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2. Summary Description of Start-up. Provide as Exhibit C-2 a concise description of applicant's start-up program and its assumptions, including such program's operating, capitalization and financial assumptions. Indicate applicant's projected date for the beginning of operations, and discuss the factors which require such date.
D. Organization and Affiliated Persons.
1. Type of Organization.
a. Corporation. If applicant is a corporation, attach as Exhibits D-1-a-I, D-1- a- ii, D-1-a-iii and D-1-a-iv respectively, the Articles of Incorporation, Bylaws, the Corporation Information Form (Form WCHCPO 1-A) and any other organizational documents or agreements relating to the internal affairs of the applicant.
b. Partnership. If applicant is a partnership, attach as Exhibits D-1-b-I, D-1- b- ii and D-1-b-iii respectively, the Partnership Agreement, the Partnership Information Form (Form WCHCPO 1-B) and any other organizational documents or agreements relating to the internal affairs of the applicant.
c. Sole Proprietor. If applicant is a sole proprietorship, attach as Exhibit D-1-c the Sole Proprietorship Information Form. (Form WCHCPO 1-C)
d. Other Organization. If applicant is any other type of organization, attach as Exhibit D-1-d Articles of Association, trust agreement, or any other applicable documents, and any other organizational documents or agreements relating to the conduct of the internal affairs of the applicant, and attach as Exhibit D-1-d-ii the Information Form for other than Corporations, Partnerships, and Sole Proprietorships. (Form WCHCPO 1-D)
e. Individual Information Sheet. Attach as Exhibit D-1-e, an Individual Information Sheet (Form WCHCPO 2) for each natural person named in any exhibit in Item D-1.
2. Contracts with Affiliated Persons, Principal Creditors and Providers of Administrative Services.
a. Persons to Be Identified. Attach as Exhibit D-2-a, a list identifying each individual or entity who is a party to a contract with applicant, if such contract is one for the provision of administrative services to the applicant or any such party is an Affiliated Person or Principal Creditor (Rule 9771.60 ( c) and (j)) of the applicant. As to each such person, show the following information in columnar form:
(i) The names in alphabetical order.
(ii) The exhibit and page number of the contract (including loans and other obligations).
(iii) The type of contract or loan.
(iv) Each relationship which such individual or entity bears to the applicant (officer, director, partner, trustee, member, Principal Creditor, employee, administrative services provider, health care services provider, or shareholder).
3. Other Controlling Persons. Does any individual or entity not named as a contracting party in Item D-2 or any exhibit thereto have any power, directly or indirectly, to manage, influence, or administer the operation, or to control the operations or decisions, of applicant?
If the appropriate response to this item is "yes," attach as Exhibit D-3 a statement identifying each such person or entity and explaining fully such person's power or control, and summarizing every contract or other arrangement or understanding (if any) with each such person. (Each such contract should be submitted pursuant to Subsection D-2.)
4. Criminal, Civil and Administrative Proceedings. Within the preceding 10 years, has the applicant, its management company, or any Affiliate of the applicant (Rule 9771.60(c)), or any controlling person, officer, director or other person occupying a principal management or supervisory position in such organization, management company or Affiliate, or any person intended to hold such a relationship or position, been convicted of or pleaded nolo contendere to a crime, or been held to have committed any act involving dishonesty, fraud or deceit in a judicial or administrative proceeding to which such person was a party?
If "yes," attach a separate exhibit as to each such person designated Exhibit D-4, identifying such person and fully explaining the crime or act committed. Also, attach a copy of the exhibit to any Individual Information Sheet required by Item D-1-e for such individual.
5. Employment of Barred Persons. Has the organization engaged or does the organization intend to engage, as an officer, director, employee, associate, or provider, any person named in (i) any order of the Commissioner pursuant to Section 1386(c) or Section 1388(d) of the Knox-Keene Health Care Service Plan Act of 1975, (ii) any similar order of the Insurance Commissioner under the Insurance Code barring or otherwise prohibiting such person from being employed or otherwise engaged as an officer, director, employee, associate or provider of any entity subject to the jurisdiction of the Insurance Commissioner, or (iii) any administrative orders issued by a professional licensing board or by the Department of Industrial Relations? If the appropriate response to this item is "yes," attach as Exhibit D-5 a statement identifying each such person and explaining fully the scope of, and the circumstances giving rise to, such order.
