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DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,
INSURANCE DIVISION

 

DIVISION 75

THIRD PARTY ADMINISTRATORS

836-075-0000

Third Party Administrators; License Application; Required Information

An applicant for a third party administrator license shall provide the following electronically in accordance with directions set forth on the Insurance Division website of the Department of Consumer and Business Services at www.insurance.oregon.gov:

(1) Information relating to the organizational form of the applicant as follows:

(a) The name under which the applicant will transact business as a third party administrator;

(b) The principal place of business at which the applicant will transact business as a third party administrator, including the street and mailing addresses and telephone number;

(c) The organizational form of the applicant (corporation, partnership, sole proprietorship);

(d) All assumed business names and other names under which the applicant will transact business as a third party administrator;

(e) Whether the applicant has ever had a judgment entered against the applicant for fraud, and whether any insurer, insurance producer or other person claims the applicant to be indebted to it, together with the details of any such indebtedness;

(f) Whether any license of the applicant to act in any occupational or professional capacity has ever been refused, revoked or suspended in this or any other state, and whether the applicant has otherwise ever been the subject of a complaint to a professional licensing board or agency. If the applicant's answer is affirmative in any respect, the applicant must also provide the name and address of the licensing board or agency, the date of the complaint or the action taken against the license, a description of the nature of the complaint or the reason for the action taken against the license, and, with regard to a complaint, a description of the licensing board or agency's disposition of the complaint;

(g) Whether the applicant has ever filed for bankruptcy or been adjudged a bankrupt;

(h) All states and provinces of Canada in which the applicant currently holds a license or certificate of authority to transact business as a third party administrator, or has held such a license or certificate within ten years prior to the date of the application;

(i) The names, addresses, official positions and professional qualifications of the individuals who are responsible for the conduct of affairs of the administrator, 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 or the partners or members in the case of a partnership or association; shareholders holding directly or indirectly ten percent or more of the voting securities of the administrator; and any other person who exercises control or influence over the affairs of the administrator;

(j) The name and telephone number of a contact person who is knowledgeable about preparation of the annual financial statements or reports required under section (4) of this rule.

(2) An appointment of the Director, on the application, as agent for service of process, if the third party administrator will be a nonresident licensee.

(3) Biographical information for each owner, partner, director and officer of the applicant, on the Biographical Affidavit form designed by the National Association of Insurance Commissioners.

(4) The following documents, which must accompany the application under section (1) of this rule:

(a) All basic organizational documents of the applicant, including any articles of incorporation, articles of association, partnership agreement, trade name certificate, trust agreement, share-holder agreement and other applicable documents and all amendments to such documents;

(b) The bylaws, rules, regulations or similar documents regulating the internal affairs of the applicant;

(c) Annual financial statements or reports for the two most recent years, which prove that the applicant is solvent, and such information as the Director may require in order to review the current financial condition of the applicant, except as provided in subsection (d) of this section;

(d) If the applicant is a corporation that is newly formed for the purpose of transacting business as a third party administrator, the financial statements or reports of each incorporator, shareholder and officer for the two most recent years, a current balance sheet for the corporation and such information as the Director may require in order to review the current financial condition of the applicant;

(e) A statement describing the business plan, including information on staffing levels and activities proposed in this state and nationwide. The plan must provide details setting forth the applicant's capability for providing a sufficient number of experienced and qualified personnel in the areas of claims processing, recordkeeping and underwriting;

(f) Evidence that the applicant has a fiduciary account established in a federally or state-insured financial institution. An applicant that is an insurance producer licensed under ORS Chapter 744 need not comply with this subsection if the applicant is in compliance withers 744.225 with respect to the premiums, charges and return premiums referred to in 744.730;

(g) Evidence of insurance coverage required by ORS 744.726;

(h) If the applicant will be managing the solicitation of new or renewal business, proof that it employs or has contracted with an insurance producer licensed by the Director for solicitation and taking of applications. Any applicant that intends directly to solicit insurance contracts or to otherwise act as an insurance producer must provide proof that it has a license as an insurance producer in this state.

Stat. Auth.: ORS 731.244, 744.303, 744.635, 744.704, 744.706, 744.712, 744.726
Stats. Implemented: ORS 744.706
Hist.: ID 1-1992, f. & cert. ef. 1-27-92; ID 8-2005, f. 5-18-05, cert. ef. 8-1-05; ID 19-2006, f. & cert. ef. 9-26-06; ID 12-2012(Temp), f. 6-19-12, cert. ef. 8-1-12 thru 1-25-12; ID 18-2012, f. & cert. ef. 11-7-12

836-075-0010

Completion of Application

The Director may reject a third party administrator license application if it has not been completed by the 90th day after its filing.

Stat. Auth.: ORS 731.244, ORS 744.303, ORS 744.635, ORS 744.704, ORS 744.706, ORS 744.712 & ORS 744.726
Stats. Implemented: ORS 744.706
Hist.: ID 1-1992, f. & cert. ef. 1-27-92

836-075-0020

Amendment of License Application Information

A third party administrator shall notify the Director in writing when the third party administrator changes its principal place of business. The notice shall include the following:

(1) The new street address, including city and state.

