HOUSE BILL NO. 183
AS AMENDED BY SENATE AMENDMENT NO. 1
AN ACT AMENDING TITLE 18 OF THE DELAWARE CODE PROVIDING FOR THE REGULATION OF DENTAL SERVICE BENEFITS BY DENTAL PLAN ORGANIZATIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Title 18 of the Delaware Code by adding thereto a new chapter entitled "Chapter 38.. Regulation of Dental Service Benefits by Dental Plan Organizations" to read as follows:
This chapter shall be known and may be cited as the 'Dental Plan Organization Act.'
Definitions as used in this chapter:
(1) 'Dental Plan' means any contractual arrangement for dental services provided directly or arranged for or administered directly on a prepaid or postpaid individual or group capitation basis;
(2) 'Dental Plan Organization' means any person who undertakes to provide directly or to arrange for or administer one or more dental plans providing dental services;
(3) 'Dental Services' means services included in the practice of dentistry as defined in Title 24, 51121 of the Delaware Code;
(4) 'Enrollee' means an individual and his dependents who are enrolled in a dental plan organization; and
(5) 'Evidence of Coverage' means any certificate, agreement or contract issued to an enrollee setting out the dental services to which the enrollee is entitled.
§3803. Certificate of Authority Required
(a) No person may establish, operate or administer a dental plan organization, or sell or offer to sell, or solicit offers to purchase, or receive advance or periodic consideration in conjunction with any dental plan organization, utilizing in the aggregate the services of more than one full-time equivalent dentist without obtaining and maintaining a certificate of authority pursuant to requirements of this chapter.
(b) Within ninety (90) days after the effective date of this act, every dental plan organization utilizing in the aggregate the services of more than one full-time equivalent dentist shall submit an application for a certificate of authority to the commissioner. A dental plan organization may continue to operate until the commissioner acts upon the application. If the application is denied, the dental plan organization shall be treated as if its certificate of authority has been revoked.
(c) An application for a certificate of authority shall be in a form prescribed by the commissioner, shall be verified by an officer or authorized representative of the dental plan organization and shall include the following:
(1) All basic organizational documents of the dental plan organization such as the Articles of Incorporation, Article of Association, Partnership Agreement, Trade Name Certificate, Trust Agreement, Shareholder Agreement or other applicable documents and all amendments to those documents;
(2) The bylaws, rules and regulations or similar documents regulating the conduct or the internal affairs of the dental plan organization;
(3) The names, addresses and official positions of the persons who are responsible for the conduct of the affairs of the dental plan organization, including all members of the Board of Directors, Board of Trustees, Executive Committee or other governing board or committee, the principal officers in the case of a corporation and the partners in the case of a partnership or association;
(4) All contracts made between any dentist and the dental plan organization;
(5) All contracts made between any dentist and any person listed in paragraph three (3) of this subsection, any consultant, or any business manager;
(6) A description of the dental plan organization, its dental plan or plans, facilities and personnel;
(7) The form of the evidence of coverage to be issued to the enrollees;
(8) The form of any group contract which is issued to employers, unions, trustees or others;
(9) Financial statements showing the dental plan organization's assets, liabilities and sources of financial support. If the dental plan organization's financial affairs are audited by independent certified public accountants, a copy of the Most recent regular certified financial statement shall satisfy this requirement unless the commissioner determines that additional or more recent financial information is required for the proper administration of this act;
(10) The proposed method of marketing the plan, a financial plan with a three (3) year projection of the initial operating results and a statement of the sources of working capital and any other sources of funding;
(11) A Power of Attorney duly executed by the dental plan organization if not domiciled In this State, appointing the commissioner, the commissioner's successors in office and duly authorized deputies as the true and lawful attorney of the dental plan organization In and for this State, upon whom lawful process and any legal action and proceeding against the dental plan organization on a cause of action arising in this State may be served;
(12) A description of the geographic area or areas to be served;
(13) A description of the procedures and programs to be implemented to achieve an effective dental plan; and
(14) Such other information as the commissoner may require.