E. Contracts with Providers.
1. Compliance with Requirements. Attach as Exhibit E a statement in tabular form for each provider contract, and for each standard form contract and its variations, if any, specifying the provisions of such contract which comply with the following provisions of the Act and rules:
Section 4600.6(g)
4600.6(I)(8)
4600.6(n) Rules 9771.69
9771.70
9772 through 9778
2. The provisions describing the mechanism by which payments are to be rendered to the provider clearly identified by the name of the provider.
F. Workers' Compensation Health Care Contracts.
Compliance with Requirements. Attach as Exhibit F a schedule in tabular form for each workers' compensation health care contract and each standard form workers' compensation contract, identifying the particular provision of such contract which complies with the sections listed below, covering also any variations made in standard form contracts. As to any provision which varies from the applicable provision of the Act or rules, identify such provision in Exhibit F.
Section 4600.5(e)(7)(B)
4600.6(e) Rules 9771.67
9771.69
9772 - 9778
G. Advertising.
Attach as Exhibit G a copy of any advertising which is subject to Section 4600.6 of the Code and which applicant proposes to use. With respect to each proposed advertisement indicate the contract(s) by name and by exhibit number(s) to which such advertisement relates and identify the employer segment to which the advertisement is directed.
H. Marketing of Workers' Compensation Health Care Contracts.
Attach as Exhibit H a statement describing the methods by which applicant proposes to market workers' compensation health care contracts, including the use of employees, or contracting solicitors or solicitor firms, their method or form of compensation, and the methods by which applicant will obtain compliance with Rules 9771.64, 9771.65, and 9771.83.
I. Supervision of Marketing.
Attach as Exhibit I a statement setting forth applicant's internal arrangements to supervise the marketing of its workers' compensation health care contracts, including the name and title of each person who has primary management responsibility for the employment and qualification of solicitors, advertising, contracts with solicitors and solicitor firms and for monitoring and supervising compliance with contractual and regulatory provisions.
J. Solicitation Contracts.
1. Attach as Exhibit J-1 a list of all persons (other than any employee of the organization whose only compensation is by salary) soliciting or agreeing to solicit the sale of workers' compensation health care contracts on behalf of the applicant. For each such person, identify by exhibit number that person's contract furnished pursuant to Item K-2 and, if such contract does not show the rate of compensation to be paid, specify the person's rate of compensation.
2. Attach as Exhibit J-2, a copy of each contract or proposed contract between applicant and the persons named in Exhibit J-1 for soliciting the sale of or selling workers' compensation health care contracts on behalf of applicant. If a standard form contract is used, furnish a specimen of the form, identify the provision and terms of the form which may be varied and include a copy of each variation.
K. Workers' Compensation Health Care Contract Enrollment Projections.
Note: All projections are to cover the period commencing from the applicant's commencement of operations as an authorized and certified workers' compensation health care provider organization for two years.
1. Projections. Attach as Exhibit K-1 projections of applicant's enrollments under workers' compensation health care provider contracts with self-insured employers, groups of self-insured employers, or insurers of employers (individually, "Employer"; collectively, "Employers") for the periods specified in the above note. Exhibit K-1 is to contain the following information with respect to each anticipated workers' compensation health care contract:
a. The name of the Employer.
b. The number of potential employees eligible to receive workers' compensation health care from the organization who are employed by the Employer.
c. The locations within and around applicant's service area in which the potential employees live and work.
d. The estimated date (or period after authorization by the Administrative Director and certification by the Workers' Compensation Division of the Department of Industrial Relations) for entry into the workers' compensation health care contract.
e. Identification of the workers' compensation health care contract anticipated with the Employer, by reference to Exhibit F. If more than one type of workers' compensation health care contract is expected with an Employer, each contract must be covered separately.
f. The projected number of employees on a monthly basis for the initial period specified in the Note, above, and quarterly for the following year.
2. Substantiation of Projections. Attach as Exhibit K-2 for each workers' compensation health care contract specified in Exhibit K-1 a description of the facts and assumptions used in connection with the information specified in that exhibit and include documentation of the source and validity of such facts and assumptions.
3. Letters of Interest. Attach as Exhibit K-3 letters of interest or intent from each Employer listed in Exhibit K-1, on the letterhead of the Employer and signed by its representative.
