Arkansas Administrative Code › Agency 003 - DEPARTMENT OF COMMERCE › Division 22 - Insurance Department › Rule 003.22.23-004 - Arkansas Insurance Department Rule of Practice and Procedures

Current through Register Vol. 49, No. 6, June, 2024
I.
AUTHORITY
This Rule is issued pursuant to Ark. Code Ann. §
									25-15-203(a)
				which requires state agencies to adopt a rule of practice setting forth the
				nature and requirements of all formal and informal procedures available,
				including a description of forms and instructions used by the agency. In
				addition, Ark. Code Ann. §
									25-15-203(a)
				requires state agencies to issue a rule describing its organization, method of
				operations and public access to information it provides. This Rule is also
				issued under the authority of Ark. Code Ann. §
									23-61-108(a)(1)
				which permits the Arkansas Insurance Commissioner ("Commissioner") to issue
				rules necessary for or as an aid to the effectuation of any provision of the
				Arkansas Insurance Code ("AIC").
II.
APPLICATION OF INSURANCE CODE &
			 RULES
Unless more specifically addressed in this Rule, the AIC or
				other Arkansas Insurance Department ("AID") administrative rules ("AIDR") that
				pertain to a specific administrative action or procedure shall apply to the
				administrative activity at the AID. In the event of a conflict between a
				provision in this Rule with the AIC, AIDR, or the Arkansas Administrative
				Procedures Act ("APA") (Ark. Code Ann. §§
									25-15-201 et seq.), then the
				provisions in the latter statutory or rule-based requirements shall
				apply.
IIl.
ADMINISTRATIVE ADJUDICATIVE PROCEEDINGS
A. An administrative adjudication proceeding
			 ("adjudicative proceeding") at AID shall be a proceeding qualifying as an
			 adjudication under Ark. Code Ann. §
									25-15-202(1)(A).
			 Unless specifically exempted under this Rule, adjudicative proceedings at AID
			 include but are not limited to any proceedings initiated by AID against
			 licensees for violations of the AIC or AIDR resulting or culminating in an
			 administrative order.
1.
Exemption For Financially Related Transactions Or
			 Reviews
. Financially related reviews by AID or administrative
			 actions undertaken by AID pertaining to the financial solvency, ownership,
			 condition, or affairs of an insurer or business organization licensee that may
			 ultimately result in an administrative order shall be exempt from the
			 provisions of this Rule; instead, the specific, pertinent provisions of the AIC
			 or AIDR pertaining to the activity under review shall apply to provide the
			 procedures, forms, or practices related to the financial activities. This
			 exemption applies, by example and without limitation, to mergers and
			 acquisitions, holding company transactions, financial examinations and adoption
			 orders of such reports, risk-based capital requirements, changes of ownership,
			 hazardous condition situations, rehabilitations,, receiverships, liquidations,
			 material business modifications, and any other matter pertaining to the
			 financial affairs of an insurer or licensed business organization. AID
			 maintains that there already exist adequate and unique statutory or rule-based
			 requirements supplying the AID practices or procedures required for such
			 activities in Chapters 62, 63 and 69 of the AIC.
2.
Notices of Public
			 Hearing(s)
. An adjudicative proceeding by AID shall begin from its
			 issuance of a written Notice of Public Hearing ("NOPH") mailed to a licensee
			 that sets out the date, time and location of an administrative hearing and
			 provides sufficient facts and notice of allegations of violations of AIC or
			 AIDR, allegedly committed by the licensee. The content of the NOPH shall
			 otherwise comply with Ark. Code Ann. §
										25-15-208 and shall be mailed by
			 certified mail, return receipt requested to the licensee at its last reported
			 address at AID. AID advises licensees to maintain a current and accurate
			 working address with AID to receive notices from AID; otherwise, AID shall
			 consider that adequate notice was provided to the licensee of the NOPH at the
			 licensee's last known address as reported to AID. A licensee subject to a NOPH
			 shall be identified as a Respondent.
a.
Timing of Hearing
. No hearing shall be conducted in
			 less than ten (10) days from the Respondent's receipt of the NOPH unless there
			 exists a public emergency as set out in Section III(A)(12) of this Rule.
			 Although it is not statutorily required to provide the following time frame,
			 AID, generally, sets nonemergency hearings to occur within thirty (30) to
			 forty-five (45) days of the anticipated receipt of the NOPH by the Respondent.
