The Issue The issue presented is whether Petitioner is eligible to participate in the State of Florida's group health insurance plan.
Findings Of Fact Petitioner Judy Stahl began her employment with the State of Florida as a public assistance specialist with the Department of Children and Families on October 4, 1991. She began participating in the State's group health insurance program on December 1, 1991. Petitioner voluntarily terminated her employment by the State on November 28, 2002, for personal reasons. In her letter of resignation she stated that it was her intention to again seek employment with the State after the personal situation which caused her to resign was concluded. Premiums for the State's group health insurance are paid one month in advance. Therefore, Petitioner's coverage under the State's group health insurance program continued through the end of December 2002. In January 2003, the State's Division of State Group Insurance notified Petitioner of her right to elect continuation coverage under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) and the federal Public Health Services Act (PHSA). Petitioner so elected and continued her participation in the State's group health insurance under COBRA for the maximum period of 18 months that was available to her. Her continuation coverage expired June 30, 2004. In May 2004 the State's Division of State Group Insurance notified Petitioner that her continuation coverage would soon expire and further advised her of her right to convert her insurance coverage to a private, individual policy. Petitioner exercised her option to convert to a private policy, effective July 1, 2004. In March 2005 the Florida Division of Retirement sent Petitioner an Estimate of Retirement Benefits. The Estimate contained the comment that: "As a result of a review of accounts for terminated members, it was determined that you are eligible for retirement benefits." The Estimate form was accompanied by a pamphlet explaining the Florida Retirement System Pension Plan. It was also accompanied by information on the State Employees' Preferred Provider Organization (PPO) health plan. The retirement pamphlet included the information that health insurance was available to retirees; however, the health insurance information advised that health insurance was only available to certain retirees. Petitioner concluded that if she retired, she could obtain cheaper health insurance from the State than from her private provider. This was the first time that Petitioner considered the possibility of retirement. Petitioner thereafter made many telephone calls to the Department of Children and Families, to the Division of Retirement, to the Division of State Group Insurance, and to People First, inquiring about retirement and insurance. These telephone inquiries were the first time she mentioned to any State employee or representative that she was interested in retiring. At the end of March 2005 she made the decision to retire and submitted her application for retirement benefits. Her effective retirement date was April 1, 2005. At the time Petitioner filed her application for retirement, she was no longer participating in the State's group health insurance program. At the time she filed her application for retirement, she was no longer participating in continuation coverage pursuant to COBRA. She was insured under a private policy. At the time of her initial enrollment in the State group health insurance program, Petitioner signed a new enrollee form that, inter alia, advised her that eligibility and enrollment were governed by the provisions of Florida Administrative Code Rule 22K-l. During her employment she also enrolled in supplemental dental insurance. That enrollment application form notified Petitioner that any changes in enrollment or coverage are governed by the federal Internal Revenue Code and the Florida Administrative Code. Throughout her employment and at the time that she terminated her employment, she completed Annual Benefits Open Enrollment forms, which also notified her that any changes in enrollment or coverage are governed by the Internal Revenue Code and the Florida Administrative Code. While employed by the Department of Children and Families, Petitioner was provided with copies of the State of Florida Employees Group Health Self Insurance Plan Booklet and Benefit Document. Those booklets describe eligibility for participation to include employees, certain retirees, and COBRA participants. They also describe termination of coverage due to termination of employment and describe continuation coverage and conversion coverage. At the time Petitioner retired, she was not a State employee; she was a former State employee.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Petitioner is not eligible to participate in the State's group health insurance program. DONE AND ENTERED this 19th day of January, 2006, in Tallahassee, Leon County, Florida. S LINDA M. RIGOT 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 19th day of January, 2006. COPIES FURNISHED: Mark J. Berkowitz, Esquire Mark J. Berkowitz, P.A. 524 South Andrews Avenue, Suite 200N Fort Lauderdale, Florida 33301 Sonja P. Matthews, Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Tom Lewis, Jr., Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Alberto Dominguez, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue The issue for consideration in this hearing was whether Petitioner was entitled to insurance coverage reimbursement for items claimed as a result of his son's hospitalization at a specialty hospital in April, 1989.
Findings Of Fact At all times pertinent to the issues herein, Petitioner, Claud E. Leiby, was employed by the State of Florida and was a member of the State Group Health Self Insurance Plan. The State of Florida, Department of Administration, Division of State Employees' Insurance, is the state agency responsible for administering the Group Health Self Insurance Plan in Florida. On April 5, 1989, Petitioner's son, Floyd (Chris), attempted to take his own life. Chris is hearing impaired. He is a 22 year old who was, at the time, six months away from earning his Bachelor of Science degree in Computer Engineering Technology at Tampa Technical Institute. Prior to this suicide attempt in April, 1989, Chris had been seen by a psychologist who referred him to a psychiatrist. Chris had previously been seen by a psychiatrist for a drug abuse problem several years before. Approximately two years ago, Chris was admitted to Palms Hospital in Sarasota, an institution covered by the insurance plan in issue. At that time, the hospital represented it would provide an interpreter for the deaf and those other specialized personnel necessary for appropriate treatment of a hearing impaired individual. However, after several days of treatment which were singularly non-beneficial because of the fact that no interpreter was provided and Chris could not lip read, the treatment was terminated and Chris was discharged. The Leibys felt, based on that experience, that appropriate service could or would not be provided at a facility covered by the plan, and as a result, when Chris attempted to take his life on April 5, 1989, did not even attempt to hospitalize him in either of the covered facilities in Sarasota County, Sarasota Palms Hospital or Sarasota Memorial Hospital. Instead, they had him admitted to Horizon Hospital in Sarasota, a psychiatric specialty hospital which is the only hospital in the area providing a program for the psychiatric treatment of the hearing impaired even though they had been advised such treatment would not be covered. Their conclusion as to the lack of availability of other qualified treatment may not have been accurate, however. Dr. Curran, director of mental health services at Memorial indicated that facility could and would provide adequate treatment for the hearing impaired. This is inconsistent with the Petitioner's prior experience. The Leibys felt that due to the suicidal attempt, the situation constituted an immediate crisis. However, after several days of Chris' hospitalization at Horizon, they were advised that their coverage under the state plan would not cover the incurred expenses at that facility. The Plan administrator indicated the Petitioners were not covered because of the terms of the plan which exclude services and supplies provided by a specialty institution. Further, the Division took the position that since Chris attempted to take his own life, and since the plan excludes coverage for services and supplies resulting from an intentional self-inflicted injury, it was "unlikely" reimbursement would be made even if Chris had been