L. (Reserved for future use.)
M. Current Viability.
1. Financial Statements.
a. Attach as Exhibit M-1-a the most recent audited financial statements of applicant, accompanied by a report, certificate, or opinion of an independent certified public accountant, together with all footnotes to such financial statements.
b. If the financial statements attached as Exhibit M-1-a are for a period ended more than 60 days before the date of filing of this application, also attach as Exhibit M-1-b financial statements prepared as of date no later than 60 days prior to the filing of this application consisting of at least a balance sheet, a statement of income and expenses, and any accompanying footnotes; these more recent financial statements need not be audited, so long as they are prepared in accordance with generally accepted accounting principles.
2. Provision for Extraordinary Losses. The following requirements require an initial applicant to submit legible copies of the actual policies of insurance (including any riders or endorsements) or specimen copies of the policies of insurance which show all of the terms and conditions of coverage, or with respect to those items expressly allowing for self-insurance, allow applicant to provide evidence of self-insurance at least as adequate as insurance coverage.
a. Attach as Exhibit M-2-a evidence of adequate insurance coverage or self-insurance to respond to claims for damages arising out of furnishing workers' compensation health care (malpractice insurance).
b. Attach as Exhibit M-2-b evidence of adequate insurance coverage or self-insurance (e.g., appropriate reserve set aside to fund likely liabilities associated with uninsured costs) to respond to claims for tort claims, other than with respect to claims for damages arising out of furnishing health care services.
c. Attach as Exhibit M-2-c evidence of adequate insurance coverage or self-insurance to protect applicant against losses of facilities upon which it has the risk of loss due to fire or other causes. Identify facilities covered by individual policies and indicate the basis upon which applicant believes that the insurance thereon is adequate.
d. Attach as Exhibit M-2-d, evidence of fidelity bond coverage for at least the amounts specified in Rule 9771.74, in the form of a primary commercial blanket bond or a blanket position bond written by an insurer licensed by the California Insurance Commissioner, providing 30 days' notice to the Administrative Director prior to cancellation, and covering each officer, director, trustee, partner and employee of the organization, whether or not compensated.
e. Attach as Exhibit M-2-e evidence of adequate workers' compensation insurance coverage against claims which may arise against applicant.
N. Fiscal Arrangements.
1. Maintenance of Financial Viability. Attach as Exhibit N-1 a statement describing applicant's arrangements to comply with Section 4600.6(m) of the Code and Rule 9771/73.
2. Provider Claims. Attach as Exhibit N-2 a statement describing applicant's system for processing claims from providers for payment, including the rules defining applicant's obligation to reimburse, the standards and procedures for applicant's claims processing system (including receipt, identification, handling, screening, and payment of claims), the timetable for processing claims, and procedures for monitoring the claims processing system.
3. Other Business. If the applicant is or will engage in any business other than as a workers' compensation health care provider organization, attach as Exhibit N-3 a statement describing such other business, its relationship to applicant's business as an organization, and the anticipated financial risks and liabilities of such other business. If the financial statements and projections in Exhibits M-1-a, do not include such other business, explain.
(d) Information Forms Required by Item D-1:
(1) Corporation Information Form (WCHCPO 1-A).
STATE OF CALIFORNIA
DIVISION OF WORKERS' COMPENSATION
D-1-a-iii CORPORATION
INFORMATION FORM
To be used in response to Item D-1-a of Form WCHCPO 1.
________________________________________________________________
1. Name of Applicant (as in Item 1-a) __________________________
________________________________________________________________
2. State of Incorporation. _____________________________________
3. Date of Incorporation. ______________________________________
4. Is applicant a nonprofit corporation? ( ) Yes ( ) No
5. Is applicant exempted from taxation as a nonprofit corporation?
( ) Yes ( ) No
6. Names of principal officers, directors and shareholders: List (a) each person who is a director or principal officer or who performs similar functions or duties and (b) each person who holds of record or beneficially 5 percent or more of the voting securities of applicant or 5 percent or more of applicant's equity securities. If this is an amended exhibit, place an asterisk (*) before the names for whom a change in title, status or stock ownership is being reported and a double asterisk (**) before the names of persons which are added to those furnished in the most recent previous filing.