			 In the absence of statutory language explicitly referencing the time periods to
			 be calculated upon working days, the timing of the hearing shall be provided
			 upon a calendar day basis.
i. Following
			 receipt of the NOPH by Respondent, Respondent and AID may mutually agree to a
			 rescheduled hearing date.
b.
Replies or Responses to a
			 NOPH
. A Respondent may, but is not required to, respond to a NOPH,
			 either orally or in writing. AID however strongly encourages licensees
			 receiving a NOPH to respond in writing to AID's NOPH in order to provide an
			 adequate record for acknowledgment that Respondent was notified of an
			 administrative hearing and, in addition, such oral or written response may
			 provide for a consideration by AID as to the nature of any plausible or
			 meritorious defenses to the allegations raised against the Respondent by a
			 complainant. Any such response to the NOPH should be submitted to AID within
			 fifteen (15) working days of the Respondent's receipt of the NOPH. Formal rules
			 of pleading are not required in any written reply to a NOPH. A written reply
			 may be made in general narrative form, or it may admit or deny the averments or
			 paragraphs in the NOPH. A Respondent shall not be prejudiced by failing to
			 respond to a NOPH.
c.
Hearing Officer
. In the NOPH, AID shall identify the
			 hearing officer to preside over the adjudicative proceeding who may be the
			 Arkansas Insurance Commissioner ("Commissioner") or other duly appointed
			 person. Within fifteen (15) days of receipt of the NOPH, a Respondent may
			 request the appointment of a substitute hearing officer in the event of
			 conflict, bias, appearance of impropriety, or upon any other basis of
			 disqualification that is sufficiently described and justified. In the event of
			 conflict, AID may designate a hearing officer not employed by AID or by the
			 Arkansas Department of Commerce ("ADOC") to act as hearing officer under Ark.
			 Code Ann. §
											23-61-303(a)(3).
			 In the event of a scheduling conflict with the originally designated hearing
			 officer, the Commissioner may appoint a substitute hearing officer, and AID
			 shall promptly notify Respondent in writing of this change,
3.
Continuances
. In
			 the event of a conflict or hardship with the date and time of the
			 administrative hearing as set out in the NOPH, a Respondent may request a
			 rescheduled date and time for the administrative hearing within fifteen (15)
			 days of receipt of the NOPH. The request under this Section shall be made to,
			 reviewed and decided by the hearing officer designated in this matter. The
			 conflict needs to detail a legitimate hardship upon the Respondent to attend
			 the initially scheduled hearing and shall not be granted in the event that the
			 Respondent has demonstrated a pattern or history of requesting multiple
			 continuances.
4.
Pre-hearing Evidence Notices, Discovery and Access to AID
			 Information
. If the Respondent chooses to request the items listed
			 in Ark. Code Ann. §
										25-15-208(a)(3),
			 then, upon such a request, AID shall provide the information to the Respondent
			 no later than ten (10) days from the date of the scheduled hearing. AID and
			 Respondent may however mutually agree as to a different timing for submission
			 of the items under Ark. Code Ann. §
										25-15-208(a)(3).
			 In the absence of statutory language explicitly referencing the time periods to
			 be calculated upon working days, the information shall be supplied, upon
			 request, on the basis of calendar days,
a.
Access to AID File(s)
. Upon request and after issuance
			 of a NOPH, Respondent may access or copy the file and records constituting the
			 basis of the adjudicative proceeding against the Respondent as detailed in the
			 NOPH under the same time periods required by a state agency to respond to an
			 Arkansas Freedom of Information Act ("FOIA") request; however, AID and
			 Respondent may mutually agree to an extended time period. The information
			 provided however shall not disclose any information related to other AID files
			 under active and open investigation or examination under Ark. Code Ann.
			 §§
											23-61-107,
			 23-61-207, nor to any other
			 records exempt from disclosure under FOIA. A decision by AID denying the
			 records either in full or in part due to the above FOIA exemptions shall detail
			 in writing the nature of exemption relied upon. The Respondent may challenge
			 any such denials by petitioning the appointed hearing officer for the
			 information under a protective order, or other appropriate limitations
			 (assuming it is legally feasible to disclose such information in a limited
			 fashion) if the Respondent shows an imperative need for such information that
			 is critical to its defense to a NOPH.
b.
