In addition to any other grounds specified in this chapter, the following constitute grounds for denial, nonrenewal, suspension, or revocation of an application or existing certificate of registration, following notice and an opportunity for hearing:

(a) Failure to comply with the provisions of this chapter.

(b) Failure to disclose a preexisting oral or written agreement during the alliance application process.

(c) Failure to fairly and affirmatively offer, market, and sell all of the health benefit plan designs offered through a purchasing alliance that are sold or offered to small employers to all small employers.

(d) Failure to have adequate controls or failure to follow approved procedures.

(e) Failure to meet minimum standards in a financial or performance audit or examination.

(f) Failure to comply with a lawful order of the commissioner.

(g) Committing an unfair or deceptive act or practice as defined in Section 17200 of the Business and Professions Code or under Chapter 6.5 (commencing with Section 790) of Part 2 of Division 1.

(h) Filing any necessary form with the commissioner that contains fraudulent information or omission.

(i) Misappropriation, conversion, illegal withholding, or refusal to pay over upon proper demand any moneys that belong to a person or participating carrier otherwise not entitled to the alliance and that have been entrusted to the alliance in its fiduciary capacity.

(j) Operation of the purchasing alliance that is at variance with the basic organizational documents as filed pursuant to this chapter or as published by the purchasing alliance, or in any manner contrary to that described in, or reasonably inferred from, the purchasing alliance’s application for certification and annual report, or any modification thereof, unless amendments allowing the variation have been submitted to, and approved by, the commissioner pursuant to this chapter.

(k) The continued operation of the purchasing alliance will constitute a substantial risk to its subscribers and enrollees.

(l) The purchasing alliance has violated, attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate any provision of this chapter or any rule or regulation adopted by the commissioner pursuant to this chapter.

(m) The purchasing alliance has permitted, or aided or abetted, any violation by an employee or contractor who is a holder of any license, certificate, permit, or registration issued pursuant to the Business and Professions Code, the Health and Safety Code, or this code, which violation would constitute grounds for discipline against that licensee, or certificate, permit, or registration holder.

(n) The purchasing alliance has aided, abetted, or permitted the commission of any illegal acts.

(o) The purchasing alliance, its management company, or any other affiliate of the purchasing alliance, or any controlling person, officer, director, or other person occupying a principal management or supervisory position in the purchasing alliance, management company, or affiliate, has been convicted or pleaded no contest to a crime, or committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of that person under this chapter. The commissioner may revoke or deny a certificate issued under this chapter irrespective of a subsequent order under Section 1203.4 of the Penal Code.

(Added by Stats. 1996, Ch. 916, Sec. 1. Effective January 1, 1997.)