Full Name Relationship Class of Equity Percent
Last First Middle Beginning Title or Security of
Date Status Class
Mo. Year
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
7. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:
________________________________________________________________
________________________________________________________________
(2) Partnership Information Form (WCHCPO 1-B)
________________________________________________________________
STATE OF CALIFORNIA
DIVISION OF WORKERS' COMPENSATION
EXHIBIT D-1-ii PARTNERSHIP
INFORMATION FORM.
To be used in response to Item D-1-b of Form WCHCPO 1.
________________________________________________________________
1. Name of Applicant (as in Item 1-a). _________________________
2. State of organization. ______________________________________
3. Date of organization. _______________________________________
4. Names of Partners and Principal Management: List all general, limited and special partners and all persons who perform principal management functions. If this is an amended exhibit, place an asterisk (*) before the names of persons for whom a change in title, status or partnership interest is being reported and place a double asterisk (**) before the names of persons which are added to those furnished in the most recent previous filing.
Full Name Beginning Type of Capital Title or
Last First Middle Date Partner Contribution Duties
Mo. Year (percentage)
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
5. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:
________________________________________________________________
________________________________________________________________
________________________________________________________________
(3) Sole Proprietor Information Form (WCHCPO 1-C).
STATE OF CALIFORNIA
DIVISION OF WORKERS' COMPENSATION
EXHIBIT D-1-c SOLE PROPRIETORSHIP
INFORMATION FORM
To be used in response to Item D-1-c of Form WCHCPO 1.
________________________________________________________________
1. Name of Applicant (as in Item 1-a).
________________________________________________________________
2. Residence Address.
________________________________________________________________
3. Names of persons performing principal management functions: List each person who occupies a principal management position or who performs principal management functions for the applicant. If this is an amended exhibit, place an asterisk (*) before the names of persons for whom a change in title or duties is being reported and place a double asterisk (**) before the names of persons which are being added to those furnished in the most recent previous filing of this exhibit.
Full Name Beginning Title and
Last First Middle Date Duties
Mo. Year
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
4. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:
________________________________________________________________
________________________________________________________________
________________________________________________________________
(4) Information Form for Miscellaneous Types of Entities (WCHCPO 1-D).
STATE OF CALIFORNIA
DIVISION OF WORKERS' COMPENSATION
EXHIBIT D-1-d INFORMATION FORM FOR MISCELLANEOUS TYPES OF ENTITIES.
To be used in response to Item D-1-d of Form WCHCPO 1.
1. Name of Applicant (as in Item 1-a)
________________________________________________________________
2. State of Organization _______________________________________
3. Date of Organization ________________________________________
4. Form of Organization (describe briefly) _____________________
5. Names of Principal Officers and Beneficial Owners: List below the names of (a) each person who is a principal officer or trustee of the applicant or who performs principal management functions, and (b) each person who owns of record or beneficially over 5 percent of any class of equity security of the applicant. If this is an amended exhibit, place an asterisk (*) before the name of each person for whom a change in title, status or interest is reported, and a double asterisk (**) before the name of persons which are added to those reported in the most recent previous filing.
Full Name Beginning Class of Equity Percent of Title and
Last First Date Security Class Duties
Mo. Year
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
6. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.63. Individual Information Sheet (WCHCPO 2).
An individual information sheet required pursuant to these rules shall be in the following form:
CONFIDENTIAL
DIVISION OF WORKERS' COMPENSATION
State of California
INDIVIDUAL INFORMATION SHEET
under Labor Code Section 4600.6
1. Name of Applicant: File No. ____________
2. Exact full name of person completing this statement:
________________________________________________________________
First Middle Last
3. Have you ever had a certificate, license, permit registration or exemption issued pursuant to the Business and Professions Code, Health and Safety Code, Insurance Code, or Labor Code denied, revoked or suspended or been otherwise subject to disciplinary action, while you were in the employ of the applicant, or while you had a contract with the applicant as a provider or otherwise?
[ ] Yes [ ] No
If "yes" state the date of the action and the administrative body taking such action.
________________________________________________________________
________________________________________________________________
________________________________________________________________
4. Have you ever been convicted or pled nolo contendere to a misdemeanor involving moral turpitude or any felony, other than traffic violations? [ ] Yes [ ] No
If the answer is "yes" give details:
________________________________________________________________
________________________________________________________________
________________________________________________________________
5. Have you ever changed your name or ever been known by any name other than that herein listed? (Including a married person's prior surname, if any.) [ ] Yes [ ] No
If so, explain. Change in name through marriage or court order should also be listed. EXACT DATE OF EACH NAME CHANGE MUST BE LISTED.