(d) The dental plan organization shall pay a fee of $100.00 to the commissioner upon filing an application for a certificate of authority.
(e) Within ten (10) days following any significant modification of information submitted with the application for a certificate of authority, a dental plan organization shall file notice of the modification with the commissioner.
§3804. General Eligibility for a Certificate of Authority
(a) The commissioner shall issue a certificate of authority if he is satisfied that the following conditions arc met:
(1) The persons responsible for conducting the affairs of the dental plan organization are competent and trustworthy and are professionally capable of providing, arranging for or administering the services offered by the plan;
(2) The dental plan organization constitutes an appropriate mechanism to achieve an effective dental plan, as determined by the commissioner;
(3) The dental plan organization has demonstrated the potential to provide dental services in a manner that will assure both availability and accessibility of adequate personnel and facilities;
(4) The dental plan organization has arrangements for an ongoing quality of dental care assurance programs;
(5) The dental plan organization has a procedure to establish and maintain uniform systems of cost accounting and reports and audits that meet the requirements of the commissioner;
(6) The dental plan organization is financially responsible and may reasonably be expected to meet its obligations to enrollees. In making this determination the commissioner shall considers
a. The financial soundness of the dental plan's arrangements for services and the schedule of charges used;
b. Any arrangement with an insurer or medical or dental service corporation for a continuation of coverage in the event of discontinuance of the plan on an indemnity basis through a group vehicle to the end of the period for which premiums were paid to the discontinued dental plan organization; and
c. The sufficiency of an agreement with dentists for the provision of dental services.
(7) A general surplus is maintained as required in §3805 of this act;
(8) A contingent surplus is accumulated and maintained as required in §3807 of this act; and
(9) The condition or methods of operation of the dental plan organization are not such as would render its operation hazardous to its enrollees or the public.
(b) When the commissioner disapproves an application for a certificate of authority he shall notify the dental plan organization in writing of the reasons for the disapproval.
(c) A certificate of authority shall expire one (1) year following the date of issuance or previous renewal. If the dental plan organization remains in compliance with this act and has paid a renewal fee of $100.00 it certificate shall be renewed.
§3805. General and Special Contingent Surplus Requirements
(a) The Commissioner may determine, at his discretion, the amount of a general surplus, if any, that the dental plan organization shall be required to maintain.
(b) A dental plan organization utilizing in the aggregate the servcies of more than ten (10) full-time equiuvalent dentists shall accumulate and maintain a special contingent surplus in excess of its assets over liabilities the rate of two percent (2%) annually of its net contract and certificate income until the surplus totals 550,000.00.
§3806. Bonding Requirement
Any director, officer, employee or partner of a dental plan organization who receives, collects, reimburses or invests monies in connection with the activities of the organization shall be bonded for his fidelity in an amount which shall be determined by the commission.
§3807. Dentist Malpractice Insurance Requirement
Each dentist employed by a dental plan organization shall be insured against professional liability or malpractice by an insurer licensed to conduct business in this State for such minimum amounts as shall be determined by the commissioner.
§3808. Enrollees' Right to Receive Evidence of Coverage
(a) As enrollee shall be entitled to receive evidence of coverage or a certificate indicating specifically the nature and extent of coverage, and evidence of the total amount or percentage of payment, if any, which the enrollee is obligated to pay for dental services. If an individual enrollee obtains coverage through an insurance policy or through a contract issued by a medical or dental service corporation, whether by option or otherwise, the insurer or medical or dental service corporation shall issue the evidence of coverage. Otherwise, the dental plan organization shall issue the evidence of coverage.
(b) No evidence of coverage or amendment thereto shall be issued or delivered to any person until a copy of the form of evidence of coverage or amendment thereto has been filed with the commissioner.
