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Health Plans Request Hearing on Penalty Rule Repeal

Health Plans Request Hearing on Penalty Rule Repeal

America’s Health Insurance Plans (AHIP) has requested a hearing on the Office of Insurance Regulation’s proposed repeal of administrative rule 69O-142.011, sometimes called the “penalty rule.”  The rule classifies many types of violations of the insurance codes into categories, ranging from the most severe to the relatively minor.  The rule then sets forth ranges of potential penalties based on the severity of the violations and other factors.

The Office of Insurance Regulation seeks to repeal the rule because it believes the rule is outdated.  Statutes setting forth insurer penalties have been amended since the rule was adopted, generally increasing the potential fines.  However, some insurers are concerned with the proposed repeal because it would eliminate useful provisions of the rule.  For example, the rule specifies that insurers may identify and correct errors on their own without incurring penalties, which encourages self-evaluation and corrective measures by insurers.  The rule also identifies mitigating factors that insurers should employ to lessen the impact of potential violations, and as a result to reduce the applicable fines. 

The hearing will take place August 16, 2012 in Tallahassee.