating attachment points in stop loss insurance policies. See Conclusions of Law 19. However, Section 627.6699(2), Florida Statutes, is applicable here because the Policy is a de facto health insurance policy. See Findings of Fact 15-16 and Conclusions of Law 24-27. First sentence rejected as contrary to more persuasive evidence. See Findings of Fact 15-16 and Conclusions of Law 19. First sentence rejected; More like a conclusion of law or legal argument the substance of which is not persuasive. Second sentence irrelevant. Irrelevant. Accepted but subordinate to Findings of Fact 15-16. NAIC's stop loss model act supports the proposition that the Policy is not a stop loss insurance policy but rather a health insurance policy. Accepted in part as restated in Conclusions of Law 19. Accepted but subordinate to Findings of Fact 15-16. Accepted but subordinate to Findings of Fact 15-16. Irrelevant. Rejected as contrary to more persuasive evidence. Respondent's Proposed Findings of Fact Accepted in Findings of Fact 1. Accepted in Findings of Fact 15. Not a finding of fact. Not a finding of fact. More like a conclusion of law. Accepted in Findings of Fact 1. Accepted as restated in Findings of Fact 2. Accepted as restated in Findings of Fact 11, 15-16. Accepted as restated in Findings of Fact 10, 15-16, and Conclusions of Law 22, 24-27. Accepted as restated in Findings of Fact 4. Accepted as restated in Findings of Fact 4-8 and 10. Accepted in Findings of Fact 10 and Conclusions of Law 22. Accept that the Policy provides for a specific attachment point of not less than $500; See Findings of Fact 8, 15 and 16. There is no evidence that the Policy's specific attachment point can be no more than $1,000. Accepted as restated in Findings of Fact 5-8. Accepted as restated in Findings of Fact 8. Accepted as restated in Conclusions of Law 22. Accepted as restated in Findings of Fact 9, 11-13 and Conclusions of Law 22, 24-27. Accepted as restated in Findings of Fact 9-13. Accepted as restated in Findings of Fact 11. Accepted in part in Findings of Fact 14. Reject that Petitioner could totally avoid the coverage responsibilities otherwise imposed by Section 627.6699, Florida Statutes, merely by setting the Policy's attachment points at the same level as the deductible in the Plan. If the Plan's deductible was $500 and the Policy's specific attachment point was $500, the employee would pay the first $500 of expenses, the employer would be responsible for the next $500 of expenses, and Petitioner would reimburse the employer for 100 percent of any excess eligible expenses for that employee during the contract year. However, Petitioner can totally avoid paying for state mandated protections because the Policy will mirror any prohibited exclusions or provisions in the Plan. Substance accepted in part; See Findings of Fact 15-16. There is no evidence that the Policy's specific attachment point can be as high as $2,000. Accepted as restated in Findings of Fact 16; See Conclusions of Law 24-27. COPIES FURNISHED: Michael H. Davidson, Esquire Department of Insurance Division of Legal Services 200 E. Gaines Street Tallahassee, Florida 32399-0333 Frank J. Santry, Esquire Granger, Santry, et al. Post Office Box 14129 Tallahassee, Florida 32308 Bill Nelson, State Treasurer Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Esquire Department of Insurance and Treasurer The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Prior to the institution of this proceeding, Petitioner had undergone surgical sterilization through a procedure known as a vasectomy. Subsequent to the Petitioner having the vasectomy, Petitioner made a decision to have the procedure surgically reversed. At all times material to this proceeding, Petitioner was a member of the State of Florida Employees Group Health Self Insurance Plan (Plan). At some time prior to having the vasectomy surgically reversed the Petitioner obtained and reviewed the Brochure from the Plan (Petitioner's Exhibit 1). Page 1 of the Brochure advises the members of the Plan (members) that the Brochure is "not a contract since it does not include all of the provisions, definitions, benefits, exclusions, and limitations" of the Plan and that its purpose is to furnish members a summary of the benefits available under the Plan and provides a regular telephone number and a SunCom telephone number for the Office of State Employees Insurance (OSEI) in Tallahassee, Florida for the members to call if there are any questions. Page 4 of the Brochure contains a paragraph entitled "Benefit Inquiries" and provides a regular telephone number and a SunCom telephone number for members to call the OSEI on questions concerning benefits. Page 12 of the Brochure contains a paragraph entitled "Claims Inquiries" and provides a TOLL FREE WATS LINE number for the Jacksonville Office of Blue Cross and Blue Shield for members to use when calling that office on questions concerning claims or claims problems. OSEI interprets "Claims Inquiries" to mean inquiries concerning payment, nonpayment or timeliness of claims as distinguished from whether certain services are covered under the Plan which would be "Benefit Inquiry". Page 9 of the Brochure contains a paragraph entitled "Limitations and Exclusions" wherein surgery to reverse surgical sterilization is listed as one of those procedures that the Plan finds necessary to limit or exclude payment. Immediately above the paragraph entitled "Limitations and Exclusions" on page 9 the Brochure advises the member that exclusions and limitations are contained in the Benefit Document on file in the individual's personnel office and the OSEI in