Pre-Hearing
			 Discovery
. The provisions of Ark. Code Ann. §§
											23-61-301 and
			 23-61-302 shall apply to a
			 Respondent's pre-hearing discovery rights under an adjudicative proceeding. The
			 Commissioner's issuance of subpoenas for witnesses or the production of
			 documents from persons, business organizations, or other entities under this
			 Rule shall be ministerial in nature. A party's request for a subpoena shall not
			 be denied unless the requested subpoena:
(1)
			 seeks information or testimony from persons or organizations that is
			 substantially irrelevant, or not substantially probative, of any issue raised
			 in the NOFH; or
(2) reasonably
			 appears to be intended to harass or overly burden the person or organization
			 with excessive information requests that are substantially not relevant to the
			 proceeding at issue. There is not a form required for use for a request for a
			 Commissioner's subpoena other than the request must be a request that details
			 and identifies the individuals needed to testify in an administrative
			 proceeding or sufficiently describes the documents to be produced. Requests for
			 a subpoena from the Commissioner shall be made to the investigator assigned to
			 review the complaint. Depositions of witnesses are permitted with an
			 appropriately described subpoena detailing the date, time and location of the
			 deposition for such person's testimony, with any described production of
			 documents. AlD and Respondent may however mutually agree as to the date, time
			 and location of the deposition. Although AID is not required to abide by other
			 pre-hearing discovery provisions or actions as permitted under the Arkansas
			 Rules of Civil Procedure, the parties to an adjudicative proceeding may however
			 mutually agree to other forms of pre-hearing discovery if it is permitted by
			 the appointed hearing officer.
5.
Conduct of Administrative
			 Hearing
. The conduct of any hearing for an adjudicative proceeding
			 under this Rule shall follow the provisions of Ark. Code Ann. §§
										23-61-301 to
			 23-61-306 and any of the
			 requirements described under the Arkansas Administrative Procedures Act in Ark.
			 Code Ann. §
										25-15-208. The Arkansas Rules of
			 Evidence do not apply to the admission or rejection of evidence submitted in
			 the proceeding; however, the hearing officer may loosely apply such standards
			 in the proceeding. The hearing officer may admit or deny oral or documentary
			 evidence on the basis of whether the information is relevant to the allegations
			 or defenses raised or alleged.
a. The
			 Commissioner, or his or her appointed hearing officer, may temporarily close an
			 administrative hearing from the public subject to Ark. Code Ann, §
											23-61-305(a).
b. The appointed hearing officer may
			 sequester witnesses for good cause upon request of any party in the
			 adjudicative proceeding.
c. The
			 appointed hearing officer has full power to maintain order, decorum and
			 organization of the proceeding, to make rulings on the admission or rejection
			 of evidence, to require adherence to his or her rulings as to all parties,
			 witnesses, or to the public in attendance, as well as other powers described in
			 Ark. Code Ann. §
											25-15-213(3)(A).
			 These powers include:
(i) To issue subpoenas
			 if the agency is authorized by law to issue them;
(ii) To administer oaths and
			 affirmations;
(iii) To maintain
			 order;
(iv) To rule upon all
			 questions arising during the course of a hearing or proceeding;
(v) To permit discovery by deposition or
			 otherwise;
(vi) To hold conferences
			 for the settlement or simplification of issues;
(vii) To make or recommend decisions;
			 and
(viii) Generally, to regulate
			 and guide the course of the pending proceeding.
d. The appointed hearing officer may issue
			 preliminary rulings and orders during the course of an administrative
			 proceeding, governing the administration of the proceeding, prior to a final
			 order, without such orders requiring ratification or approval by the
			 Commissioner under Section III (9) of this Rule.
e.
Interventions
.
			 Following issuance of the NOPH, interested persons may file a petition, motion
			 or request to intervene in writing to the Commissioner, under Ark. Code Ann.
			 §
											23-61-305(c)
			 setting forth its qualifications for intervention. An Intervenor's financial or
			 economic interests must be directly or immediately impacted by a Commissioner's
			 order on the issue(s) raised in the NOPH to qualify as Intervenors. The
			 Commissioner, or appointed hearing officer, may grant or deny a request for
			 intervention by written order with or without a separate administrative
			 hearing. Interveners granted participation in the proceeding shall be
			 identified as Interveners and shall be accorded the same rights as a party in
			 the administrative proceeding. There is no AID required form or format for a
			 petition, motion or request to intervene in a proceeding, other than, in
			 general, it should be in writing and set out its qualifications in satisfying
			 the above standards in this Section.
7.