(c) Evidence of coverage shall contain a clear and complete statement if a contract, or a reasonably complete summary if a certificate, of:
(1) The dental services and the insurance and other benefits, if any, to which enrollees are entitled;
(1) Any limitations on the services, kind of services, benefits, or kind of benefits to be provided including any charge, deductible or co-payment features;
(1) Where and in what manner information is available as- to how services may be obtained; and
(1) A clear and understandable description of the dental plan organization's method for resolving enrollees' complaints.
(d) Any subsequent change in the evidence of coverage or the amount or percentage of payment which the enrollee is obligated to pay, shall be evidenced in a separate document issued to the enrollee.
§3809. Schedule of Charges
(a) No schedule of charges for enrollee coverage for dental services, or amendment thereto, may be used by a dental plan organization until a copy of such schedule, or amendment thereto, has been filed with the commissioner. The commissioner may disapprove the schedule of charges at any time if he finds that the charges are excessive, inadequate or unfairly discriminatory. If the commissioner disapproves the schedule of charges he shall notify the dental plan organization within five (5) days of the day of disapproval and specify in the notice, the reason for his disapproval. A hearing shall be granted within twenty (20) days after a request in writing by the filer. It shall be unlawful for any dental plan organization whose schedule of charges has been disapproved to effect any contract or issue any subscription certificate which uses the disapproved schedule of charges until a revised schedule of charges has been filed.
(b) Charges shall be established in accordance with actuarial principles, but charges applicable to an enrollee shall not be individually determined based on the status of his health.
§3810. Examination of Records
The commissioner or his designee may, as often as he may reasonably determine, investigate the business and examine the books, accounts, records and files of every dental plan organization.
For that purpose the commissioner or his designee shall have reasonably free access to the offices and places of business, books, accounts, papers, records and files of all dental plan organizations. A dental plan organization shall keep and use in its business such books, accounts and records as will enable the commissioner to determine whether the dental plan organization is complying with the provisions of this act and with the rules and regulations promulgated pursuant to it. A dental plan organization shall preserve its books, accounts and records for at least three (3) years; except that preservation by photographic reproduction or records in photographic form shall constitute compliance with this act.
(a) For the purpose of the examination, the commissioner may, within the limits of funds appropriated for such purpose, contract with such persons as he may deem advisable to conduct the same or assist therein.
(b) The expenses incurred in making any examination pursuant to this section up to $1,000.00 annually, shall be assessed against and paid by the dental plan organization so examined. Upon written notice by the commissioner of the total amount of an assessment, a dental plan organization shall become liable for and shall pay the assessment to the commissioner.
§3811. Enrollees' Complaint System
(a) A dental plan organization shall establish and maintain a complaint system to provide reasonable procedures for the resolution of written complaints initiated by enrollees concerning dental plan services. The dental plan organization shall maintain records of all written complaints initiated by enrollees.
(b) The commissioner may examine the complaint system and if he determines that the system is not adequate he may require a revision of the complaint system.
§3812. Annual Report to Commissioner
(a) Every dental plan organization annually on or before March 1 shall file with the commissioner a report covering its activities for the preceding calendar year.
(b) The reports shall be on forms prescribed by the commissioner and shall includes
(1) A financial statement of the dental plan organization, including its balance sheet, receipts and disbursements for the preceding year certified by a certified public accountant;
(2) Any significant modification of information submitted with the application for a certificate of authority;
(3) The number of persons who became enrollees during the year, the number of enrollees as of the end of the year and the number of enrollments terminated during the year;
(4) A description of the enrollee complaint system Including the procedures of the complaint system, the total number of written complaints handled through the system, a summary of causes underlying the complaints filed, and the number, amount and disposition of malpractice claims settled during the year by the dental plan organization and any of the dentists used by it and
(5) Any other information relating to the performance of the dental plan organization as required by the commissioner.
§3813. Maximum Portion of Income to be Used for Expenses
A dental plan organization shall not use more than thirty percent (30%) of Its gross contract and certificate income in the first year of operation, twenty-five percent (25%) in the second year of operation and twenty percent (20%) in any subsequent year for general expenses, acquisition expenses and miscellaneous taxes, licenses and fees.