Tallahassee, Florida. The Benefit Document is defined on page 2 of the Brochure as the document containing "the provisions, benefits, definitions, exclusions and limitations of the" Plan. Section VII, EXCLUSIONS, subparagraph P. of the State Employees Group Health Insurance Benefit Document (Document) (Respondent's Exhibit 3) specifically excludes surgery to reverse surgical sterilization procedures from coverage under the Plan. The Department of Administration has been designated by the Florida Legislature as the State agency responsible for the administration of the Plan and to make the final determination as what benefits are covered under the Plan in accordance with the Document. There was no evidence presented to show that this responsibility had been delegated to Blue Cross and Blue Shield of Florida, Inc. (Administrator) who was selected by the competitive bid process to provide claims payment services, actuarial and printing services, and medical underwriting of late enrollee applications. Before having surgery to reverse surgical sterilization, the Petitioner contacted the Jacksonville Office of the Administrator and was advised by an unidentified person in that office that the Plan would cover the hospital costs for reverse surgical sterilization but would not cover the doctor's fee. The Petitioner did not at any time material to this proceeding contact the OSEI in Tallahassee or the local personnel office concerning the Plan's coverage of surgery to reverse surgical sterilization. Petitioner acted on the advice of the unidentified person in the Jacksonville Office of Blue Cross and Blue Shield, plus his reading of the Brochure, to come to the conclusion that there was a limitation on the benefits available under the Plan for surgery to reverse surgical sterilization rather than an exclusion of benefits for that procedure; the limitation being that the Plan would pay for hospital costs but not the doctor's fees. Prior to entering the hospital, the Petitioner's admission, being elective, was certified under the Plan's Preadmission Certification Program. However, the Petitioner was advised that the admission being certified did not mean that the services requested were covered under the Plan and that the services rendered would be subject to the limitations and exclusions listed in the Plan. On or about July 30, 1986, Petitioner was admitted to Fish Memorial Hospital where Dr. Youngman performed surgery to reverse surgical sterilization and was discharged on July 31, 1986. After surgery was performed, claims were made under the Plan and, the State of Florida, through the Administrator, made the following payments in connection with the surgery: (a) Fish Memorial Hospital - $935.10; (b) Southeast Volusia Radiology Associates - $19.10; (c) Clifford Chu, M.D. - $742.00 and; (d) Robert Charles Youngman, M.D. - 742.00 Although claims made by the different health care providers (providers) for the services rendered to the Petitioner indicated a diagnosis of Azoospermia which is defined as the absence of live spermatozoa in the semen, there was insufficient evidence to show that this diagnosis was the primary reason for payments being made in error to the providers by the Administra- tor for the services rendered in connection with Petitioner's surgery to reverse surgical sterilization. Subsequent to the health care providers being paid by the Administrator for services rendered to Petitioner under the Plan, the OSEI made a determination that none of the services rendered to the Petitioner to reverse surgical sterilization were covered under the Plan, and demanded reimbursement from the providers. All of the providers, with the exception of Dr. Youngman, reimbursed the Plan but, since the Petitioner had paid Dr. Youngman prior to the claim being made, the Petitioner had received Dr. Youngman's claim and subsequently reimbursed the Plan. Petitioner made a demand on the State to pay the providers since he had been informed by the Administrator that the services, at least the hospital costs, were covered under the Plan. Respondent, at Petitioner's request, reviewed its denial of coverage and determined that costs incurred for surgery to reverse surgical sterilization was not covered under the Plan. By letter dated September 25, 1987, received by Petitioner on October 1, 1987, Respondent advised Petitioner of that decision and of his right to a hearing should he desire one. Petitioner was also advised that he had twenty-one (21) days to file a petition and failure to timely comply would result in the action contemplated in the letter becoming final. A Petition For Formal Proceedings and Notice of Appearance was received by the Respondent on October 26, 1987 bearing a certificate of service dated October 23, 1987. The petition was mailed by Petitioner and received by the Respondent more than 21 days after receipt of the letter by the Petitioner on October 1, 1987. Respondent's ore tenus Motion For Remand Or, In The Alternative, To Dismiss The Petition citing Petitioner's failure to timely file his petition was filed at the hearing on May 12, 1988 some five and half (5 1/2) months after Respondent's receipt of the petition. Upon the Respondent determining that the Petitioner's surgery to reverse surgical sterilization was not covered under the Plan, Petitioner became responsible for all costs incurred for the surgery rather than just Dr. Youngman's fee which resulted in Petitioner being responsible for $3,057.70, in addition to Dr. Youngman's fee. Had the surgery been covered under the Plan, the Petitioner would have only been responsible for $91.90, plus Dr. Youngman's fee.