admitted to one of the eligible hospitals. Petitioner claims that the Division's interpretation of the rule and the plan provisions constitutes a form of discrimination against the handicapped which is prohibited by federal and state law. After Chris was discharged from Horizon Hospital, he had another episode while at work and was taken to a medical facility in St. Petersburg. After four days, he was released and taken to see Dr. Douglas R. Elliott, a psychiatrist, who was unable to treat him successfully without the services of an interpreter. Dr. Elliott indicated that Ms. Leiby, who acted as an interpreter on the first session, could not continue to act in that capacity, considering the issues that needed to be addressed. In the doctor's opinion, the treatment Chris received at Horizon was both necessary and beneficial. The Plan brochure provided to state employees contains numerous provisions pertinent to this hearing. On Page 3, the definition of a hospital specifically includes a "specialty institution" and at page 9, the section on Limitations (on coverage) indicates, "Payment for inpatient services rendered by a hospital and/or specialty institution while confined for alcoholism or drug addiction, and/or rendered by a hospital while confined for alcohol or drug addiction or mental or nervous conditions, shall be made for not more than thirty-one (31) days of confinement during a calendar year. Specialty institutions are, in the Summary of Benefits section found on Page 6, identified as being permitted for alcohol/drug impaired employees only. In the Exclusions portion, found on pages 11 and 12, services and supplies provided by a specialty institution or residential facility (with the exception of the alcohol/drug treatment for employees) are excluded as are services and supplies provided by a skilled nursing facility for the treatment of an insured for alcoholism, drug addiction, (other than for employees), or mental or nervous conditions. The Plan Benefit Document itself, which was not previously provided to Petitioner, at page 24, defines a "specialty institution" as a "licensed facility providing an inpatient rehabilitation program for the treatment of persons suffering from alcohol or drug abuse or mental or nervous conditions." At Section VII L, dealing with Exclusions, "...services and supplies provided by a specialty institution, except as provided under Section II G, (treatment relating to alcoholism or drug addiction for the employee only), are excluded from coverage." The Division has defined these terms as meaning, in substance, that a specialty institution is specifically excluded except when a covered employee asks approval for entry into such an institution for alcohol or drug addiction. Otherwise, they have been excluded since implementation of the plan in 1972, because of cost. If these institutions were to be included, the additional costs would, according to Mr. Seaton, mean premium rates to the participants would have to be increased. The benefit document, as it exists, was constructed with the assistance of Blue Cross/Blue Shield and other consultants. It was the intent of the Department to provide services that a majority of the employees and their families need. To change the benefit document requires legislative approval. The plan is not intended to deny coverage to the handicapped. An "appropriate" service was available to Chris at the time of his admission to Horizon Hospital in April, 1989 under the state plan. Further, in Mr. Seaton's opinion, since the injury was self-inflicted, even if Chris had been admitted to an eligible hospital, coverage would not have been available. This latter position is unsupportable as an improper interpretation of the relevant provision. To insure cost reimbursement, Petitioner would have had to have a physician admit Chris to an acute care hospital such as Palms or Memorial, and in that case, according to Seaton, the state would have allowed up to 31 days of inpatient service. Seaton indicates that Section 504 of The Rehabilitation Act of 1973, was not considered in determining benefits to be covered. In his opinion, the "majority of employee needs" were covered and handicapped employees are covered to the same degree as non-handicapped employees. Family coverage for an employee does not include provisions to cover special needs of family members. Since treatment for handicapped is covered as a matter of course, no need was seen to make specific provision for handicapped individuals. The limitations, exclusions, or benefits provided are the same for all members and are provided to the handicapped to the same extent as to the non-handicapped. When asked if the patient had been initially admitted to a general hospital and thereafter referred to a specialty hospital as a matter of appropriate medical treatment by a covered provider, would that specialty admission be covered, Mr. Seaton replied, "absolutely not."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Petition for reimbursement for Chris' hospitalization at Horizon Hospital be denied. RECOMMENDED this 24th day of October, 1989, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 24th day of October, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-4186 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. None submitted by Petitioner: For the Respondent: 1.-5. Accepted and incorporated herein. 6.-7. Accepted and incorporated herein. Accepted. Accepted. Petitioner submitted the hospital bill subsequent to the hearing and after both parties had rested. Respondent moved to strike this evidence but the motion was denied. The amount of the hospital bill is now known, but in light of the Findings and Conclusions is not relevant. Accepted and incorporated herein. Accepted and incorporated herein. Accepted except for last sentence. Petitioner's opinion is based on prior experience. Accepted. This is opinion only. Not a Finding of Fact but a restatement of testimony. The substance of the testimony is accepted, however. Accepted and incorporated herein. 16.-18. Accepted and incorporated herein. 19. Accepted as to lack of discrimination. COPIES FURNISHED: Claude E. Leiby 321 East Lake Drive Sarasota, Florida 34232 Augustus D. Aikens, Jr., Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 A. J. McMullian, III Interim Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
Findings Of Fact Petitioner resigned from State Government on July 23, 1987. At the time of his resignation, Petitioner was covered under the Florida State Group Health Insurance Plan. His wife, who is a diabetic, was also covered under Petitioner's insurance. Upon termination Petitioner was eligible for continuation of coverage benefits under the federal COBRA Act. However, prior to receiving any notice of his COBRA rights, Petitioner elected to continue his State Employees' Insurance for two months from July 1, 1987 and then begin coverage under his new employer's insurance plan. 2/ Petitioner made advance payment on the 2 months additional coverage. The payments carried his State Employees' health insurance through September 1, 1987 when it was terminated. DOA notified Petitioner on August 27, 1987, of his right to elect continuation of coverage under the COBRA Act. This notice complied with the notice requirements under the COBRA Act. COBRA provides continued health insurance coverage for up to (18) months, after a covered employee leaves employment. However, coverage does not continue beyond the time the employee is covered under another group health plan. COBRA simply fills the gap between two different employers group health insurance plans so that an employee's group health insurance does not lapse while the employee changes jobs. Petitioner's new employer's health coverage began around September 1, 1987. After Petitioner had begun coverage under his new insurance plan, he discovered that his wife's preexisting diabetic condition would not be covered. However, no evidence was presented that Petitioner, within 60 days of September 1, 1987 requested the Division of State Employee's Insurance to continue his insurance coverage pursuant to COBRA. Moreover, Petitioner's COBRA rights terminated when he began his coverage under his new employer's health plan.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Administration enter a Final Order denying Petitioner's request for continuation of coverage under COBRA. DONE and ENTERED this 5th day of April, 1989, in Tallahassee, Florida. DIANE CLEAVINGER 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 5th day of April, 1989.
The Issue The issue at the hearing was whether Petitioner is entitled to a premium refund of her health insurance premium.