§3814. Untrue or Misleading Advertising Prohibited
(a) No dental plan organization, or representative thereof, may cause or knowingly permit the use of advertising which is untrue or misleading, solicitation which is untrue or misleading, or any form of evidence of coverage which is deceptive. For purposes of this act:
(1) A statement or item of information shall be deemed to be untrue if it does not conform to fact in any respect which Is or may be significant to an enrollee of, or person considering enrollment in, a dental plan;
(2) A statement or item of information shall be deemed to be misleading, whether or not it may be literally untrue, if, in the total context in which the statement is made of the item of information is communicated, the statement or item of information may be reasonably understood by a person who does not possess special knowledge regarding dental plan coverage, as indicating any benefit or advantage or the absence of any exclusion, limitation, or disadvantage of possible significiance to an enrollee of, or person considering enrollment in a dental plan, if the benefit or advantage or absence of exclusion, limitation, or disadvantage does not in fact exist; and
(3) Evidence of coverage shall be deemed to be deceptive ff the evidence of coverage taken as a whole, and with consideration given to typography, format and language, may cause a person who does not possess special knowledge regarding dental plans and evidences of coverage therefor, to expect benefits, services, charges, or other advantages which the evidence of coverage does not provide or which the dental plan organization issuing the evidence of coverage does not regularly make available for enrollees covered under such evidence of coverage.
(b) No dental plan organization, unless licensed as an insurer may use In its name, evidence of coverage or literature any of the words 'insurance,' 'assurance,' casualty,"surety,' 'mutual' or any other words descriptive of the insurance, casualty, or surety business or deceptively similar to the name or description of any insurer licensed to do business in this State.
(e) The provisions of this subsection shall be enforced by the Division of Consumer Affairs and, where applicable, the commissioner. Nothing in this chapter shall limit the powers of the attorney general and the procedures with respect to consumer fraud.
§3815. Suspension or Revocation of Certificate of Authority
(a) The commissioner may suspend or revoke any certificate of authority issued to a dental plan organization pursuant to this chapter if he finds that any of the following conditions exist:
(1) The dental plan organization is operating in a manner significantly contrary to that described in §3803 of this chapter;
(2) The dental plan organization issues an evidence of coverage which does not comply with the requirements of §3808 of this chapter;
(3) The dental plan organization does not provide or arrange for an effective dental plan as determined by the commissioner;
(4) The dental plan organization can no longer be expected to meet its obligations to enrollees;
(5) The dental plan organization, or any authorized person on its behalf, has advertised or merchandised its services in an untrue or misleading manner;
(6) The dental plan organization has failed to comply with this chapter or any rules and regulations promulgated thereunder.
(b) When the commissioner has cause to believe that grounds for the suspension or revocation of a certificate of authority exist, he shall notify the dental plan organization in writing, specifically stating the grounds for suspension or revocation. A hearing on the matter shall be granted by the commissioner within twenty (20) days after a request in writing by the dental plan organization. After the hearing,or upon failure of the dental plan organization to appear at the hearing, the commissioner shall take action on his findings.
(c) If the commissioner suspends the certificate of authority, the dental plan organization shall not accept any additional enrollees or engage in any advertising or solicitation during the period of the suspension.
(d) If the commissioner revokes the certificate of authority, the dental plan organization shall proceed to dissolve its structure immediately following the effective date of the order of revocation, and shall conduct no further business except as may be essential to the orderly conclusion of the affairs of the dental plan organization. The commissioner by written order, however, may permit such further operation of the dental plan organization as he finds to be in the best interest of enrollees to the end that enrollees shall be afforded the greatest practical opportunity to obtain continuing dental plan coverage.
(e) Notwithstanding the provisions of subsections (c) and (d) of this section, a dental plan organization which has had its certificate of authority suspended or revoked, or has suffered an adverse decision by the commissioner, shall be entitled to appeal this decision. The appeal shall be granted as a matter of right and shall be taken to the Court of Chancery in any County in this State.