Recommendation HAVING considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that the Department of Administration enter a Final Order DENYING Petitioner payment for the costs incurred for the surgery to reverse surgical sterilization requested in his Petition for Formal Proceedings. RESPECTFULLY SUBMITTED and ENTERED this 20th day of July, 1988, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of July, 1988. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-1452 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Petitioner's Proposed Findings of Fact were submitted in unnumbered paragraphs but, for clarity, I have numbered them 1 through 18. The first two sentences of paragraph one are rejected as not being supported by substantial competent evidence in the record. Although an employee of the Administrator represented to Petitioner that the procedure was covered, there was no approval in that the Administrator did not have that authority. The last two sentences of paragraph one are adopted in Findings of Fact 15, 16, and 17. The first two sentences of paragraph 2 are adopted in Finding of Fact 19 but clarified. The last two sentences in paragraph two are adopted in Finding of Fact 20. Adopted in Finding of Fact 20 but clarified. (4-7) Rejected as immaterial to irrelevant except the last sentence of paragraph 7 which is adopted in Finding of Fact 11 but clarified to show the 800 number being provided under "Claims Inquiries". Adopted in Finding of Fact 11. Adopted in Finding of Fact 11 but clarified. Adopted in Findings of Fact 11 and 14 but clarified. Adopted in Finding of Fact 16. Rejected as immaterial or irrelevant. Adopted in Finding of Fact 18. Adopted in Finding of Fact 24 but clarified. Rejected as not supported by substantial competent evidence in the record. Adopted in Findings of Fact 9 and 13 but clarified. The first sentence of paragraph 17 is adopted in Finding of Fact 8 and although there is a difference in the meaning of "limitations" and "exclusions", there was no substantial competent evidence in the record that the Brochure and Document were inconsistent in this regard, therefore the last sentence is rejected. Rejected as a restatement of a witness' testimony and not a finding of fact but additionally, rejected as not being supported by substantial competent evidence in the record. Specific Rulings on Proposed Findings of Fact Submitted by Respondent (1-6) Adopted in Findings of Fact 1 through 6, respectively. (7-8) Adopted in Finding of Fact 8. (9-10) Adopted in Finding of Fact 7. (11-14) Adopted in Findings of Fact 15, 12, 11 and 13, respectively. (15-16) Adopted in Finding of Fact 17. (17) Rejected as not supported by substantial competent evidence in the record. See Finding of Fact 17. (18-19) Adopted in Findings of Fact 18 and 19, respectively. (20) Rejected as a restatement of a witness' testimony and not a Finding of Fact. Also, it would be rejected as not being supported by substantial competent evidence in the record. (21-22) Adopted in Finding of Fact 20. (23) Adopted in Finding of Fact 21. (24-25) Adopted in Finding of Fact 22. (26-28) Adopted in Finding of Fact 10. Adopted in Finding of Fact 9. Rejected as a conclusion of law. COPIES FURNISHED: William A. Frieder, Esquire Department of Administration 440 Carlton Building Tallahassee, Florida 32399-1550 Lester A. Lewis, Esquire P. O. Drawer 9670 Daytona Beach, Florida 32020 Adis Vila, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue Whether petitioner owes respondent premiums on account of insurance coverage (Family I) under the State Employees Group Health Insurance Program from March 1, 1979, to August 31, 1981? If so, whether petitioner is obligated to pay the underpayment as a condition of continued insurance coverage?