________________________________________________________________
________________________________________________________________
________________________________________________________________
6. Have you ever engaged in business under a fictitious firm name either as an individual or in the partnership or corporate form? [ ] Yes [ ] No
If the answer is "yes" set forth particulars:
________________________________________________________________
________________________________________________________________
________________________________________________________________
VERIFICATION
I, the undersigned, state that I am the person named in the foregoing Individual Information Sheet, that I have read and signed said Individual Information Sheet and know the contents thereof, including all exhibits attached thereto; and that the statements made therein, including any exhibits attached thereto, are true and correct.
I certify (or declare) under penalty of perjury under the laws of the State of California that I have read this Individual Information Sheet and the exhibits thereto and know the contents thereto, and that the statements therein are true and correct.
Executed at ____________________________on ________________
(Place) (Date)
___________________________________________
(Signature of Declarant)
Note: If this form is signed outside California complete the verification before a notary public in the space provided below.
State of _______________________
County of ______________________
Dated, _________________________
at _____________________________
(Signature of Affiant)
Subscribed and sworn to before me,
________________________________
Notary Public in and for said
County and State
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.64. Organization Assurances Prior to Solicitation.
Prior to allowing any person to engage in acts of solicitation on its behalf, each organization shall reasonably assure itself that such person has sufficient knowledge of its organization, procedures, workers' compensation health care contracts, and the provisions of the Act and these rules to do so lawfully.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.65. Filing of Advertising and Disclosure Forms.
(a) Two copies of a proposed advertisement shall be filed. To minimize the expense of changes in advertising copy, it may be submitted in draft form for preliminary review subject to the later filing of a proof or final copy, and the later filing of a proof or final copy may be waived when the draft copy is presented in a manner reasonably representing the final appearance of the advertisement. The text of audio or audio/visual advertising should indicate any directions for presentation, including voice qualities and the juxtaposition of the visual materials with the text.
(b) The Administrative Director will not issue letters of nondisapproval of advertising. If the person submitting the advertisement requests an order shortening the 30-day waiting period under Section 4600.6(d) of the Code, such order will be issued when an appropriate showing of the need therefor is made.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.66. Deceptive Advertising.
Without limitation upon the meaning of Section 4600.6 of the Code, an advertisement or other consumer information is untrue, misleading or deceptive if:
(a) It represents that payment is provided in full for the charge for workers' compensation health care other than in accordance with what is required under the Labor Code.
(b) It represents that payment is provided for the customary charges for workers' compensation health care other than in accordance with what is required under the Labor Code.
(c) It represents that the organization, firm or solicitor or any provider or other person associated therewith is licensed or regulated by the Department of Managed Health Care or Administrative Director or other governmental agency, unless such statement is required by law or regulation or unless such statement is accompanied by a satisfactory statement which counters any inference that such licensing or regulation is an assurance of financial soundness or the quality or extent of workers' compensation health care.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.67. Disclosure Form.
(a) The disclosure form required under subdivision (a) of Section 4600.6(e) of the Code and made available to employers and employees shall conform to the requirements established by the Administrative Director of the Division of Workers' Compensation of the Department of Industrial Relations (Cal. Code Regs., Tit. 8, Sec. 9770 et seq. ).
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.68. Deceptive Workers' Compensation Health Care Provider Organization Names.
(a) A change of organization name is a "material modification".
(b) An organization name will be considered deceptive if it suggests the quality of care furnished by the organization or if it suggests that the cost of workers' compensation health care provided to employees is lower than the cost of similar health care purchased elsewhere, and in any such case the express or implied representation contained in the organization name is demonstrably untrue or is not supported by substantial evidence at all times while such name is used by the organization. Nothing in this subsection limits or restricts the Administrative Director from a determination that an organization or solicitor firm name is deceptive for reasons other than those stated herein.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.69. Workers' Compensation Health Care Contracts.
(a) All workers' compensation health care contracts and endorsements and amendments shall be printed legibly and shall include at least the following:
(1) The information required to be included on disclosure formsby Section 4600.6(e) of the Code and the information required to be included on disclosure forms by Rule 9771.67.
