1. (1) Purpose. The purpose of this rule is to establish penalty categories that specify varying ranges of monetary fines for willful and nonwillful violations of applicable provisions of Chapter 641, Parts II and III, F.S., or rules promulgated thereunder.
2. (2) Scope. This rule developed by the Agency for Health Care Administration governs the issuance of penalties against health maintenance organizations and prepaid health clinics pursuant to the authority set forth in Chapter 641, F.S. It applies to all violations of the provisions of Chapter 641, Parts II and III, F.S., or rules promulgated thereunder.

3. (3) Definitions. All terms defined in the Health Maintenance Organization Act, Chapter 641, F.S., which are used in this rule shall have the same meaning as in the act:

   1. (a) “Action” means an event or events leading to the commission of a violation.
   2. (b) “Harm” means any physical or economic damages to a subscriber, member, covered person, or provider.
   3. (c) “HMO” means a health maintenance organization as defined in Section 641.19(13), F.S., and licensed pursuant to the provisions of Chapter 641, F.S.
   4. (d) “Investigation”, “examination”, “inspection” means any official Agency review, analysis, inquiry, or research into referrals, complaints, or inquiries to determine the existence of a violation pursuant to Section 641.515, F.S.
   5. (e) “Knowing and Willful” means any act or omission, which is committed intentionally as opposed to accidentally and which is committed with knowledge of the act’s unlawfulness or with reckless disregard as to the unlawfulness of the act.
   6. (f) “Mitigating Factors” means a condition that moderates, lessens, or alleviates a determination of penalties for violations not listed in this rule.
   7. (g) “PHC” means a prepaid health clinic as defined in Section 641.02(5), F.S., and licensed pursuant to the provisions of Chapter 641, F.S.
   8. (h) “Provider” means any physician, hospital, or other institution, organization, or person that furnishes health care services and is licensed or otherwise authorized to practice in the state.
   9. (i) “Repeat Violations” means a second or subsequent offense of any given violation under this rule within the preceding four years.
   10. (j) “Subscriber” means an individual who has contracted, or on whose behalf a contract has been entered into, with a HMO or PHC for health care services.
   11. (k) “Violation” means any finding by the Agency of noncompliance by a HMO or PHC with any applicable provisions of Chapter 641, Parts II and III, rules or orders of the Agency governing HMOs or PHCs.

4. (4) General Provisions:

   1. (a) Rule and Statutory Violations Included. This rule applies whether the violation is of an applicable statute or Agency rule, or an order implementing such a statute or rule.
   2. (b) Relationship to Other Rules. The provisions of this rule shall be subordinated in the event that any other rule more specifically addresses a particular violation or violations.
   3. (c) Other Licensees. The imposition of a penalty upon any HMO or PHC in accordance with this rule shall in no way be interpreted as barring the imposition of a penalty upon any agent, or other licensee in connection with the same conduct.

5. (5) Aggravating Factors. The following aggravating factors are considered in determining penalties for violations not listed in this rule, and, as to listed violations, the placement of the penalty within the range specified. The factors are not necessarily listed in order of importance:

   1. (a) Willfulness and knowledge of the violation.
   2. (b) Actual harm or damage to any recipient, subscriber, claimant, applicant, or other person or entity caused by the violation, as determined by the Agency’s examination, inspection, or investigation.
   3. (c) Degree of harm to which any recipient, subscriber, claimant, applicant, or other person or entity was exposed by the violation, as determined by the Agency’s examination, inspection, or investigation.
   4. (d) Whether the HMO or PHC reasonably should have known of the action’s unlawfulness.
   5. (e) Financial gain or loss to the HMO or PHC or its affiliates from the violation.
   6. (f) Whether the violation is a repeat violation.
   7. (g) The number of occurrences of a violation found during an examination, inspection, or investigation.

6. (6) Mitigating Factors. Examples of mitigating factors are as follows:

   1. (a) Whether corrective activities were actually and substantially initiated (not just planned) and implemented by the HMO or PHC before the violation was noted by or brought to the attention of the Agency and before the HMO or PHC was made aware that the Agency was investigating the alleged violation. Such corrective activities must be implemented to assure that the violation does not recur and may include the following: personnel changes, reorganization or discipline, and making any injured party whole as to harm suffered in relation to the violation.
   2. (b) Destruction of records by fire, hurricane, or other natural disaster.
   3. (c) Sudden unexpected death or incapacitation of key personnel.
   4. (d) Error ratios of less than 5%.

7. (7) Penalty Categories and Fines Assessed. Violations are divided into three categories. Category I violations are the most serious and Category III violations are the least serious. Category I violations are violations that will cause harm; Category II violations are violations that have the potential to cause harm; and, Category III violations are violations that would cause no harm. The Agency will use the factors in subsections (5) and (6) above, and any similar or analogous violation listed in this rule to determine, within the penalty ranges specified below, the fine for each violation within a category.