(2) The new mailing address, if different.

(3) The new telephone number.

Stat. Auth.: ORS 731.244, ORS 744.303, ORS 744.635, ORS 744.704, ORS 744.706, ORS 744.712 & ORS 744.726
Stats. Implemented: ORS 744.006, ORS 744.716 & ORS 744.724
Hist.: ID 1-1992, f. & cert. ef. 1-27-92

836-075-0030

Third Party Administrator License Renewal

(1) A third party administrator applying for renewal of the license must do the following, as applicable:

(a) Not later than the license expiration date, submit electronically a completed renewal application in accordance with directions set forth on the Insurance Division website of the Department of Consumer and Business Services at www.insurance.oregon.gov.

(b) Submit the renewal fee.

(2) The Director may allow a third party administrator not more than 30 days to submit missing information on the renewal application form, if the fees have been submitted on or before the expiration date.

(3) The Director may require on the renewal application any information required with regard to an original application for a license.

Stat. Auth.: ORS 731.244, 744.303, 744.635, 744.704, 744.706, 744.712 & 744.726
Stats. Implemented: ORS 744.712(3)
Hist.: ID 1-1992, f. & cert. ef. 1-27-92; ID 12-2012(Temp), f. 6-19-12, cert. ef. 8-1-12 thru 1-25-12; ID 18-2012, f. & cert. ef. 11-7-12

836-075-0040

Annual Report Requirements

(1) A third party administrator shall include in the annual report required in ORS 744.738 the balance sheet and income statement of the third party administrator for the immediately preceding calendar year. The balance sheet and income statement must each be verified by two of its officers, if the third party administrator is a corporation, or by two of its partners, if the third party administrator is a partnership. Each annual report must be filed not later than March 1 of each year.

(2) The first annual report required under this rule shall be filed not later than March 1, 1993.

(3) If the annual report of a third party administrator is for a year other than a calendar year, the third party administrator may file the following instead of an annual report on a calendar year basis:

(a) The annual report of the third party administrator that is most current as of March l; and

(b) The interim financial statement most current as of March 1.

Stat. Auth.: ORS 731.244, ORS 744.303, ORS 744.635, ORS 744.704, ORS 744.706, ORS 744.712 & ORS 744.726
Stats. Implemented: ORS 744.738
Hist.: ID 1-1992, f. & cert. ef. 1-27-92

836-075-0045

Format and Instructions for Report Required by ORS 743.818

(1) As used in this rule:

(a) “Covered lives” means Oregon residents who are employees, dependents of employees, or individuals otherwise eligible for an individual, student health, association, group or self-insured group health benefit plan or other benefit plan for which reporting is required and who are enrolled for coverage under the terms of the plan as of the close of the calendar quarter.

(b) “Third party administrator” means a third party administrator licensed under ORS 744.702.

(c) “Zip code” means the 5-digit code:

(A) Of the employee or individual policyholder’s Oregon residence;

(B) Of an Oregon employer group covered by a stop loss policy; or

(C) In circumstances for which an Oregon zip code does not exist, the placeholder code established by the Director of the Department of Consumer and Business Services and set forth on the website of the Insurance Division of the Department of Consumer and Business Services at http://www.insurance.oregon.gov.

(2) At quarterly intervals covering each year, a third party administrator must submit information pertaining to covered lives through the reporting system of the Insurance Division in the format established by the director and in accordance with instructions set forth on the website of the Insurance Division at http://www.insurance.oregon.gov. The third party administrator must submit the required information on or before:

(a) May 1 for the first calendar quarter.

(b) August 1 for the second calendar quarter.

(c) November 1 for the third calendar quarter.

(d) February 1 for the fourth calendar quarter.

(3) A third party administrator claiming exemption from reporting must request an exemption through the reporting system of the Insurance Division on or before the due date for the calendar quarter for which reporting is first due.

(4) A third party administrator submitting information pertaining to covered lives or requesting an exemption from reporting is subject to the electronic reporting or response requirements of OAR 836-011-0005.

Stat. Auth.: ORS 731.244, 743.745 & 743.818
Stats. Implemented: ORS 743.818
Hist.: ID 12-2013, f. 12-31-13, cert. ef. 1-1-14

836-075-0050

Exemptions from Third Party Administrator License Requirements

(1) This rule is adopted under the authority of ORS 731.244 and 744.704 for the purpose of establishing exemptions under and implementing ORS 744.704(1)(p). The persons described in this rule are exempt from the licensing requirement for third party administrators in ORS 744.702 and from all other provisions of ORS 744.700 to 744.740.

(2) The Department of Human Resources and any organization contracting with the Department of Human Resources for that portion of its business covered under a contract with the Department are exempt.