Findings Of Fact Until December 6, 1978, petitioner, who has worked as a forest ranger for Florida's Department of Agriculture and Consumer Services since 1967 or 1968, was married to Betty R. Brogdon, the mother of his two children. Betty Brogdon was employed by Florida's Department of Health and Rehabilitative Services at the time of the dissolution of her marriage to petitioner. A provision of the dissolution decree required petitioner to maintain health insurance in effect for the children. During the marriage, in April of 1978, petitioner applied for, and received Family I insurance in the Florida Employees Group Health Self Insurance Plan, Respondent's Exhibit No. 1, continuing the coverage under a predecessor policy. Petitioner paid a premium for the Family I coverage reduced by certain employer contributions, after formally bringing to his supervisor's attention the fact that Betty R. Brogdon was also a state employee, and signing forms to that effect. Before August 1, 1979, the employer contributed 75 percent of the amount of the premium for Individual I coverage for each employee. From August 1, 1979, until August 1, 1980, the employer contributed, in addition, 25 percent of the family premium. On and after August 1, 1980, the employer contribution for each employee increased to 75 percent of the amount of the premium for Individual I coverage plus 50 percent of the family premium. Since this amount exceeds the total premium for Family I, families with this coverage in which both spouses work for state government have paid no insurance premium for Family I coverage since April 1, 1980. After the marriage ended, Betty Brogdon applied, on February 6, 1979, for Individual I health insurance, by submitting a form through the personnel office at the Sunland Center in Marianna, where she was employed. Since she had been a beneficiary under the family policy that her husband kept in force while they were married, her application reflected no change in that policy. When it reached the Bureau of Insurance of the Department of Administration, it was indistinguishable from any other new application by an employee who had not signed up when beginning work. After medical approval on May 7, 1979, she received Individual I coverage for herself only. Petitioner works with four other forest rangers and a supervisor at a site seven miles west of Marianna. There is no "personnel technician" stationed there and none visits. He told his supervisor of the divorce and, on March 2, 1979, filled out a "personnel action request" form furnished by a district office of the Department of Agriculture and Consumer Services in Bonifay, Florida, indicating "[m]arital and dependent change," which reached the Director of the Division of Forestry on March 9, 1979. Like other forms of its kind, this form never reached the Bureau of Insurance of the Department of Administration. The Bureau of Insurance did receive, however, on August 13, 1981, a "change of information" form reporting the Brogdons' dissolution of marriage on December 6, 1978. Respondent's Exhibit No. 3. Effective the following month, on advice of the Bureau of Insurance, the Department of Agriculture and Consumer Services subtracted from petitioner's paychecks the same insurance premium other employees not married to state employees paid for Family I coverage. The Bureau of Insurance lacks authority to make such deductions itself. Between March of 1980 and December 31, 1982, the only claims submitted under the policy were for petitioner himself. But for the $100.00 deductible, these claims were paid. The difference between what a state employee married to another state employee paid for Family I insurance coverage between July 1, 1979, and August 31, 1981, and what a state employee not married to another state employee paid for the same coverage amounts to $864.42.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent direct petitioner to pay the sum of eight hundred sixty-four dollars and forty two cents ($864.42) within ninety (90) days of entry of final order. If petitioner fails to make timely payment, that respondent cancel his Family I State Employees Group Health Insurance Program policy. DONE and ENTERED this 11th day of May, 1983, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of May, 1983. COPIES FURNISHED: Ben R. Patterson, Esquire 1215 Thomasville Road Tallahassee, Florida 32315 Daniel C. Brown, Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Nevin G. Smith, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301
The Issue Whether the Petitioner was entitled to enrollment for his son in the State of Florida Group Health Self Insurance Plan for the January 1, 2008, to December 31, 2008, plan year and, if so, whether he is entitled to reimbursement of $543 for student health insurance coverage that was added to his son's college tuition bill.
