ASSEMBLY, No. 2257

STATE OF NEW JERSEY

INTRODUCED JULY 18, 1996

By Assemblyman DORIA

An Act concerning health maintenance organizations and amending P.L.1973, c.337.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. Section 24 of P.L.1973, c.337 (C.26:2J-24) is amended to read as follows:

    24. a. The commissioner may, in lieu of suspension or revocation of a certificate of authority under section 18 hereof, levy an administrative penalty in an amount not less than [$100.00] $250 nor more than [$1,000.00] $10,000 for each day the health maintenance organization is in violation of P.L.1973, c.337 (C.26:2J-1 et seq.), if reasonable notice in writing is given of the intent to levy the penalty [and the health maintenance organization has a reasonable time within which to remedy the defect in its operations which gave rise to the penalty citation, and fails to do so within said time]. Any such penalty may be recovered in a summary proceeding pursuant to [the Penalty Enforcement Law (N.J.S.2A:58-1 et seq.)] "the penalty enforcement law," N.J.S.2A:58-1 et seq.

    b. Any person who violates this act is a disorderly person and shall be prosecuted and punished pursuant to the "disorderly persons law" subtitle 12 of Title 2A of the New Jersey Statutes.

    c. (1) If the commissioner or the Commissioner of Insurance shall for any reason have cause to believe that any violation of this act has occurred or is threatened, the commissioner or Commissioner of Insurance may give notice to the health maintenance organization and to the representatives, or other persons who appear to be involved in such suspected violation, to arrange a conference with the alleged violators or their authorized representatives for the purpose of attempting to ascertain the facts relating to such suspected violation, and, in the event it appears that any violation has occurred or is threatened, to arrive at an adequate and effective means of correcting or preventing such violation.

    (2) Proceedings under this subsection c. shall not be governed by any formal procedural requirements, and may be conducted in such manner as the commissioner or the Commissioner of Insurance may deem appropriate under the circumstances.

    d. (1) The commissioner or the Commissioner of Insurance may issue an order directing a health maintenance organization or a representative of a health maintenance organization to cease and desist from engaging in any act or practice in violation of the provisions of this act.

    (2) Within 20 days after service of the order of cease and desist, the respondent may request a hearing on the question of whether acts or practices in violation of this act have occurred. Such hearings shall be conducted pursuant to the Administrative Procedure Act, P.L.1968, c.410 (C.52:14B-1 et seq.) and judicial review shall be available as provided therein.

    e. In the case of any violation of the provisions of this act, if the commissioner elects not to issue a cease and desist order, or in the event of noncompliance with a cease and desist order issued pursuant to subsection d. of this section, the commissioner may institute a proceeding to obtain injunctive relief, in accordance with the applicable Court Rules.

(cf: P.L.1973, c.337, s 24)

    2. This act shall take effect 30 days after the date of enactment.

STATEMENT

    This bill increases the penalties for violations of the "Health Maintenance Organizations Act," P.L.1973, c.337 (C.26:2J-1 et seq.) from a range of $100 to $1,000 to a range of $250 to $10,000 for each day the health maintenance organization is in violation of the law. The penalties have not been changed since the law was enacted in 1973, and need to be increased in order to provide for more effective enforcement of the law governing these health care services providers.

Increases penalties for violations of "Health Maintenance Organizations Act."