Florida Regulatory Action a Reminder that TPAs Must Be Licensed Before Conducting Business
A recent regulatory action against a Delaware domiciled TPA ("Company") demonstrates the importance for companies to be properly licensed with state insurance regulators where they are conducting business.
In June 2017, the Florida Office of Insurance Regulation ("OIR") denied an application submitted by the Company's parent for licensure as a TPA based on the OIR's determination that all information required to process the application had not been provided. In June 2017, the denial was appealed with the Florida Division of Administrative Hearings to preserve all rights. On October 4, 2017, the OIR withdrew its prior denial of the TPA license application.
On February 14, 2018, the OIR entered into a Consent Order granting the Company a TPA license. However, in the Consent Order, the OIR determined the Company had previously administered business on behalf of authorized insurers with respect to Florida residents, in violation of Section 626.8805 Florida Statutes. The determination that the Company had been administering business in violation of Section 626.8805 Florida Statutes was based on the OIR's review of fourteen (14) administrative agreements under which the Company had been conducting business prior to submitting its TPA application to the OIR.
As a result of this finding, the Company was assessed a fine of $140,000, pursuant to Section 626.8805(l) Florida Statutes.