Findings Of Fact The Petitioner, Mildred Daw, is a retired State employee. She is enrolled in the State of Florida, State Employees Group Health Self Insurance Plan (the Plan). Prior to retiring, Petitioner amended her coverage in the Plan, changing from single coverage to family coverage. Petitioner modified her coverage so that her husband would be covered under the Plan. Petitioner's husband was under age 65 and qualified for Medicare Parts A and B. Petitioner was not qualified for Medicare coverage. The premium for family coverage was $178.44 per month. Petitioner began paying this amount shortly before she retired in December 1984. By letter dated, July 8, 1985, the Division of State Employees' Insurance notified retirees that: If you are under age 65 and eligible for Medicare Part A and B because of disability, you may now be eligible for Medicare Coordination coverage at the reduced rate. Please notify our office if you are eligible and send a copy of your Medicare card. Your premium will be reduced the month following our receipt of your notice and the copy of your Medicare card. The letter was sent to retirees and made no mention of surviving spouses or that a current spouse, who fit within the Medicare category, could qualify the insured for Medicare Coordination coverage. The Medicare Coordination coverage is the only program that the State offers in which it is the spouse of the insured/retiree who can qualify the insured for new benefits or different coverage. In this case, the different coverage or new benefit was solely a reduction in premium. Otherwise, the benefits under the family coverage and the Medicare Coordination coverage were the same. An ordinary person reading the letter would not have been placed on notice and would not have assumed that anyone other than the retiree was covered by the letter. If Petitioner had immediately elected the Medicare Coordination coverage, her premium would have been reduced by $42.76 a month, beginning with the August 1985, payment. The July 8, 1985, letter was mailed by first class mail to all retired State employees in the Plan. The business practice of the Division is to mail any such letters to the address of the retiree listed with the Division of Retirement and given to the Division of State Employees' Insurance or to the most current address the Division of Employees Insurance has for that particular retiree. In this case, the address which the Division of Retirement would have had on Petitioner in 1985 was her old address in Jacksonville. However, by July 1985, Petitioner had mailed the Division of State Employees' Insurance a change of address card with her new Pensacola address. She did not mail the Division of Retirement a change of address. There is no evidence as to which address the Respondent mailed the July 8, 1985, letter. Without such evidence Respondent is not entitled to a presumption of proper notice when a letter is mailed to a party with the correct address. Petitioner does not remember receiving the July 8, 1985, letter. She would have elected the Medicare Coordination coverage had she been aware of its availability. Petitioner became aware of her eligibility for reduced premiums in October 1987, when she received an informational bulletin from the Division of State Employees' Insurance. The bulletin stated the premium rates for various types of insurance coverage, including the reduced premiums for family coverage with members of the family who are qualified for Medicare benefits. Petitioner telephoned the Division and was instructed by Division personnel to send in a copy of her husband's Medicare card in order to establish her eligibility for the reduced premium. Petitioner sent a copy of her husband's Medicare card to the Division in October 1987. On November 6, 1987, Petitioner requested a refund of excess insurance premiums paid from July 1985, through November 1987. On December 28, 1987, Petitioner was informed by the Respondent that the earliest date a change in coverage could become effective was October 1987, because Petitioner had not applied for a change of coverage prior to that time. Petitioner was awarded an excess premium refund for the premium paid for November coverage. The Rules governing the Plan are found in Chapter 22I-1, Florida Administrative Code. This Chapter generally requires that an employee or retiree perform an affirmative act, by completing an informational form and sending it to the Department, before any change in coverage can be effectuated. The reason for such a requirement is that the Department has no way of knowing the number of eligible employees or retirees, without being supplied that information from the insureds, so that the Plan's administrator can better manage the Plan's funds to provide an adequate amount for the payment of claims. However, competing with this Rule is the Respondent's policy that a retiree who is otherwise eligible for certain benefits, but did not receive any notice of such eligibility is entitled to retroactive benefits. This policy is based on the Division's duty to administer the State's health plan, including notifying retirees of the availability of new types of coverage or benefits. The evidence showed that this policy takes precedence over the Rule when the Division has failed to notify an eligible retiree. In this case the Division failed to notify Petitioner of her eligibility for Medicare Coordination coverage due to her spouse's qualifications. Petitioner is therefore entitled to retroactive benefits beginning July 1985. Since the benefit of the Medicare Coordination coverage is a reduced premium, Petitioner is entitled to a refund of the excess premium of $42.76 a month from July 1985, through October 1987. The refund for that time period totals $1,154.52.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Administration enter a Final Order refunding to Petitioner excess premiums paid to the Department in the amount of $1,154.52. DONE and ENTERED this 18th day of July, 1989, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 18th day of July, 1989. APPENDIX TO RECOMMENDED ORDER CASE NO. 89-301 The facts contained in paragraphs a, b, c, d, e, f, g, h, i, j and k of Petitioner's Proposed Findings of Fact are adopted in substance, in so far as material. The facts contained in paragraphs l, m, and n of Petitioner's Proposed Findings of Facts are subordinate. The facts contained in paragraph p of Petitioner's Proposed Findings of Facts were not shown by the evidence. The facts contained in paragraph o of Petitioner's Proposed Findings of Fact are rejected. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 8, 9, 10, 11 and 12 of Respondent's Proposed Findings of Fact are adopted in substance, in so far as material. The facts contained in paragraphs 13 and 14 of Respondent's Proposed Findings of Fact are subordinate. The facts contained in paragraph 7 of Respondent's Proposed Findings of Fact were not shown by the evidence except for the fact relating to the letter being mailed first class mail. COPIES FURNISHED: Karren Lessard 15 West La Rua Street Pensacola, Florida 32521 Larry D. Scott Senior Attorney Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Andrew McMullian III 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 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 Whether Petitioner's claim against her state group health insurance company for services related to a Magnetic Resonance Imaging examination (MRI) should be granted or denied.
Findings Of Fact At all times material hereto, Petitioner was employed by the State of Florida and was a participant in the State of Florida group health insurance plan, which is a self-insured plan administered by the State of Florida in conjunction with the plan's third party administrator, Blue Cross Blue Shield of Florida (BCBSF). This plan is frequently referred to as the PPO Plan, an acronym for preferred provider organization. Prior to April 26, 2002, Petitioner's physician detected a lump in Petitioner's right breast. Petitioner's physician ordered mammography and ultrasound examinations to be performed on Petitioner's right breast. Those examinations were performed on April 1, 2002. Following those tests, Petitioner's physician ordered an MRI examination of the right breast, which was performed on April 26, 2002, and is the procedure at issue in this proceeding. Following that MRI, Petitioner had another mammography and ultrasound for the diagnosis and treatment of breast cancer. Respondent has paid Petitioner's claims for coverage of the mammography and ultrasound examinations. Respondent has denied payment for the professional fee associated with the MRI in the amount of $215.00. Respondent has paid the facility fee associated with the MRI in the amount of $1,705.00. Respondent asserts that the payment of that fee was in error and intends to seek reimbursement for that payment if it prevails in this proceeding. The terms of coverage of the state group health insurance plan are set forth in a document entitled "State Employees' PPO Plan Group Health Insurance Plan Booklet and Benefit Document" (Benefit Document). The Benefit Document (at page 31, paragraph 47 of the section entitled "Services Not Covered By The Plan") specifically excludes the following from coverage: 47. Services and procedures considered by BCBSF to be experimental or investigational, or services and procedures not in accordance with generally accepted professional medical standards, including complications resulting from these non-covered services. The Benefit Document has a section entitled "Definitions of Selected Terms Used By The Plan" beginning at page 49. The definition of the phrase "experimental or investigational services", found at page 51, includes, in pertinent part, the following: . . . any evaluation, treatment, therapy, or device that: * * * is generally regarded by experts as requiring more study to determine maximum dosage, toxicity, safety or efficacy, or to determine the efficacy compared to standard treatment for the condition has not been proven safe and effective for treatment of the condition based on the most recently published medical literature of the U.S., Canada or Great Britain using generally accepted scientific, medical or public health methodologies or statistical practices is not accepted in consensus by practicing doctors as safe and effective for the condition is not regularly used by practicing doctors to treat patients with the same or a similar condition The Benefit Document provides at page 51 that BCBSF and the Division of State Group Insurance determine whether a service is experimental or investigational. The testimony of Dr. Wood established that an MRI of the breast is experimental or investigational within the meaning of the Benefit Document. 2/ MRI examinations of the breast are not reliable diagnostic tools because such examinations result in an unacceptable number of cases where an MRI produces false negative findings that reflect the absence of cancer where cancer is, in fact, present in the breast. According to Dr. Wood, an MRI cannot be relied upon and should not be used to avoid a biopsy of a suspicious mass because a patient would run an unacceptable risk that the detection of cancer may be delayed or missed. Dr. Wood also testified that radiologists in Florida performing services for the state group insurance health plan have been informed of BCBSF's position. Petitioner's doctors did not inform her prior to the examination that the MRI examination would not be covered by her insurance plan.
