20-845. Suspension or revocation of certificate of authority; civil penalties

A. The director may suspend or revoke a certificate of authority issued to a corporation pursuant to this article if the director finds that any of the following conditions exist:

1. The corporation is operating significantly in contravention of its basic organizational documents or in a manner contrary to that described in, and reasonably inferred from, any other information submitted pursuant to sections 20-824 and 20-825.

2. The corporation has issued subscription contracts that do not comply with the requirements of section 20-826.

3. The corporation can no longer be expected to meet its obligations to subscribers.

4. The corporation, or any authorized person on its behalf, has advertised or merchandised its services in a materially untrue, misleading, deceptive or unfair manner.

5. The corporation has failed to substantially comply with this article or any rule adopted pursuant to this article.

6. The corporation is in an unsound condition or in such a condition as to render its further transaction of business in this state hazardous to its subscribers or to the residents of this state.

B. If the certificate of authority of a corporation is suspended, the corporation shall not accept, during the period of the suspension, any additional subscribers except newborn children or other newly acquired dependents of existing subscribers and shall not engage in any advertising or marketing.

C. If the certificate of authority of a corporation is revoked, the corporation shall proceed, immediately following the effective date of the order of revocation, to conclude its affairs and shall conduct no further business except as may be essential to the orderly conclusion of business. The director, by written order, may permit any further operation of the corporation as the director finds to be in the best interest of subscribers to the end that subscribers shall be afforded the greatest practical opportunity to obtain continuing hospital, medical, dental or optometric coverage as applicable.

D. Notwithstanding subsections B and C of this section, a corporation that has had its certificate of authority suspended or revoked, or that is subject to an adverse action by the director, is entitled to a hearing pursuant to title 41, chapter 6, article 10 and, except as provided in section 41-1092.08, subsection H, is entitled to judicial review pursuant to title 12, chapter 7, article 6.

E. If, after a hearing, the director finds grounds pursuant to subsection A of this section to suspend or revoke a corporation's certificate of authority, the director may impose, in lieu of or in addition to that suspension or revocation, the following civil penalties that shall be remitted to the state treasurer for deposit, pursuant to sections 35-146 and 35-147, in the state general fund:

1. For an unintentional violation, not more than one thousand dollars for each violation and not more than an aggregate of ten thousand dollars in any six month period.

2. For an intentional violation, not more than five thousand dollars for each violation and not more than an aggregate of fifty thousand dollars in any six month period.