Findings Of Fact Petitioner, Bashere Bchara, has been employed by the Florida Department of Transportation for the past 9 years including the period October 2007 through December 2008. He is and was, on all relevant dates, entitled to state employees’ benefits, including participation for himself, his spouse, and eligible dependents in the State Group Health Insurance Program. On October 16, 2007, during the open enrollment period, the Petitioner accessed his state employee benefits from his computer to change his dental coverage, as he was required to do because of a change in State providers. Mr. Bchara believes that an error in the People First computer program, that is used to manage state human resources data, caused his son, Dani Bchara, to be removed from health insurance coverage as his dependent. He also said it was his first time using the computerized People First program to elect or change benefits. There is no dispute that Dani Bchara, who had been covered during the previous plan year, continued to be an eligible dependent. Mr. Bchara's witness, Michael Smith, testified that he too had problems trying to use People First to change dental plans. He found the People First computer screens confusing and disorganized. Dani Bchara was, at the time, a 22-year-old college student. As a part of his tuition and fees, Florida State University charged his account $543 for health insurance. In May 2008, after a claim for reimbursement for health expenses for Dani Bchara was rejected, Mr. Bchara, contacted plan insurer, Blue Cross Blue Shield; plan contract administrator, People First; and then Respondent, the Department of Management Services, Division of State Group Insurance (Respondent or DSGI). DSGI has the responsibility for administering the insurance program. See § 110.123, Fla. Stat. (2008). After reviewing his complaint, Sandi Wade, a benefits administrator for DSGI, notified Mr. Bchara that his son was not covered by the state health plan. She also determined that he could not add his son, at that time, due to the absence any qualifying status change, as required by federal and state law. There is no allegation nor evidence of a qualifying status change that would allow the addition of Mr. Bchara's son to his coverage. Ms. Wade was not aware of any other reports of possible computer glitches of the type Mr. Bchara believes he experienced during the open enrollment period in October 2007. James West, a manager for People First testified that, during the enrollment period in October 2007, computer screens for health insurance and dental insurance were entirely different. Each was displayed only after the appropriate tab was chosen. In addition, Mr. West noted that a "summary last step" had to be chosen and the final summary screen allowed employees to view changes from all prior screens before selecting the option to "complete enrollment." Mr. West examined logs of computer transactions on October 16, 2007. The logs showed that Mr. Bchara, using his People First identification number changed his health insurance by deleting coverage for his son. Mr. West reviewed correspondence logs that indicated that Mr. Bchara was sent a notice dated October 27, 2007, confirming the changes he had made to his benefits. The notice was sent from the Jacksonville service center of Convergys, the contract operator of the People First system, to an address that Mr. Bchara confirmed was correct. Mr. Bchara testified that he did not receive the letter. Mr. West testified that the letter was not returned, as confirmed by an electronic tracking system for mail. Scott Thompson, Director of Application Development for Convergys, testified that his records also show every time Mr. Bchara logged into the People First system using his identification number and password. The logs also show that his health plan was changed when he accessed the system on October 16, 2007. Based on the evidence in the computer records and logs that Mr. Bchara, albeit unintentionally, deleted coverage for his son in the group health insurance program, there is insufficient evidence of computer or human error attributable to Respondent. In the absence of sufficient evidence of any errors by DSIG or its agents, or any evidence of a qualifying status change in Mr. Bchara's employment or his family, DSIG correctly rejected the request for retroactive enrollment of his son in the state group health insurance.
Recommendation Based on the foregoing, it is recommended that the Respondent enter a final order denying Petitioner, Bashere Bchara, retroactive health insurance coverage for an additional dependent under the state plan for the 2008 plan year. DONE AND ENTERED this 16th day of January, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of January, 2009. COPIES FURNISHED: Sonja P. Matthews, Esquire Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 Bashere Bchara 10178 Southwest 53rd Court Cooper City, Florida 33328 John Brenneis, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue Does the Prescription Drug Services Plan administered by the Division of State Group Insurance provide coverage for the drug Xenical as prescribed to the Petitioner?