Recommendation Based on the foregoing, it is RECOMMENDED that Respondent enter a final order denying coverage for the MRI claims submitted by Petitioner. DONE AND ENTERED this 17th day of February, 2003, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 17th day of February, 2003.
The Issue Whether the School Board of Broward County's award of a contract for Excess General and Auto Liability insurance coverage to United National Insurance Company is barred because of illegality?
Findings Of Fact The Parties Ranger Insurance Company, Petitioner, is the holder of a Certificate of Authority dated September 9, 1996 and issued by the Department of Insurance and Bill Nelson, Insurance Commissioner and Treasurer. Good through June 1, 1997, the certificate authorizes Ranger to write in a number of lines of insurance business, including, Private Passenger Auto Liability, Commercial Automobile Liability, Private Passenger Automobile Auto Physical Damage, Commercial Auto Physical Damage and Other Liability. As such, Ranger is an "authorized" or "admitted" insurer in the State of Florida. L.B. Bryan & Company, Alexander & Alexander, Inc., and Benefactor Financial Group, Inc., is a joint venture and co- petitioner with Ranger in this proceeding through whom Ranger proposed to procure the Excess General and Auto Liability (“Excess GL/AL”) coverage. A timely proposal under Request for Proposal 97- 072S was submitted to the School Board of Broward County by the petitioners to provide the Excess GL/AL Insurance Coverage sought by the RFP. United National Insurance Company is an "eligible" surplus lines insurer, approved by the Florida Department of Insurance to transact all surplus lines coverages in the State of Florida and licensed as such. The Department has notified insurance agents of United Nation's eligibility as a surplus lines insurer since 1978. It is the insurer of the Excess General and Excess Auto Liability insurance coverage awarded by the School Board under RFP 97-072S. Arthur J. Gallagher & Company ("Gallagher,") is the eighth largest insurance broker in the world. It has four sales offices, nine service offices, and approximately 150 employees in the State of Florida alone. The office from which it conducted business related to this proceeding is in Boca Raton, Florida, an office for which Area President David L. Marcus is responsible. Gallagher submitted a timely proposal (the "Gallagher proposal,") in response to the RFP on behalf of United National. The School Board of Broward County is the authority that operates, controls, and supervises all free public schools in the Broward County School District, "[i]n accordance with the provisions of s. (4)(b) of Article IX of the State Constitution ...". Section 230.03(2), F.S. In accord with its powers, the School Board may contract directly to purchase insurance. It is not required by its purchasing rules to use a competitive bidding or procurement process to purchase insurance. Nonetheless, on Friday, April 26, 1996, it issued a request for proposals, the RFP at issue in this proceeding, for insurance coverages including for Excess GL/AL insurance coverages. Siver Insurance Management Consultants Siver Insurance Management Consultants ("Siver,") are the drafters of RFP 97-072S. The School Board relied on Siver to draft the RFP, particularly its technical sections. Technical review of the proposals made under the RFP was conducted by Siver. And Siver put together for the School Board's use a summary of the policies proposed by both United National and Ranger. The summary was considered by the School Board's Evaluation Committee when it evaluated the competing proposals. The determination of whether the competing proposers were properly licensed was made by Siver. The School Board's Evaluation Committee, indeed the School Board, itself, played no role in determining the licensing credentials of the proposers while the proposals were under consideration. Under the arrangement between Siver and the School Board, however, the School Board retained the primary responsibility for administering the RFP. The RFP Request for Proposal 97-072S was mailed to 324 vendors (prospective proposers) the same day as its issuance, April 26, 1996. None of the vendors knew the contents of the RFP until it was issued. The RFP sought proposals for seven coverages, each of which was severable from the remainder of the coverages and was allowed to be proposed separately. The scope of the request was described in the RFP as follows: The School Board of Broward County, Florida ... is seeking proposals for various insurance coverages and risk management services. To facilitate distribution of the underwriting data and the requirements for each of the coverages, this consolidated Request for Proposals ... has been prepared. However, each of the coverages is severable and may be proposed separately. The following are included: Boiler & Machinery Excess General and Automobile Liability Excess Workers' Compensation School Leaders Errors & Omissions Crime Including Employee Dishonesty - Faithful Performance, Depositor's Forgery Claim and Risk Management Services (Including Managed Care Services) Statutory Death Benefits Petitioner's Ex. 1, pg. I-1. Since the seven coverages are severable and no proposer had to submit a proposal on all seven coverages, one way of looking at RFP 97-072S is as a consolidated RFP composed of seven, separate proposals, each for a different type of insurance coverage. Of the 324 vendors to whom the RFP was sent, only two, Gallagher, on behalf of United National, and Ranger, through the action of the joint venture, submitted proposals with respect to the Excess GL/AL coverages. Reasons for Using an RFP The School Board, under the auspices of Siver, chose to seek insurance coverage through an RFP rather than an Invitation to Bid, or what is colloquially referred to as a "straight bid," for a number of reasons. As one familiar with RFPs and Invitations to Bid might expect, the School Board and Siver were attracted to the RFP by the increased flexibility it offered in the ultimate product procured in comparison to the potentially less flexible product that would be procured through an invitation to bid. More pertinent to this case, however, Siver chose to use an RFP for the School Board in this case because "as explained ... by the Department of Insurance over the ... years, while there may... [be a] prohibition against any surplus lines agents submitting a straight bid, there would not be a prohibition against a ... [surplus lines] agent responding to a request for proposal " (Tr. 149.) The RFP approach was not chosen, however, in order to avoid any legal requirement or to circumvent the Insurance Code. As explained by Mr. Marshall, the approach was born of hard reality: Id. [O]ne of the primary motivations [for using an RFP rather than an Invitation to Bid] was to allow us [The School Board and Siver] to consider surplus lines companies because of the fact that very often they were the only insurers that would respond on the number of coverages and clients that we were working for. The Insurance Code and the Surplus Lines Law The Insurance Code in Section 624.401, Florida Statutes, requires generally that an insurer be authorized by the Department of Insurance (the "Department,") to transact business in the State of Florida before it does so: (1) No person shall act as an insurer, and no insurer or its agents, attorneys, subscribers, or representatives shall directly or indirectly transact insurance, in this state except as authorized by a subsisting certificate of authority issued to the insurer by the department, except as to such transactions as are expressly otherwise provided for in this code. One place in the code where transactions are "expressly otherwise provided for ...," is in the Surplus Lines Law, Section 626.913 et seq., Florida Statues. The purposes of the law are described as follows: It is declared that the purposes of the Surplus Lines Law are to provide for orderly access for the insuring public of this state to insurers not authorized to transact insurance in this state, through only qualified, licensed, and supervised surplus lines agents resident in this state, for insurance coverages and to the extent thereof not procurable from authorized insurers, who under the laws of this state must meet certain standards as to policy forms and rates, from