(2) Definitions of all terms contained in the contract which:
(A) Are defined by the Act, relevant Labor Code provisions, and the Regulations of the Administrative Director.
(B) Require definition in order to be understood by a reasonable person not possessing special knowledge of law, medicine, or organizations;
(C) Specifically describes the eligibility of employees.
(3) Appropriate captions, in boldface type, regarding the provision of workers' compensation health care, consistent with the requirements of the certification standards for health care organizations promulgated by the Administrative Director of the Division of Workers' Compensation of the Department of Industrial Relations (Cal. Code Regs., Tit. 8, Sec. 9770, et seq. ).
(A) A benefit afforded by the contract shall not be subject to any limitation, exclusion, exception, reduction, deductible, or copayment, if any, which renders the benefit illusory.
(4) Provisions relating to cancellation under appropriate caption, in boldface type, which provisions shall include a statement of the time when a notice of cancellation becomes effective.
(5) A provision requiring the organization to provide written notice within a reasonable time to the other party of any termination or breach of contract by, or inability to perform of, any contracting provider if the other party may be materially and adversely affected thereby.
(6) A provision requiring a self-insured employer, group of self-insured employers, or insurer of an employer to mail promptly to each employee a legible, true copy of any notice of cancellation of the organization contract which may be received from the organization and to provide promptly to the organization proof of such mailing and the date thereof.
(7) A provision that (i) the organization is subject to the requirements of the Labor Code, the Regulations of the Administrative Director, and (ii) any provision required to be in the contract by the above shall bind the organization whether or not provided in the contract.
(b) For the purposes of this section:
(1) "Other party" means (A) in the case of a group of self-insured employers, the group representative designated in the contract, and (B) in the case of a self-insured employer or issuer of an employer, the self-insured employer or insurer of an employer and the insured employer.
(2) Any express or implied requirement of notice to the other party, in the context of a contract with a group of self-insured employers, requires notice to the group representative designated in the contract and, with respect to material matters, to the employers and employees under the contract. An organization may fulfill any obligation imposed by this section to notify employers and employees under such contract if the organization provider notice to the group representative designated in the contract, and the contract requires the group representative to disseminate such notice to employers and employees by the next regular communication to the group, but in no event later than 30 days after the receipt thereof.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.70. Contracts with Providers.
Written contracts must be executed between the organization and each provider of workers' compensation health care which regularly furnishes health care under the organization. All contracts with providers shall be subject to the following requirements:
(a) A written contract shall be prepared or arranged in a manner which permits confidential treatment by the Administrative Director of payment rendered or to be rendered to the provider without concealment or misunderstanding of other terms and provisions of the contract.
(b) The contract shall require that the provider submit claims for workers' compensation health care services to the organization within a reasonable period of time following the delivery of health care services to an employee.
Contracts which contain the following language shall be deemed to meet the timing requirements of this subsection (b), and there shall be no other agreements or other language in the contract which negates or diminishes the effect of the following language:
"[Name of Provider] shall submit claims for the cost of workers' compensation health care services to [Organization] according to the compensation provisions of [Section and paragraph] of this agreement, within 60 days after [Name of Provider] has rendered the workers' compensation health care services to the employee. However, failure to submit claims within 60 days does not alter the obligation of the organization to pay claims of contracting providers for which the organization has received payment."
(c) The contract shall provide that the organization shall forward claims from providers to the self-insured employer, group of self-insured employers or insurers of employers within 30 days after receipt of the claim from the provider, and that the organization shall pay the provider's claim no later than 30 days after receiving payment from the self-insured employer, group of self-insured employers or insurer of employers.
(d) The contract shall require that the provider maintain such records and provide such information to the organization or to the Administrative Director as may be necessary for compliance by the organization with the provisions of the Code and the rules thereunder, that such records will be retained by the provider for at least five years, and that such obligation is not terminated upon a termination of the agreement, whether by rescission or otherwise. (See Rule 9771.83) Contracts which contain the following language shall be deemed to meet the requirements of this subsection (d), and there shall be no other agreements or other language in the contract which negates or diminishes the effect of the following language:
"[Name of Provider] shall maintain all books, records of account, medical records, reports and papers as may be necessary for compliance by the organization with the provisions of Labor Code Section 4600.6 and the rules thereunder. All such books, records and reports shall be available to the organization or to the Administrative Director, as necessary or required, under the Act and Rules.