Findings Of Fact The Plan The Division of State Group Insurance is authorized to provide health insurance coverage to employees of the State of Florida through a fully insured plan or a self-insured plan. The decision to offer a self-insured plan is explained in the State of Florida Employees Group Health Self Insurance Plan Booklet and Benefits Document (the "Plan Booklet and Benefits Document"): As is the case with many major employers, the State of Florida determined that a self- insured plan would result in significant savings to the participating members, and, therefore, implemented the current self- insured program in 1978. Being self-insured means that Claims are paid directly from funds belonging to the State of Florida, with the State earning interest on all fund balances. In addition, the Plan avoids charges normally charged by insurance companies such as retentions, reinsurance, risk factors, and other insurance related charges. (Petitioner's Ex. 7, p. 2.) Denominated the State of Florida Employees' Group Health Insurance Plan, the Plan has both a Servicing Agent and a Prescription Drug Program Administrator. At the time the events leading to this case arose, the Servicing Agent was Blue Cross/ Blue Shield of Florida, Inc., and the Prescription Drug Program Administrator was Eckerd Health Services ("EHS"). By designation of the Florida Legislature, however, the Division is responsible for the administration of the Plan. In the capacity of Plan Administrator, "the Division . . . has full and final decision-making authority concerning eligibility, coverage, benefits, claims, or interpretation of the Benefit Document." (Id.) Mr. Magee, Diabetes and Hypercholesteremia Dennis J. Magee is an employee of the Department of Corrections. He has been covered by State Health Insurance since he commenced his employment with the state in 1971. Mr. Magee has participated in numerous health insurance plans over the course of his employment. For the past three or four years, at least, he has participated in the State of Florida Group Health Self-Insurance Plan administered by the Division. Approximately twelve years ago, Mr. Magee was diagnosed with diabetes. Since the initial diagnosis, his diabetes mellitus type 2 has become complicated by microangiopathy, nephropathy, retinopathy, hypercholesterolemia (elevated serum cholesterol) and obesity. With regard to obesity, Mr. Magee was determined near the time of hearing to have a body mass index of 32.25, an index beyond the threshold for obesity. Dr. Croom and Xenical Mr. Magee's physician is William P. Croom, M.D. Dr. Croom is an endocrinologist specializing in the treatment of types 1 and 2 diabetes mellitus. On July 22, 1999, Dr. Croom prescribed Xenical, a drug used in the control of obesity, at a dosage of 150 milligrams for Mr. Magee. The prescription was medically necessary in Dr. Croom's view because Mr. Magee "has been unsuccessful in managing his obesity with diet and exercise" (Petitioner's Ex. 2) and because "his diabetes and hyperlipidemia [elevated cholesterol] are driven by his obesity . . . ." (Petitioner's Ex. 3). Attempt to Fill the Prescription Mr. Magee presented the prescription to Express Pharmacy Services. It was not honored. On August 3, 1999, Express Pharmacy Services wrote to Mr. Magee that "[t]his item is not covered by your insurance. Please contact your benefits rep. if you have questions." Petitioner's Ex. 4. Appeal to the Division Eckerd Health Services, the Prescription Drug Program Administrator, affirmed the denial of the prescription. Mr. Magee appealed the decision to the Division. The Department of Management Services has an appeals committee, which reviews all denials of coverage by EHS. The appeals committee is composed of three members within the Division: the director, the assistant director and the Policy and Development Bureau Chief. The Director, at the time Mr. Magee's appeal was considered, Mr. Slavin, is a diabetic. The appeals committee looked into Xenical as a treatment for diabetes. It obtained information through literature and internet research and from consultation with physicians at Blue Cross/Blue Shield. On the basis of the research, the committee concluded that Xenical is used only for the treatment of obesity and not for the treatment of diabetes. The appeal resulted in the letter from Director Slavin (referenced in the Preliminary Statement of this order) in which the Director wrote, "I am writing in response to your appeal of the decision by Eckerd Health Services (EHS) to deny coverage for Xenical [and] [r]egrettably, we must concur with EHS' determination." The Plan Booklet and Benefits Document Basis for the Denial The Division's concurrence with EHS that coverage for Xenical should be denied was based on the Prescription Drug Program Section of the Plan Booklet and Benefits Document. The program is described in Part XXVIII, Section W. Subsection 1., Covered Drugs, on p. 57 lists "(a) [f]ederal legend drugs" and "(b) [s]tate restricted drugs" as among those drugs covered. Among the list under Subsection 5., entitled "Exclusions," however, is "(c) [a]nti-obesity drugs." The listing of anti- obesity drugs under Part XXVIII, Section W., Subsection 5, the "Exclusions" subsection, ultimately, is the basis for the Division's denial of coverage of Xenical as prescribed for Mr. Magee. The Plan Booklet and Benefits Document is prepared on an annual basis by the Division. Typically, the Plan Booklet and Benefits Document is "enacted by the Legislature every year through the appropriation[] process of Section 8 of the Appropriations Act." (Tr. 54). For example, the Conference Report on Senate Bill 2500, General Appropriations for 1999- 2000, under Specific Appropriation states: 9) All State Group Health Insurance Plan benefits as provided in the State of Florida Employees Group Health Insurance Plan Booklet and Benefit Document effective January 1, 1998, . . . shall remain in effect. Changes to the benefits provided by the Plan Booklet and Benefits Document are normally initiated by submission of the Governor in his Legislative Budget Request. Benefit changes must be approved by the Legislature. The Plan Booklet and Benefit Document provides, among many, the following definitions: "Covered Services and Supplies" shall mean those health care services, treatments, therapies, devices, procedures, techniques, equipment, supplies, products, remedies, vaccines, biological products, drugs, pharmaceutical and chemical compounds which expenses are covered under the terms of the Benefit Document. The Administrator has final authority to determine if a service or supply is covered