(a) Withdrawal plan. An approved PEO that undertakes of its own initiative or is required by §13.581 or §13.582 of this title (relating to Limitation, Suspension, or Cancellation of Certificate of Approval in Response to TDLR Action and Limitation, Suspension, or Cancellation of Certificate of Approval in Response to TDI Action) to terminate its health benefit plan must file a withdrawal plan for review by the commissioner prior to terminating the plan. The withdrawal plan must include:
  (1) the approved PEO's reasons for the withdrawal;
  (2) a timeline for withdrawal, including the date on which the approved PEO intends to complete the withdrawal process;
  (3) a copy of the proposed notice to be sent to client employers and plan participants giving them at least 180 days' notice of the plan's termination;
  (4) the number and names of clients and the number of plan participants affected by the proposed withdrawal;
  (5) a procedure for handling plan participants' claims for benefits;
  (6) a procedure for identifying plan participants with special circumstances, as defined in Insurance Code §1301.153, concerning Continuity of Care;
  (7) provisions for meeting all contractual obligations of the approved PEO;
  (8) provisions for meeting any applicable statutory obligations; and
  (9) verification of reserves to complete a solvent resolution of the plan's obligations.
(b) Novation and resolution of plan claim obligations. The commissioner will not grant the request of an approved PEO to cancel its certificate of approval unless the approved PEO novates its remaining plan obligations with an unaffiliated authorized insurer or satisfies its remaining plan obligations under an agreement filed with and approved in writing by the commissioner. For purposes of this subsection, those obligations are:
  (1) known claims and expenses associated with those claims; and
  (2) incurred but not reported claims and expenses associated with those claims.
(c) Approval of withdrawal plan. Except as provided by subsection (d) of this section, the commissioner will approve a withdrawal plan that satisfies the requirements of subsections (a) and (b) of this section.
(d) Modification or denial of withdrawal plan. If the approved PEO is unable to meet its contractual and financial obligations in a solvent and compliant manner, the commissioner will modify or deny an approved PEO's filed withdrawal plan, and take action authorized under Insurance Code Chapters 404, Financial Condition; 406, concerning Special Deposits Required Under Potentially Hazardous Conditions; 441, concerning Supervision and Conservatorship; 443, concerning the Insurer Receivership Act; or all other applicable law.
(e) Notice of modification. The commissioner will issue a written notice to an approved PEO stating the basis for a modification under subsection (d) of this section. If within 30 days of receiving a notice of modification the approved PEO submits a written request for review by the commissioner and submits additional information that its withdrawal plan satisfies the requirements of subsections (a) and (b) of this section, the commissioner will reconsider the modification and give the PEO written notice of his decision.
(f) Notice of denial; State Office of Administrative Hearings hearing request. The commissioner will issue a written notice of denial to an approved PEO stating the basis for a denial under subsection (d) of this section. If within 30 days of receiving the commissioner's notice the approved PEO submits a written request for a hearing on denial of withdrawal plan, the commissioner will file a request to set a hearing at the State Office of Administrative Hearings under Government Code Chapter 2001, concerning Administrative Procedure; and Insurance Code Chapter 40, concerning Duties of State Office of Administrative Hearings and Commissioner in Certain Proceedings; Rate Setting Proceedings. At the hearing the approved PEO will be given an opportunity to show compliance with this section.

Source Note: The provisions of this §13.580 adopted to be effective May 17, 2016, 41 TexReg 3479