B. If the carrier treats the group contract as continuing in force after the end of the grace period by recognizing claims incurred after the end of the grace period, the carrier shall be liable for valid claims for losses beginning prior to the effective date of written notice of discontinuance to the group contract holder responsible for making premium payments to the carrier. The effective date of discontinuance shall not be prior to midnight at the end of the third scheduled work day after the date upon which the notice is delivered to the last known address of the policyholder.

[11/1/98; Recompiled 11/30/01]