or limited by the Plan. * * * "Medical Supplies or Equipment" means supplies or equipment that must be: ordered by a Physician; of no further use when medical need ends; usable only by the Participant patient; not primarily for the Participant patient's comfort or hygiene; not for environmental control; not for exercise; manufactured specifically for medical use. (Petitioner's Ex. 7, Definitions 21 and 50, pgs. 17 and 23, respectively.) Drugs are services as defined by the Plan Booklet and Benefits Documents. But drugs that are excluded from coverage, such as anti-obesity drugs, are not "covered services" as defined by the Plan Booklet and Benefits Document since by definition, an exclusion prevents them from being "covered." As a "service," moreover, Xenical is not covered by virtue of Section G. of the Benefits Document, also entitled "Exclusions." Petitioner's Ex. 7., p. 38. With regard to services "related to obesity and weight reduction," the Benefits Document states the following: G. EXCLUSIONS The following are not Covered Services and Supplies under the Plan. * * * All services and supplies related to obesity or weight reduction except: Medically Necessary intestinal or stomach by-pass surgery; or medically related services provided as part of a weight loss program when weight loss of a Participant is required by the surgeon prior to performing a Medically Necessary surgical procedure. (Petitioner's Ex. 7, pgs. 38, 41.) Xenical and Section 627.65745, Florida Statutes Subsection 627.65745(1), Florida Statutes, states: A health insurance policy or group health insurance policy sold in this state, including a health benefit plan issued pursuant to 727.6699, must provide coverage for all medically appropriate and necessary equipment, supplies and diabetes outpatient self management training and educational services used to treat diabetes, if the patient's treating physician or a physician who specializes in the treatment of diabetes certifies such services are necessary. Xenical, a drug, is obviously not "equipment." Nor would it fall under the category of "self management training and educational services used to treat diabetes." It does not fall under the category of "supplies" either. Under the coding system developed by the Health Care Financing Administration of the United States Department of Health and Human Services, the standard coding system for the payment of health claims, drugs are not supplies. Examples of supplies include prosthetics, testing supplies, artificial limbs, ventilators, needles, and insulin pumps. Update of the Basis for the Prescription In a letter dated June 13, 2000, Dr. Croom more fully explained the basis for the prescription. Xenical is medically necessary for the treatment of diabetes and is not for cosmetic purposes. Xenical is a part of Mr. Magee's outpatient management program which consists of other medications and education. Despite these medications, his most recent hemoglobin A1C is 9.1 significantly higher than the recommended target of 7.0. The use of Xenical would be instrumental in reducing this parameter. In my opinion, Xenical is medically appropriate and necessary. (Petitioner's Ex. 3). The appeals committee did not have the benefit of Dr. Croom's June 13, 2000, letter in which Dr. Croom opined that in the case of Mr. Magee, "Xenical is medically necessary for the treatment of diabetes and is not being used for cosmetic purposes." Other Purpose for the Prescription That a drug's effectiveness is primarily for the treatment of an excluded purpose may not necessarily exclude it from coverage if it were prescribed for some other purpose. This point was elicited during testimony of the Division's witness, C. Merrill Moody, the Division's Assistant Director: (Tr. 81). MR. MOODY: If [Xenical] was being prescribed for obesity, it would be excluded; if it was not, it would not. And I'll give you an example. We have a direct exclusion for contraceptives for contraceptive use . . . [b]ut contraceptives can be used for other purposes. . . . [P]articipants are required to provide us with a letter from the doctor describing what the contraceptive is being used for. We then cover that contraceptive. Mr. Moody went on to explain that oral contraceptives, because of certain properties, are used also in the management of conditions not related to prevention of contraception. For example, oral contraceptives are prescribed in the treatment of menopause because of their ability to maintain the levels of certain hormones. If prescribed for that purpose, then, despite the fact that they are oral contraceptives and normally excluded from coverage, they are covered because of the non-contraceptive basis for the prescription. The Division's position with regard to oral contraceptives is consistent with the exclusion contained in Section W.5. of the Plan Booklet and Benefits Document. There the "Exclusions List" states "(a) Oral contraceptives for contraception." Petitioner's Ex. 6, p. 59. In other words, it is not some policy of the Division that provides coverage for oral contraceptives when the prescription is for a purpose other than contraception. The coverage is provided by the Plan Booklet and Benefits Document, itself. If oral contraceptives are prescribed "for contraception" then they are excluded from coverage. If prescribed for some other medical purpose, then the exclusion contained in Section W, 5(a) does not prevent coverage of oral contraceptives.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that: the Division of State Group Insurance in the Department of Management Services enter a final order denying coverage of Dennis J. Magee's prescription for Xenical; and, the Division present to the Legislature the Plan Booklet and Benefits Document amended so as to allow coverage of anti-obesity drugs for diabetics if such drugs are prescribed as medically necessary for management of the subscriber's diabetes. DONE AND ENTERED this 28th day of July, 2000, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 2000. COPIES FURNISHED: Dennis J. Magee Post Office Box 636 Safety Harbor, Florida 34695 Cindy Horne, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Thomas D. McGurk, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 J. Bruce Hoffmann, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue The issue in this case is whether the expenses incurred by Petitioner incident to admission to Town & Country Hospital on December 11, 1999, resulted from an intentional self-inflicted injury, to wit: attempted suicide, and are therefore excluded from coverage under the State of Florida Employees Group Health Self Insurance Plan.