Style Heading & Font
			 Requirements
. The style headings or format for documents, replies,
			 motions, written requests or responses related to an administrative proceeding
			 subject to this Section should follow the heading or format of the initial NOPH
			 stating the subject matter described, the name of the licensee, which shall be
			 identified as Respondent, and the AID tracking number. AID will not reject any
			 document failing to conform to these technical style requirements, however AID
			 strongly encourages Respondents with attorneys to comply with this requirement.
			 In addition, AID encourages Respondents when filing written documents in a
			 proceeding with AID to use a 12 (twelve) point typeface, double-spaced on eight
			 and ½ by eleven (11) inch paper.
8.
Time Limit for Orders
			 Following Hearing
. The time limit upon AID for the issuance of an
			 order, following an adjudicative hearing, shall follow the requirement in Ark.
			 Code Ann. §
										23-61-306(b) that
			 states an order must be entered within thirty (30) days from the termination of
			 the hearing or any rehearing thereon. The Commissioner or hearing officer may
			 keep the adjudicative hearing record open to receive items requested by the
			 hearing officer after a hearing, and, therefore, the hearing shall be
			 considered terminated when the record actually closes for purposes of the
			 thirty (30) day period under this Section. Pursuant to Ark. Code Ann. §
										23-61-306 and Ark. Code Ann.
			 §
										25-15-210, the Commissioner shall
			 mail a copy of the order to the same persons given notice of the hearing and to
			 all parties of the hearing with the content of the order complying with Section
			 III (A)(ll) of this Rule. A party may agree in advance to accept receipt or
			 delivery of the order by electronic means. In the absence of statutory language
			 explicitly referencing the time periods to be calculated upon working days, the
			 order shall be issued on the basis of calendar days.
9.
Review and Ratification of
			 Hearing Officer Findings and Recommendations
. For adjudicative
			 proceedings or hearings in which the Commissioner does not preside over the
			 matter as a hearing officer, the Commissioner shall review the record and
			 recommendations of the appointed hearing officer and may accept or reject such
			 recommendations, or make modifications thereof, and such actions shall be
			 reflected in writing in a final order.
10.
Request for
			 Rehearing
. The Respondent in an adjudicative proceeding or hearing
			 may request a rehearing with the Commissioner under Ark. Code Ann. §
										23-61-305(f)
			 within thirty (30) days after Respondent's receipt of the order by Respondent.
			 The Commissioner in his or her discretion may grant a rehearing or re-argument
			 of the matters involved. The Commissioner's discretion to grant a rehearing or
			 re-argument is guided by whether the order lacked substantial evidence under
			 Ark. Code Ann. §
										23-61-307(g)(2)
			 or violated the standards under Ark. Code Ann. §
										25-15-212(h). AID
			 does not require a specific form or format of a rehearing petition, rehearing
			 motion or request for a rehearing other than it should be a written request
			 describing such errors meeting the above described and cited statutory
			 standards. In the absence of statutory language explicitly referencing the time
			 periods to be calculated upon working days, the request for a rehearing shall
			 be made on the basis of calendar days.
11.
Content of the
			 Order
. The content of an adjudicative order subject to this
			 Section shall comply with Ark Code Ann. §
										23-61-306(c) and
			 (d) as well as Ark. Code Ann. §
										25-15-210. AID does not require a
			 specific form or format of a final order, other than, in general, it should
			 meet the above cited statutory standards.
12.
Emergency Suspension Orders
			 on a Public Emergency Basis
. Following the issuance of an AID
			 issued emergency order on the basis of a public, health, safety and welfare
			 emergency, pursuant to Ark. Code Ann. §
										23-64-216(e), a
			 hearing shall be promptly instituted. A hearing shall be considered promptly
			 instituted under Ark. Code Ann. §
										23-64-216(e) if
			 the hearing is held within ten (10) days of receipt by the Respondent of the
			 NOPH or emergency order issued, whichever is the earliest received by the
			 Respondent. By mutual agreement, AID and Respondent may agree to a different
			 time and date of the hearing. In the absence of statutory language explicitly
			 referencing the time periods to be calculated upon working days, the hearing
			 shall be set on the basis of calendar days.
13.