All such books, records, reports and papers must be maintained for at least five years after the initial date of delivery of health care services under this Agreement. The obligation of [Name of Provider] to maintain books, records, reports and papers and to make them available shall not terminate upon the termination of [this Agreement]."
(e) The contract shall require that the organization shall have access at reasonable times upon demand to the books, records and papers of the provider relating to the workers' compensation health care provided to employees, to the cost thereof, to payments received by the provider from the organization, self-insured employer, group of self-insured employers, an insurer of an employer, employee, or from others on the behalf of the foregoing.
Contracts which contain the following language shall be deemed to meet the requirements of this subsection (e), and there shall be no other agreements or other language in the contract which negates or diminishes the effect of the following language:
"The [Organization] shall have access during regular business hours to all administrative, financial and medical books, records reports and papers relating to the delivery of workers' compensation health care to employees, and to the cost of such delivery, payments received by [the Provider] from [the Organization] and/or any self-insured employer, group of self-insured employers, or insurer of an employer, an employee, or others."
(f) The contract shall prohibit surcharges or other payments in violation of the Labor Code for workers' compensation health care services and shall provide that whenever the organization receives notice of any such surcharge it shall take appropriate action.
(g) The contract shall disclose whether there are any other agreements between the organization and the provider, and shall incorporate by reference all such other agreements. Contracts which contain the following language shall be deemed to meet the requirements of this subsection (g):
"This [Agreement], including all addenda, supersedes any and all other agreements between [the Organization] and [the Provider] which are not attached hereto and incorporated herein and which are related to the delivery of, or to the compensation for, workers' compensation health care services. No future statements or promises relating to the delivery of workers' compensation health care services shall be valid or binding unless written and incorporated herein as addenda, subject to the approval of the Administrative Director".
(h) The contract shall contain provisions complying with Section 4600.6(n) of the Code and shall comply with the provisions of subsection (a)(7) of Rule 9771.69.
(i) The contract shall require that the provider cooperate with the organization's quality assurance and utilization review system established pursuant to Section 4600.6(k) of the Code, and cooperate with the Administrative Director in accordance with the provisions of Section 4600.6(o) of the Code and Sections 9771.76 and 9771.77 of the Rules.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.71. Disclosure of Conflicts of Interest.
(a) An organization shall not enter into any transaction with a person currently named in Item D of its application under Rule 9771.62 unless, prior thereto, each of the following conditions is met:
(1) The material facts concerning the transaction and the person's interest therein are disclosed to the governing body of the organization.
(2) The transaction is approved by a disinterested majority of the governing body.
(3) Such facts and such approval are made a part of the minutes of such governing body or, if no minutes are required of such governing body, otherwise retained as a record of the organization.
(b) An organization shall promptly give written notice to the Administrative Director if a transaction with a person currently named in Item D of its application under Rule 9771.62 is entered into otherwise than in conformity with the terms of this section.
(c) For the purposes of this section, "governing body" means the board of directors, all general partners, the sole proprietor, the board of trustees, and any other persons occupying a similar position or performing similar functions.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.72. Contracts with Solicitor Firms.
An organization shall not permit a solicitor firm to solicit self-insured employers, groups of self-insured employers, or insurers of an employer on its behalf except pursuant to a written contract which meets all of the following minimum requirements:
(a) The solicitor firm shall comply, and shall cause its principal persons and employees to comply, with all applicable provisions of the Act and the rules thereunder.
(b) The solicitor firm shall promptly notify the organization of the institution of any disciplinary proceedings against it or against any of its principal persons or employees relating to any license issued to any such person by the California Insurance Commissioner.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.73. Fiscal Soundness, Insurance, and Other Arrangements.
(a) An organization shall demonstrate fiscal soundness as follows:
Demonstrate an approach to the risk of insolvency which allows for the continuation of health care services for the duration of the contract period, the continuation of health care services to employees who are under treatment or confined on the date of insolvency in an in-patient facility until their discharge, and payments to unaffiliated providers for health care services rendered.
(b) In passing upon an organization's showing pursuant to this section, the Administrative Director will consider all relevant factors, including but not limited to:
(1) The method of compensating providers and the terms of provider contracts, especially as to the obligations of providers to employees in the event of the organization's insolvency.
(2) The methods by which the organization controls and monitors the utilization of health care services.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.74. Fidelity Bond.