unwarranted competition by unauthorized insurers who, in the absence of this law, would not be subject to similar requirements; and for other purposes as set forth in this Surplus Lines Law. Section 626.913(2), F.S. Surplus lines insurance is authorized in the first instance only if coverages cannot be procured from authorized insurers: If certain insurance coverages of subjects resident, located, or to be performed in this state cannot be procured from authorized insurers, such coverages, hereinafter designated "surplus lines," may be procured from unauthorized insurers, subject to the following conditions: The insurance must be eligible for export under s. 626.916 or s. 626.917; The insurer must be an eligible surplus lines insurer under s. 626.917 or s. 626.918; The insurance must be so placed through a licensed Florida surplus lines agent; and The other applicable provisions of this Surplus Lines Law must be met. Section 626.915, Florida Statutes, and then only subject to certain other conditions: No insurance coverage shall be eligible for export unless it meets all of the following conditions: The full amount of insurance required must not be procurable, after a diligent effort has been made by the producing agent to do so, from among the insurers authorized to transact and actually writing that kind and class of insurance in this state ... . Surplus lines agents must verify that a diligent effort has been made by requiring a properly documented statement of diligent effort from the retail or producing agent. However, to be in compliance with the diligent effort requirement, the surplus lines agent's reliance must be reasonable under the particular circumstances surrounding the risk. Reasonableness shall be assessed by taking into account factors which include, but are not limited to, a regularly conducted program of verification of the information provided by the retail or producing agent. Declinations must be documented on a risk-by-risk basis. It is not possible to obtain the full amount of insurance required by layering the risk, it is permissible to export the full amount. Section 626.916, F.S. Authorized vs. Unauthorized Insurers Unlike authorized insurers, unauthorized insurers do not have their rates and forms approved by the Department of Insurance, (the "Department.") Similarly, unauthorized insurers are not member of the Florida Insurance Guaranty Association, which guarantees payment of claims if an insurer becomes insolvent. Unauthorized insurers may qualify to transact Florida insurance business under the Surplus Lines Law and so, for purposes of the Surplus Lines Law, be considered "eligible" to transact surplus lines business in Florida. When a Surplus Lines insurer is eligible, Department of Insurance employees refer to the insurer in Surplus Lines terms as "authorized," a term in everyday English that is synonymous with "eligible." But an eligible surplus lines insurer remains an "unauthorized" insurer when compared to an "authorized" insurer for purposes of the Insurance Code and that part of the code known as the Surplus Lines Law. Submission and Review of Proposals Both L.B. Bryan & Company, Alexander & Alexander, Inc., and Benefactor Financial Group, Inc., (the "Joint Venture") and Gallagher submitted timely proposals with regard to Excess GL/AL coverage in response to the RFP. The Joint Venture's proposal was submitted, of course, on behalf of Ranger, an authorized insurer, and Gallagher's was submitted on behalf of United National, an insurer eligible to transact insurance in the State of Florida as a surplus lines insurer but otherwise an unauthorized insurer. The School Board's Insurance Evaluation Committee met on May 30, 1996, to evaluate proposals received pursuant to the RFP. Although briefly discussed by the Evaluation Committee, the issue of proper licensing was not determined independently by the committee. Instead of making that determination, the committee turned to its insurance consultant, Siver. Siver had determined that both proposers, Ranger and United National, were properly licensed for purposes of responding to the RFP and being considered by the committee. Siver communicated that determination to the committee. The committee relied on Siver's determination. Aside from receiving Siver's determination of proper licensing when "briefly discussed" (Tr. 108,) the Evaluation Committee did not address whether either Ranger or United National were properly licensed. Certainly, no issue of whether Ranger should take precedence over United National by virtue that it was an authorized insurer when United National was an unauthorized insurer and a mere eligible Surplus Lines insurer was ever discussed by the committee. In evaluating the proposals, the Committee awarded 73 points to the Gallagher proposal and 69 points to the Ranger proposal. Points were awarded on the basis of three criteria or in three categories: Qualifications (20 points maximum); Scope of Coverages/Services Offered (30 points maximum); and, Points for Projected Costs (50 points maximum.) The Ranger proposal outscored the Gallagher proposal in the "projected cost" category, 50 to 23, but it scored lower in the "qualifications" category, 14 versus 20 for Gallagher, and significantly lower in the "scope of coverages" category, five points versus 30 for Gallagher. The United National coverage was more than twice as costly as Ranger's, a $491,000 annual premium as opposed to Ranger's $226,799, which explains the points awarded in the "projected cost" category. The Gallagher proposal received more points than the Ranger proposal in the "qualifications" category because United National has provided the School Board with Excess GL/AL coverage for a number of years and Ranger has never provided the School Board with such coverage. The Ranger proposal fell so drastically short of the Gallagher proposal in the "scope of coverages/services offered" category primarily because of an athletic participation exclusion appearing in a rider to the specimen policy appearing in its proposal. Ranger had intended to cover athletic participation and the rider was included with the Ranger proposal in error. Ranger notified the School Board of its intent immediately after the tabulations were released. Nonetheless, the Evaluation Committee was never informed of the error and no attempt was made by the School Board to negotiate with Ranger to improve the coverages offered, despite authority in the RFP for the School Board to negotiate with any of the proposers. (The language used in the RFP is "with one or more" of the proposers.) The Ranger proposal also fell short of the Gallagher proposal in the "scope of coverages/service offered" category because the Gallagher proposal was made in several ways. One way was as to only Excess GL/AL coverage. Another way included School Leaders' Errors and Omissions ("E & O") coverage. The E & O coverage was offered by United National in the Gallagher proposal together with the Excess GL/AL coverage in a "combined lines" package, similar to United National coverages already existing for the School Board. Furthermore, the Ranger proposal expressly excluded coverage for Abuse and Molestation, a needed coverage due to the School Board's prior claims history. On June 5, 1996, the Evaluation Committee submitted its recommendations to the School Board's Purchasing Department. With regard to GL/AL coverage, the Evaluation Committee recommended the purchase of the GL/AL/E & O "combined lines" coverage offered by Gallagher through United National. The School Board posted its Proposal Recommendation/Tabulations adopting the recommendation, two days later, on June 7, 1996. Ranger Seeks Redress from the Department Following the School Board's award, Ranger, thinking that it should have received the award under the RFP as the only authorized insurer to submit a proposal for Excess GL/AL coverage, sought redress from the Department. On June 14, 1996, Ranger personnel met with the head of the Department's Surplus Lines Section, Carolyn Daniels, alleging a violation of the Insurance Code's Surplus Lines Law. On June 18, 1996, Ranger reiterated its complaint in writing and asked Ms. Daniels to find a violation that day. On June 24, 1996, Ranger, now through its attorneys, met with Ms. Daniels and her supervisor. Again, on July 4, 1996, Ranger's attorneys wrote to Ms. Daniels, further pleading for her to find a violation