   1. (a) Category I. When a fine is imposed within this category for a knowing and willful violation, the amount shall not exceed $20,000 per violation. Additionally, fines for knowing and willful violations may not exceed an aggregate amount of $250,000 for all such violations arising out of the same action. When a fine is imposed for a nonwillful violation within this category, the fine shall not exceed $2,500 per violation. Additionally fines for non-willful violations may not exceed an aggregate amount of $25,000 for all such violations arising out of the same action.

      1. Violation by the HMO or PHC of any lawful rule or order of the Agency.

      2. Failure by the HMO or PHC to acquire a health care provider certificate from the Agency pursuant to Section 641.49, F.S.

      3. Failure by the HMO or PHC to notify the Agency at least 60 days prior to the date it plans to begin providing health care services in a new geographic area pursuant to Section 641.495, F.S.

      4. Failure of the HMO or PHC to provide health care services to subscribers as required by Sections 641.495 and 641.51, F.S.

      5. Failure by the HMO or PHC to provide referrals to out-of-network specially qualified providers or for ongoing specialty care to subscribers pursuant to Sections 641.51(6) and (7), F.S.

      6. Failure by the HMO or PHC to allow subscribers access to a grievance process for the purpose of addressing complaints and grievances pursuant to Section 641.511, F.S.

      7. Failure by the HMO or PHC to notify subscribers of appeal rights under the plan’s grievance process pursuant to Section 641.511(10), F.S.

      8. Failure of the HMO or PHC to provide or otherwise cover emergency services and care to subscribers pursuant to Section 641.513, F.S.

   2. (b) Category II. If the violation is knowing and willful, the fine assessed shall not exceed $10,000 per violation. If the violation is nonwillful, the fine assessed shall not exceed $1,000 per violation.

      1. Failure by the HMO or PHC to provide to the subscriber the right to a second medical opinion pursuant to Section 641.51(5), F.S.

      2. Failure by the HMO or PHC to take appropriate action as prescribed by the written policies and procedures of the HMO or PHC whenever inappropriate or substandard services have been provided or services that should have been provided have not been provided as determined under the quality assurance program pursuant to Section 641.51, F.S.

      3. Failure by the HMO or PHC to investigate and analyze as prescribed by the written policies and procedures of the HMO or PHC, the frequency and causes of adverse incidents causing injury to patients pursuant to Section 641.55, F.S.

      4. Failure by the HMO or PHC to analyze patient grievances relating to patient care and quality of medical services pursuant to Section 641.55, F.S.

      5. Failure by the HMO or PHC to pay a claim pursuant to Section 641.513, F.S. Assignment by the HMO or PHC of claim processing to a third party administrator or other entity does not relieve the managed care plan of its responsibilities to pay claims. Assignment by the HMO or PHC of payment to a third party administrator or other entity does not relieve the managed care plan of its responsibilities to pay claims.

   3. (c) Category III. If the violation is knowing and willful, the fine assessed shall not exceed $2,500 per violation. If the violation is nonwillful, the fine assessed shall not exceed $500 per violation.

      1. Failure by the HMO or PHC to timely and accurately submit data to the Agency pursuant to Section 641.51(9), F.S. and Rule 59B-13.001, F.A.C. The penalty period will begin on the first day following the due date at $200 a day for purposes of penalty assessments.

      2. Failure by the HMO or PHC to resolve a grievance within the statutory requirements pursuant to Section 641.511, F.S.

      3. Failure by the HMO or PHC to file with the Agency a copy of the quarterly grievance report pursuant to Section 641.511(7), F.S. The penalty period will begin on the first day following the due date at $200 a day for purposes of penalty assessments.

      4. Failure by the HMO or PHC to report to the Agency any adverse or untoward incident within the mandated time frames pursuant to Section 641.55(6), F.S. In addition to any penalty imposed, the Agency may impose an administrative fine not to exceed $5,000 per violation pursuant to Section 641.55(7), F.S.

      5. Failure by the HMO or PHC to timely pay the regulatory assessment as required by Section 641.58, F.S., by April 1. The penalty period will begin on the first day following the due date and continue until such time as the assessment is received by the Agency. During such penalty period the HMO or PHC shall be penalized at a rate of $200 per day for each calendar day during the penalty period. The failure to timely pay will be classified as non-willful for the first 30 days that payment has not been received. Willful violations will be penalized at the rate of $500 a day unless the HMO or PHC can show mitigating factors as defined under paragraph 59A-12.0073(3)(f), F.A.C., and listed in subsection 59A-12.0073(6), F.A.C.

Rulemaking Authority 641.56 FS. Law Implemented 641.52(5) FS. History–New 12-9-03, Amended 5-11-04.