Findings Of Fact At all times pertinent hereto, Petitioner, Sarah Nuding, was employed by the University of South Florida and was a participant in the State of Florida Employees Group Health Self Insurance Plan (PPO). Respondent, Department of Management Services, Division of State Group Insurance (DSGI), administers the state's self- funded group insurance plan for employees and has secured the services of BCBS as its third party administrator. On December 11, 1999, Petitioner called the Hillsborough County Sheriff's office after ingesting a handful of Wellbutrin and four tablets of Neurontin. Deputy Sheriff Midarst initiated involuntary examination pursuant to Section 394.463, Florida Statutes, (Baker Act), and Petitioner was admitted through the emergency room to Town & Country Hospital, Tampa, Florida. Petitioner was placed in the Hospital's Intensive Care Unit for observation of her seizure activity and remained there under observation and treatment until her release on December 13, 1999. Upon admission and after examinations, Petitioner was diagnosed with chronic anemia by the admitting physician who ordered consultation with the treating physician before medical services and treatment were provided. The admitting and treating physician, after review of Petitioner's hematocrit and hemoglobin levels which were above that normally requiring hospitalization, determined that Petitioner should be treated for the anemia condition before her discharge on December 13, 1999. Petitioner's State of Florida Employees Group Health Self Insurance Plan Booklet and Benefit Document excludes coverage for services rendered for treatment of self-inflicted wounds, in pertinent part provides: The following are not Covered Services and Supplies under the Plan. The Participant is solely responsible for the payment of charges for all such services, supplies or equipment excluded in this Section. 5. Any services and supplies received due to the following circumstances: (b) Resulting from an intentional self- inflicted injury whether the Participant was sane or insane. An injury is intentionally self-inflicted if the Participant intended to perform the act that caused the injury regardless of whether the Participant intended to cause the injury. On or about July 31, 2000, BCBS notified DSGI that of the Hospital's statement totaling $8,244.00 for services and supplies rendered December 11-13, 1999, only $1,030.25 were directly related to a diagnosis of "anemia"; the remaining charges are for the diagnosis of "drug overdose" and are not covered expenses under the State PPO Plan. The decision by both BCBS and DSGI, to pay those charges related to Petitioner's diagnosis and treatment for anemia and to not pay those charges related to the suicide attempt, including two days intensive care unit cost of $1,150.00 per day, are supported by preponderance of the evidence, and is in accord with the terms and conditions of the insurance plan exclusion provision. Petitioner's position is that her prolonged hospital stay, medical treatment and supplies were: (a) not at her request and consent, (b) that her anemia condition was a pre- existing, and therefore, a covered condition, and (c) intensive care placement ($1,500.00 per day for two days) was not necessary to treat her pre-existing anemic condition, therefore, only her first day hospitalization expenses should have been excluded. However, Petitioner's position ignores the fact that her hospital admission was for a suicide attempt, and her stay resulted from the requirements of the Section 394.463, Florida Statutes, to wit: mandatory involuntary placement for 72 hours.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, issue a final order dismissing with prejudice the petition for administrative review. DONE AND ENTERED this 14th day of August, 2001, in Tallahassee, Leon County, Florida. FRED L. BUCKINE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of August, 2001. COPIES FURNISHED: Julia P. Forrester, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Sarah C. Nuding 15501 Bruce B. Downs Boulevard Apartment 3705 Tampa, Florida 33647 Cynthia Henderson, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Mallory Roberts, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