and asking for an administrative hearing if Ms. Daniels did not find in favor of the Ranger position. On a fifth attempt, Ranger wrote Ms. Daniels on July 11, 1996, requesting that she adopt Ranger's position. Ms. Daniels reviewed Ranger's five complaints with her supervisor, the Chief of the Bureau of Property and Casualty Solvency and Market Conduct. In a letter dated August 14, 1996, to the School Board's Purchasing Agent, Ms. Daniels announced her determination: I did not find any evidence to indicate that Mr. David L. Marcus of Arthur J. Gallagher & Company or United National Insurance Company violated the Surplus Lines Law in providing a quote for the School Board. Intervenor's Ex. No. 2. Ms. Daniel's determination was based on a number of factors, including the School Board's position in the transaction as an "informed consumer," (Tr. 422-423,) and that the School Board had possessed a United National policy for 13 years. But, the determination was primarily based on the fact that Gallagher had received three declinations from authorized insurers to provide Excess GL/AL coverage and so had performed that which was required prior to deciding that the coverage was eligible for export and provision by a surplus lines insurer: due diligence. Due Diligence Section 626.916(1)(a), Florida Statutes, provides, [n]o insurance coverage shall be eligible for export unless it meets ... the following condition[]: ... [t]he full amount of insurance required must not be procurable, after a diligent effort has been made by the producing agent to do so, from among the insurers authorized to transact and actually writing that kind and class of insurance in this state, and the amount of insurance exported shall be only the excess over the amount so procurable from authorized insurers. (e.s.) The statute goes on to require that the diligent effort, "be reasonable under the particular circumstances surrounding the export of that particular risk." Reasonableness is assessed by taking into account factors which include, but are not limited to, a regularly conducted program of verification of the information provided by the retail or producing agent. Declinations must be documented on a risk-by- risk basis. Section 626.916(1)(a), F.S. "'Diligent effort' means seeking coverage from and having been rejected by at least three authorized insurers currently writing this type of coverage and documenting these rejections." Section 626.914(4), F.S. Under this definition, the "producing agent should contact at least three companies that are actually writing the types of clients and the business in the area [that they are] wanting to write." (Tr. 268.) A specific form to help insurance agents document their three rejections is adopted by Department rule. The rule provides: When placing coverage with an eligible surplus lines insurer, the surplus lines agent must verify that a diligent effort has been made by requiring from the retail or producing agent a properly documented statement of diligent effort on form DI4-1153 (7/94), "Statement of Diligent Effort", which is hereby adopted and incorporated by reference. Rule 4J-5.003(1), F.A.C. Fully aware of the requirement for documentation of diligent effort to find authorized insurers, and cognizant that it would be unlikely that an authorized insurer could be found based on experience, Gallagher began soliciting proposals for coverage in the middle of April, 1996, several weeks before the School Board had issued the RFP. In fact, at the time that Gallagher started soliciting bids, the School Board had not yet assembled or distributed the underwriting data needed by bidders. Nonetheless, with good reason based on experience, Gallagher expected that the School Board would seek a "combined lines" package of GL/AL/E & O coverages like the School Board then received through United National, and that it would be unlikely that an authorized insurer would step forward to propose coverage. Gallagher, therefore, used the policy form current in April of 1996, that is the form providing Excess GL/AL/E & O coverage in a "combined lines" package, "as an example of what the School Board had been looking for this type of program and seeking a program similar to that and similar in coverage." (Tr. 242.) But it also sought Excess GL/AL without combination with E & O coverage. As Mr. Marcus testified, when seeking coverage from authorized insurers beginning in April of 1996, Gallagher "would be looking at a variety of different ways, whether they were package or not." (Tr. 243.) One authorized insurer, Zurich-American, declined to quote because it could not offer a combined line SIR program (a package of excess general liability and excess auto liability coverages) as requested by the RFP. Furthermore, the School Board risk was too large for Zurich-American to handle. A second authorized insurer, American International Group, declined to quote due to the School Board's adverse loss experience. A third authorized insurer, APEX/Great American, declined to provide a quote to Gallagher due to the large size of the School Board account. The responses of these three authorized insurers were listed in a Statement of Diligent Effort provided to Ms. Daniels, which she considered in determining that Gallagher and Mr. Marcus had committed no violation of the Surplus Lines Law. Gallagher also provided Ms. Daniels with a second Statement of Diligent Effort. The statement documented the attempt to attract quotes by adding a school leaders errors and omission component to the Excess GL/AL coverage. It, too, was used by Ms. Daniels in making her determination of no violation of the Surplus Lines Law by Gallagher. The same three insurers refused to quote for the "combined lines" program. Attempts by other Authorized Insurers Gallagher requested that any responses to its requests for quotes be submitted by May 10, 1996, so that it could prepare and submit its proposal by the RFP's deadline for submission of original proposals by all vendors, 2:00 p.m. May 16, 1996. One insurer, Discover Re/USF&G attempted to submit a quote on May 15, 1996, one day before the RFP deadline but five days after May 10. By then, Gallagher had already started printing its 625 page proposal. Furthermore, the company failed to provide the required policy forms until the day after the School Board's deadline for filing proposals. Coregis Insurance Company offered coverage of up to $700,000 for each claim and for each occurrence, but like Discover Re/USF&G, failed to provide the required policy forms until after the RFP deadline. Furthermore, definitive coverage under the Coregis policy would only be provided on the condition that the Florida Legislature pass a Legislative Claims bill, a limiting condition not authorized in the RFP or requested by Gallagher. American Home Assurance Company never responded to Gallagher with the School Board's required quote or policy forms. Rather, the company merely provided an "indication" that the company declined to provide a quote. An "indication" consists of an approximate premium rate, without any terms or conditions. A "quote," on the other hand, includes the terms and conditions of a policy. The Department places with the producing agent the responsibility of determining whether an insurer's communication constitutes and "indication" or a "quote." An agent, according to Ms. Daniels, can only violate the Surplus Lines Law if the agent receives a reliable quote. Gallagher even requested a quote from Ranger, despite never having been appointed to transact insurance on its behalf. But Ranger declined. In response to a request by Gallagher's minority business partner, McKinley Financial Services, Ranger, through E. Michael Hoke on American E & S letterhead, wrote in a letter dated May 6, 1996, "[w]e have received a prior submission on this account so we are returning the attached." Intervenor's Ex. No. 7. The Petition Ranger's petition for formal administrative hearing is the letter dated June 19, 1996, to the Director of Purchasing for the School Board under the signature of E. Michael Hoke, CPCU, Assistant Vice President of AES/Ranger Insurance Company. The letter asks its readers to "bear[] in mind we are not attorneys," p. 1 of the letter, before it outlines three protest issues. The third protest issue is the one about which Ms. Daniels made her determination that no violation of the statute had been committed