(a) Each organization shall at all times maintain a fidelity bond covering each officer, director, trustee, partner and employee of the organization, whether or not they are compensated. The fidelity bond may be either a primary commercial blanket bond or a blanket position bond written by an insurer licensed by the California Insurance Commissioner, and it shall provide for 30 days' notice to the Administrative Director prior to cancellation. The fidelity bond shall provide at least the minimum coverage for the organization determined by the following schedule:
Annual Minimum
Gross Income Coverage
Up to $ 100,000.... $ 10,000
100,000 to 300,000.... 20,000
300,000 to 500,000.... 30,000
500,000 to 750,000.... 50,000
750,000 to 1,000,000.... 75,000
1,000,000 to 2,000,000.... 100,000
2,000,000 to 4,000,000.... 200,000
4,000,000 to 6,000,000.... 400,000
6,000,000 to 10,000,000.... 600,000
10,000,000 to 20,000,000.... 1,000,000
20,000,000 and over.... 2,000,000
(b) The fidelity bond required pursuant to subsection (a) may contain a provision for a deductible amount from any loss which, except for such deductible provision, would be recoverable from the insurer. A deductible provision shall not be in excess of 10 percent of the required minimum bond coverage, but in no event shall the deductible amount be in excess of $100,000.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.75. Reimbursements on a Fee-for-Services Basis: Determination of Status of Claims.
Every organization shall institute procedures whereby all claim forms received by the organization from providers of workers' compensation health care for reimbursement on a fee-for-service basis are maintained and accounted for in a manner which permits the determination of the date of receipt of any claim, the status of any claim, the dollar amount of unpaid claims at any time, and rapid retrieval of any claim. Although any categories for status-determination held unobjectionable by the Administrative Director may be used, for the purposes of this section, the following status-determination categories, as a group, shall be presumptively reasonable:
(1) to be processed,
(2) processed, waiting for payment,
(3) pending, waiting for approval for payment or denial,
(4) pending, waiting for additional information,
(5) denied,
(6) paid, and, if appropriate,
(7) other.
These procedures shall involve the use of either a claims log, claims numbering system, electronic data processing records, and/or any other method held unobjectionable by the Administrative Director.
Note: Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.
s 9771.76. Medical Survey Procedure.
(a) Unless the Administrative Director in his discretion determines that advance notice will render the survey less useful, an organization will be notified approximately four weeks in advance of the date for commencement of an onsite medical survey. The Administrative Director may, without prior notice, conduct inspections of organization facilities or other elements of a medical survey, either in conjunction with the medical survey or as part of an unannounced inspection program.
(b) The onsite medical survey of an organization shall include, but not be limited to, the following procedures to the extent considered necessary based upon prior experience with the organization and in accordance with the procedures and standards developed by the Administrative Director.
(1) Review of the procedures for obtaining workers' compensation health care including, but not limited to, the scope of health care.
(A) The availability and adequacy of facilities for telephone communication with health personnel, emergency health care facilities, out-of-the-area coverage, referral procedures, and medical encounters.
(B) The means of advising employees of the procedures to obtain health care, including the hours of operation, location and nature of facilities, types of health care, telephone and other arrangements for appointment setting.
(C) The availability of qualified personnel at each facility referred to in Section 4600.6(j) of the Code to receive and handle inquiries concerning health care and grievances.
(2) Review of the design and implementation of procedures for reviewing and regulating utilization of health care and facilities.
(3) Review of the design and implementation of procedures to review and control costs.
(4) Review of the design, implementation and effectiveness of the internal quality of care review systems, including review of medical records and medical records systems. A review of medical records and medical records systems may include, but is not limited to, determining whether:
(A) The entries establish the diagnosis stated, including an appropriate history and physical findings;
(B) The therapies noted reflect an awareness of current therapies;
(C) The important diagnoses are summarized or highlighted; (Important are those conditions that have a bearing on future clinical management.)
(D) Drug allergies and idiosyncratic medical problems are conspicuously noted;
(E) Pathology, laboratory and other reports are recorded;
(F) The health professional responsible for each entry is identifiable;
(G) Any necessary consultation and progress notes are evidenced as indicated;
(H) The maintenance of an appropriate system for coordination and availability of themedical records of the employee, including out-patient, in-patient and referral services and significant telephone consultations. (continued)