§3816. Cease and Desist Order
(a) The commissioner may issue an order directing a dental plan organization or a representative of a dental plan organization to cease and desist from engaging in any act or practice in violation of the provisions of this act.
(b) Within twenty (20) days after service of the order of cease and desist, the respondent may request a hearing on a question of whether acts or practices in violation of this act have occurred.
§3817. Civil Penalty for Violations of this Chapter
Any dental plan organization which violates any provisions of this chapter, or neglects, fails or refuses to comply with any of the requirements of this chapter, except the failure to file an annual report and the failure to reply in writing to inquiries of the commissioner, shall be liable for a civil penalty of no more than 81,000.00 for each violations.
§3818. Power of the Commissioner to Enjoin Dental Plan Organizations from Transacting Business
Whenever any dental plan organization shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, or whenever the commissioner shall ascertain, as a result of examination as authorized by this chapter, or in any other manner, that the dental plan organization is exceeding its powers or violating the law or that its condition or methods of business may render the continuance of its operations hazardous to its enrollees or the public, or that it's assets are less than its liabilities, the commissioner may institute an action in the Court of Chancery to enjoin it from the transaction of any further business, or from the transfer or disposal of its property in any manner whatsoever. The Court may proceed in the action in a summary manner or otherwise. It may grant injunctive relief and appoint a receiver, with power to sue for, collect, receive and take into his possession all the goods and chattels, rights and credits, monies and effects, lands and tenament, books, papers, choses in action, bills, notes and property of every description belonging to the dental plan organization and sell and convey and assign the same, and authorize the purchase of continuing coverage for enrollees utilizing the remaining assets, and hold and dispose of the proceeds thereof. The Court may cause the receiver to continue the existing operation of the organization, under Court supervision, until the next anniversary of the subscription certificates and contracts then In force. The dental plan organization may be deemed in solvent whenever it is presently or prospectively unable to fulfill its outstanding contracts and to maintain the surpluses required pursuant to this chapter.
§3819. Applications and Reports are Public Information
Applications, filings and reports required under this chapter except contracts referred to in §3803 (c) (4) and §3803 (c) (5) of this chapter shall be treated as public documents and shall not be considered confidential.
§3820. Data Pertaining to Diagnosis, or Treatment of Enrollees Shall be Confidential
Data or Information pertaining to the diagnosis, treatment or health of any enrollee obtained by the dental plan organization from the enrollee or any dentist shall be confidential and shall not be disclosed to any person except to the extent that it may be necessary to carry out the purposes of this act, or upon the express consent of the enrollee or pursuant to statute or court order for the production of evidence of the discovery thereof, or in the event of claim or litigation between the enrollee and the dental plan organization wherein the data or information is pertinent. A dental plan organization shall be entitled to claim any statutory privileges against such disclosure which the dentist who furnished the information to the dental plan organization is entitled to claim.
§3821. Persons Exempt from Provisions of Chapter
Except with respect to the dental plan organization activities of a duly organized and authorized insurer or medical or dental service corporation, which activities are authorized and regulated pursuant to this chapter this chapter shall not apply to a person engaged as indemnitor or contractor in the business of life Insurance, health insurance or of annuity, nor shall it apply to a medical serivce corporation or dental service corporation. This Chapter shall not apply to the dental plan activities of a duly authorized health service corporation.
§3822. Commissioner May Promulgate Necessary Rules and Regulations
The commissioner may promulgate such rules and regulations as he may deem necessary to effectuate the purposes of this chapter.
§3823. Severability of Sections if Held Invalid
If any section, term or provision of this chapter shall be adjudged Invalid for any reason, such judgment shall not effect, impair or invalidate any other section, term or provison of this chapter, and the remaining sections, terms and provisions shall be and remain in full force and effect."
Section 2. This Act shall take effect ninety (90) days after the date of enactment.
Approved June 25, 1981.