by Gallagher or its employees: "3) Florida Statute 626.901 (Representing or aiding unauthorized insurer prohibited)." The other two issues deal not with the propriety of Gallagher's actions but the legality of the School Board's award to an unauthorized insurer, United National, when coverage was available from an authorized insurer, Ranger: Florida Statute 626.913 (Surplus Lines Law). . . Our Position * * * Ranger Insurance Company is an admitted authorized insurer ... Its proposal for excess general and auto liability is proof that the Board requested coverage was procurable. United National Insurance Company is an unauthorized insurer under the laws of the State of Florida ... . The United National Insurance Company proposal and/or its offer to extend it's current policies appear to us as "unwarranted competition." Ranger Insurance Company is protected from unwarranted competition from United National Insurance Company in accordance with the Florida Statute 626.913. Florida Statute 626.913 (Eligibility for Export) ... Our Position * * * Ranger Insurance Company is an admitted authorized insurer under the laws of the State of Florida. ... It's proposal for excess general and auto liability is proof that the Board requested amounts were available. The proposal and/or contract extensions offered by United National are for the full amount of coverage sought and not excess over the amount procurable from Ranger, an authorized insurer. The petition, therefore, set in issue not just whether Gallagher acted illegally but whether the School Board acted illegally when it made the award to United National, an unauthorized insurer when Ranger, an authorized insurer, had also submitted a proposal. Extension As soon as the School Board was made aware of the Ranger protest, it extended the existing insurance contracts procured under RFP 92-080S, awarded approximately five years earlier. The extension was on a month-to-month basis until resolution of the protest. The extension was necessary to avoid a lapse in the School Board's coverage during this proceeding.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the award to United National under the Gallagher proposal in response to RFP 97-072S be rescinded. DONE AND ENTERED this 28th day of January, 1997, in Tallahassee, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 1997. COPIES FURNISHED: Paul R. Ezatoff, Esquire Christopher B. Lunny, Esquire Katz, Kutter, Haigler, Alderman, Marks, Bryant & Yon, P.A. Post Office Box 1877 Tallahassee, Florida 32302-1877 Edward J. Marko, Esquire Robert Paul Vignola, Esquire Office of the School Board Attorney K.C. Wright Administrative Building 600 Southeast Third Avenue - 11th Floor Fort Lauderdale, Florida 33301 A. Kenneth Levine, Esquire Blank, Risby and Meenan, P.A. Post Office Box 11068 Tallahassee, Florida 32302-3068 Dr. Frank Petruzielo, Superintendent Broward County School Board 600 Southeast Third Avenue Fort Lauderdale, Florida 33301-3125
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 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.
Findings Of Fact Respondent, Mark Alan Gable, is currently eligible for licensure and is licensed in Florida as a life and health insurance agent and was so licensed at all times relevant to these proceedings. Respondent at all times relevant to these proceedings was licensed in this state to solicit health insurance on behalf of National States Insurance Company (herein National). On or about September 28, 1988, Respondent visited the home of Mabel Bowmaster of Sarasota, Florida, for the purpose of soliciting health insurance. At the time, Ms. Bowmaster was insured under the provisions of a protective life medicare supplement insurance policy. Ms. Bowmaster was interested in purchasing a policy that offered custodial nursing care benefits as her protective life policy did not offer such coverage. Respondent was not a stranger to Ms. Bowmaster as he had sold her a medicare supplement policy in 1987 and had processed claims for Ms. Bowmaster during 1987, although she did not remember him. Although Ms. Bowmaster was interested in purchasing custodial care, when Respondent explained to her the cost of the coverage versus the benefits that she could receive, she was convinced that the premiums for a custodial care policy was too expensive and she declined to purchase the coverage. In fact, Respondent tendered a certification to Ms. Bowmaster which acknowledged that she had been explained the benefits, that she understood them and there is, in that medicare supplement policy, a specific exclusion of custodial care. (Respondent's Exhibit 18 and 3.) During August 1989, Ms. Bowmaster was visited by another insurance agent, a Chris Morrison, who was also soliciting insurance. At agent Morrison's urging, Ms. Bowmaster cancelled the medicare supplement policy that Respondent had sold her after he showed her a copy of a St. Petersburg Times article which was critical of Respondent and after Morrison suggested that Respondent was in trouble with the Petitioner. When Ms. Bowmaster cancelled her insurance policy that she purchased from Respondent, she wrote a letter to National States Insurance Company asking them not to honor the bank draft authorization that she had signed for the year 1989. Notwithstanding the letter Ms. Bowmaster sent to National, the bank draft was honored. As a result, Ms. Bowmaster filed an insurance consumer service complaint with Petitioner stating the reason for cancelling the policy was that she had duplicative coverage as a result of her purchase of the same coverage from Mr. Morrison and she therefore requested a refund of the National policy in light of her request that the bank draft be terminated. In none of Bowmaster's correspondence to National during August and November 1989, was there any reference of any misrepresentation of coverage by Respondent for custodial care coverage. On or about February 11, 1988, Respondent visited the home of Alice V. Bowling of Bradenton for the purpose of soliciting health insurance. Ms. Bowling is an 82 year-old widow whose primary source of income is social security. At the time, Ms. Bowling was insured under the provisions of a Prudential Insurance AARP (American's Association of Retired Persons) medicare supplement insurance policy and an Old Southern medicare supplement insurance policy. Respondent discussed with Ms. Bowling her existing insurance coverages. Ms. Bowling was interested in obtaining an insurance policy that would pay benefits for hearing aids, eyeglasses and dental care. Neither of her existing policies offered such benefits. Respondent's purpose in visiting Ms. Bowling during February of 1988 was to follow-up on a lapse of a National States Medical/Surgical policy. During the interview with Ms. Bowling, she informed Respondent that she had in effect a policy with AARP and the National policy that was soon to lapse. She did not tell him that she had a policy with Old Southern. While Ms. Bowling testified that she showed Respondent a copy of the Old Southern policy, the evidence adduced at hearing indicates otherwise. It was noted that when Respondent purchased the National States policy during 1987, she did not tell that agent about the existence of the Old Southern policy. (Respondent's Exhibit 7.) Additionally, when Ms. Bowling signed the notice to applicant regarding replacement of accident and sickness insurance form, she indicated that she was replacing a Prudential policy. The application for insurance also indicates her replacement for the Prudential policy. After Respondent reviewed with Ms. Bowling her AARP policy and the National States policy, he advised her that he could process some claims for her under the lapsed National States policy. As a result, Respondent submitted claims for Ms. Bowling and she was reimbursed for medical bills for which she had not previously sought payment. (Respondent's Composite Exhibit 8.) Respondent and Ms. Bowling discussed eyeglass and hearing aid coverage to determine if she should purchase it. However, based on Ms. Bowling's desire to hold the cost of insurance down, and after Respondent explained to her that under the eyeglass-hearing aid rider, it would cost her approximately $340 in premiums to get $500 in coverage, she declined such coverage. By way of example, Respondent explained that the premium for the rider was $125, deductible of $75 pays 80% with a maximum