(3) A health care provider that contracts with an insurer to provide health care services to insurance plan enrollees and is compensated for such services on a prepaid, capitated or similar basis is exempt when the insurer and the provider operate under a written agreement that includes all of the conditions specified in this section. For the purpose of this section, a "health care provider" or "provider" means a licensed health care practitioner or a group of such practitioners, a licensed health care facility or group of such facilities and any similar health care organization. The conditions required to be included in the agreement are as follows:

(a) The primary contractual responsibility of the provider is the delivery of health care services to insurance plan enrollees and the administrative duties performed by the provider for the insurer are in support of the delivery of health care services;

(b) The administrative duties performed by the provider for the insurer are limited to the adjusting or settling of claims for insurance plan enrollees and the insurer retains responsibility for providing competent administration of its programs;

(c) The insurer performs all functions that pertain to soliciting and effecting coverage, underwriting, collecting premiums, determining plan benefits, determining premium rates and securing any reinsurance for the insurer's obligations;

(d) The rules pertaining to the adjusting or settling of claims are provided in writing by the insurer to the provider;

(e) The insurer at least annually conducts a review of the claims-related activities performed by the provider for the insurer to ensure that those operations are in compliance with subsection (b) of this section;

(f) The provider allows the insurer access to the administrative books and records of the provider that document the claims-related activities performed for the insurer for the purpose of assuring the proper administration of claims, and the insurer agrees to make those books and records available for examination by the Director in accordance with ORS 731.300, 731.304 and 731.308;

(g) The provider allows the insurer access to the relevant financial books and records of the provider that will enable the insurer to determine the financial ability of the provider to fulfill its responsibilities under the agreement, and both parties assure that confidentiality of financial and patient records is maintained in accordance with applicable federal and state requirements;

(h) The insurer makes certain that the administrative books and records of the provider that document the claims-related activities performed for the insurer are maintained by the provider in accordance with prudent standards of insurance record-keeping and that such books and records are maintained by the provider for a period of not less than five years from the date of their creation; and

(i) The conditions applicable to the provider in subsections (f) and (h) of this section must not be terminated upon a termination of the agreement, whether by rescission or otherwise.

Stat. Auth.: ORS 731.244 & ORS 744.304
Stats. Implemented: ORS 744.704
Hist.: ID 1-1992, f. & cert. ef. 1-27-92; ID 8-1996, f. & cert. ef. 5-29-96

836-075-0060

ERISA Exemption Registration

(1) A person who is required by ORS 744.714 to register with the Director annually, verifying the person's status as qualifying under ORS 744.704(1)(L) for the exemption from the licensing requirement for third party administrators in ORS 744.702 and from all other provisions of 744.700 to 744.740, shall register with the Director annually. In the registration, the person shall certify that the person qualifies for the exemption because of the person's status and shall inform the Director:

(a) Of the person's name, business address, mailing address if different from the business address, and telephone number; and

(b) Whether the person is acting solely as an administrator of one or more single employers, union-bargaining (Taft-Hartley) plans, rural electric cooperatives or other bona fide employer benefit plans established by an employer or an employee organization, or both, for which the Insurance Code is preempted pursuant to the Employee Retirement Income Security Act of 1974.

(2) If the Director determines that a person does not qualify for the exemption under ORS 744.704(1)(L), the person must obtain the license required under ORS 744.702 in order to transact business as a third party administrator.

[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]

Stat. Auth.: ORS 731.244, ORS 744.303, ORS 744.635, ORS 744.704, ORS 744.706, ORS 744.712 & ORS 744.726
Stats. Implemented: ORS 744.704(1)(l) & ORS 744.714
Hist.: ID 1-1992, f. & cert. ef. 1-27-92

836-075-0070

Errors and Omissions Insurance; Third Party Administrators

(1) The amount of insurance for which a third party administrator as described in ORS 744.702 must maintain a certificate of errors and omissions insurance with the Director as required by 744.726 is $500,000 claims made or per occurrence.

(2) A third party administrator may obtain insurance required by ORS 744.726 from an insurer other than an authorized insurer if the insurer is not an affiliate, as that term is defined in 744.700, of the third party administrator, and if:

(a) The insurance is procured by an Oregon surplus lines licensee from an insurer that is an eligible surplus lines insurer pursuant to the requirements of ORS 735.400 to 735.495;

(b) The insurer is an authorized insurer in the state of domicile of the third party administrator or license applicant; or

(c) The insurance is procured from a surplus lines insurer that is eligible in the state of domicile of the third party administrator or license applicant, if all requirements of this subsection are satisfied. The insurance for purposes of this subsection must be confirmed by the signature of an Oregon surplus lines licensee who also affirms in writing that the Oregon surplus lines licensee will be the agent for service of process for any action or proceeding involving the third party administrator and an Oregon resident.

Stat. Auth.: ORS 731.244, 744.303, 744.635, 744.704, 744.706, 744.712 & 744.726
Stats. Implemented: ORS 744.726
Hist.: ID 1-1992, f. & cert. ef. 1-27-92; ID 8-2005, f. 5-18-05, cert. ef. 8-1-05

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