coverage of $500; so on a $700 bill, it would pay $500, indicating that the insurance payment of $340 was for $500 worth of benefits. Evidence of Ms. Bowling's rejection was noted in the outline of coverage which specifically excludes eye glasses and hearing aids. (Respondent's Exhibit 10.) Ms. Bowling acknowledged that the benefits of the policy was clearly explained to her. After Respondent's initial visit, Ms. Bowling decided to cancel the policy. Upon receiving notice of cancellation, Respondent called upon Ms. Bowling to determine her reason for cancelling the policy. Respondent again explained the coverage to Ms. Bowling in the presence of her son. Ms. Bowling acknowledges that Respondent explained to her at the second visit that eye glasses, dentures and hearing aids were not covered by the policy, that the rider would be required to provide that coverage; and she then again elected not to purchase the rider coverage but kept the policy in force. Evidence of this continuation of coverage is in Ms. Bowling's handwriting which reflects "After talking to my agent Mark Gable, I have decided to keep the UMS 1060437 in force." Thereafter, Ms. Bowling again decided to cancel the policy and in correspondence with National States, she related that after reviewing the policy with others, she concluded that she could not afford the coverage. Ms. Bowling, at the time, made no complaint about Respondent having misrepresented the existence of eyeglass or similar coverage, but simply requested a refund. After the company failed to forward a refund to Ms. Bowling, she filed a complaint with Petitioner asserting that she was entitled to a refund, but she made no reference to any claim of misrepresentation of coverage. At hearing, Ms. Bowling acknowledged that she cancelled the policy because the coverage was too expensive. Ms. Bowling made no mention of any misrepresentation by Respondent for coverage for eye glasses, dentures or hearing aids until the interviews by Petitioner's investigators. On or about July 19, 1990, Respondent visited the home of Fred V. Lively of Englewood for the purpose of discussing health insurance. At the time, Mr. Lively had recently purchased an American Traveler's Long-Term care insurance policy effective as of July 13, 1990, and offered custodial nursing care insurance benefits. It is alleged that Respondent sold a nursing home policy to Mr. Lively representing that the policy provided coverage for custodial care and he failed to advise Mr. Lively that the policy called for a three (3) day confinement in a hospital as a condition precedent to the payment of benefits. The policy that Respondent sold to Mr. Lively did not require such a waiting period as it included a rider eliminating the waiting period. This fact was confirmed by William J. O'Connor, the manager of policy services for National States. During July of 1990, Mr. Lively was running a lapse notice on the National States policy previously sold to him by Steve Daggett, a former employee of National States. Initially, Respondent showed the Livelys a Penn States policy and a Transport Life policy for nursing home care, both of which included custodial care. The premiums on both policies approached $5,000 a year and the Livelys determined that they were too expensive. As a result, they were rejected. Thereafter, Respondent explained the National States nursing care policy which provided skilled and intermediate care and the Livelys elected to purchase the nursing care policy. Prior to the Livelys purchase, Respondent reviewed the coverage provided and an outline of coverage was left with the Livelys as well as an outline prepared by Respondent. In addition, based on the pendency of administrative charges in this matter, Respondent had the Livelys acknowledge, in their own handwriting, that "all of the benefits of this outline has been explained to me in full and a signed copy of this outline has been left with me, by my agent, Agent is Mark Gable," followed by the signature of Fred Lively. (Respondent's Exhibits 15 and 16.) Additionally, the Livelys signed two further certifications and a customer survey report prepared by Respondent. This was done in an attempt by Respondent to avert claims generated by other agents by having new clients under certification to indicate that the coverage was explained. Shortly after the Respondent sold the insurance to the Livelys, Steve Daggett, the agent who had sold the Livelys their American Traveler's policy, arrived at the Livelys' home and convinced Mr. Lively that his policy was to have included custodial care; cited that Respondent had failed to reveal that and he (Daggett) related that Respondent had failed to reveal that he (Lively) suffered from diabetes for the purpose of suggesting that Respondent had "clean sheeted" the application which would thereafter result in a denial of coverage if a claim was made. A review of Respondent's application filed with the Lively deposition showed that Respondent revealed the existence of Mr. Lively's diabetes. Sometimes after August 21, 1990, Respondent again visited the Livelys and requested that they reconsider their decision to cancel the policy. Following Respondent's review of the policy and the coverages, Mr. Lively signed a letter which was submitted to National States requesting that the policy be kept in force. National States received the letter and the cancellation of the Lively policies was rescinded. On or about October 6, 1988, Respondent visited the home of Martha Roche for the purpose of soliciting health insurance. As a result of their discussion, Ms. Roche purchased two National States insurance policies. Although Ms. Roche testified that Respondent represented himself as an insurance adjuster for the purposes of gaining entry into her home, the testimony does not comport with the documentary evidence or her practice with respect to letting insurance agents into her home. At times, Ms. Roche has had as many as three insurance agents in her home at one time. Respondent was following up on a lapse notice with respect to prior National States policies which Ms. Roche had purchased from Respondent. At her front door, Respondent showed Ms. Roche his insurance license and she granted him entrance. On November 3, 1988, or less than thirty (30) days after the policy was originally written by Respondent, Respondent returned to Ms. Roche's home after receiving a notice of cancellation with respect to the policy in question. After discussing the matter with her, she decided to save the policy and wrote a handwritten note asking that the coverage be continued. During the November 3, 1988 meeting with Ms. Roche, which was well after the bank draft authorization had been submitted to National States, Ms. Roche indicated that she did not wish to stay on the draft plan in the following year. Respondent explained to Ms. Roche that she should write a letter to National States and to the bank to terminate the bank plan. In addition to this advice, Respondent was aware that National States would advise Ms. Roche of her right to terminate the bank plan and the procedure for termination as the bank plan is a contract between the insured and the bank. Respondent was without authority to terminate the bank plan that Ms. Roche authorized. Ms. Roche requested cancellation of the bank draft as Respondent instructed her, although the bank continued payment until she filed a complaint with Petitioner, complaining that National States insurance had failed to cancel her bank draft plan. Ms. Roche fails to allege in her complaint to Petitioner or otherwise suggest that Respondent used any false pretense to gain entry to her home. Ms. Roche's complaint was that National States did not refund her money after she wrote requesting a refund. Subsequently, a refund was given to Ms. Roche.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner enter a Final Order dismissing the Second Amended Administrative Complaint filed herein in its entirety. DONE and ENTERED this 28th day of February, 1991, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL 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 28th day of February, 1991. COPIES FURNISHED: James A. Bossart, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Martin Errol Rice, Esquire 696 First Avenue North Post Office Box 205 St. Petersburg, Florida 33731 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300