Petitions For Declaratory
			 Rulings Under Ark. Code Ann. §
											23-61-303(b)
. At his or her discretion/ the Insurance Commissioner may
			 interpret or decide an insurance issue in a written declaratory order issued
			 following the requirements of AID Rule 121 resolving a question or controversy
			 concerning the applicability of statutory provisions, rules or orders over
			 which AID has authority. The time period of such adjudication shall follow the
			 requirements of AID Rule 121 which requires an order within ninety (90) days
			 from the filing of the petition. The discretion of the Commissioner to consider
			 issuing a declaratory order shall include the evaluation of whether:
(1) there is an issue of sufficient
			 state-wide magnitude over an ambiguity, interpretation or conflict requiring an
			 interpretation for the public consumers involved or a substantial number of
			 third parties servicing those consumers; and
(2) rulemaking procedures would not be timely
			 in alleviating any irreparable harm to insureds or affected third parties
			 needing an interpretation. The Commissioner may in his or her discretion grant
			 or deny a request for a declaratory order with or without a hearing. If
			 granted, the Commissioner may set a request for a declaratory order for an
			 administrative hearing to consider legal argument(s) related to such requested
			 interpretations. AID does not have a specific form or required format for a
			 petition for a declaratory ruling other than it be a request in writing to the
			 Commissioner detailing the standards above.
14.
Aggrieved Person Demand for
			 Hearing
. The Commissioner shall hold a hearing under Ark. Code
			 Ann. §
										23-61-303(b) on
			 written demand for a hearing by any person aggrieved by any act, threatened
			 act, or failure of Commissioner to act or by any report, rule, regulation or
			 order of the Commissioner. A person shall be considered aggrieved in the event
			 of an order, act or failure to act by the Commissioner if:
(1) Such action or inaction substantially and
			 directly impacts a person's or business organization's insurance rights or
			 benefits; and
(2) AID has
			 substantially demonstrated no intent to investigate or review such claim(s) or
			 complaint. Upon written demand for a hearing made by an aggrieved person, the
			 hearing shall be held within thirty (30) days after receipt by the Commissioner
			 of the demand. In the absence of statutory language explicitly referencing the
			 time periods to be calculated upon working days, a hearing shall be held on the
			 basis of calendar days.
15.
Consent Orders
.
			 Upon mutual agreement, AID and the Respondent may resolve an administrative
			 adjudication by written stipulation or through a written consent order as
			 approved by the Commissioner. The order shall be equivalent to any final order
			 issued under this Rule. There is no AID required form or format of a consent
			 order other than, in general, it should meet the previously cited statutory
			 standards of the required content in a final order. AID may supply a licensee
			 with a previously issued, or a historically issued consent order form, to
			 facilitate an agreed format for a consent order.
16.
Electronic Communications and
			 Filings
. Any requirement under this Section of the Rule
			 necessitating a document in writing may be satisfied if such communication is
			 submitted through electronic means, except for Notices Of Public Hearings or
			 final orders which shall be physically mailed. However, a Respondent may agree
			 in writing to accept service of a NOPH or a final order via email.
17.
Appeals of AID
			 Orders
. A Respondent or Intervener may appeal a final order issued
			 by the Commissioner as an administrative adjudication order under either Ark.
			 Code Ann. §
										23-61-307 or Ark. Code Ann. §
										25-15-202.
18.
Ex Parte Communications Are
			 Prohibited
. For administrative adjudications in which there has
			 been issued a NOPH, no AID personnel involved with an investigation or hearing
			 shall communicate with the appointed hearing officer or Commissioner about the
			 matter outside the presence of the Respondent or Respondent's attorney, and
			 this same limitation applies to communications to the hearing officer or
			 Commissioner by the Respondent, or Respondent's attorney, outside the presence
			 of an AID attorney or investigator assigned to the file. However, AID personnel
			 may disclose to a hearing officer, or Commissioner, status report activities of
			 the file, if it is a required job duty of such person to provide status reports
			 of his or her activities to the hearing officer or Commissioner.
19.
Telephonic or Live Video
			 Based Testimony
. In the event of a significant hardship upon a
			 witness to attend an administrative adjudicative hearing, and, upon approval by
			 AID, the Respondent and the appointed hearing officer, a witness in a
			 proceeding may testify under oath during an in person hearing via telephone or
			 on a live video basis.
20.
Live Video-Based Adjudicative Proceedings
. Upon
			 approval of the appointed hearing officer, AID and the Respondent, adjudicative
			 proceedings may be conducted by live video conferencing. AID shall
			 appropriately arrange for a court reporter to participate and to swear in
			 witnesses and to transcribe testimony.
21.
Preferred Filing
			 Requirements
. For adjudicative proceedings in which a NOPH has
			 been issued, AID does not, at this time, maintain any formal filing, or system
			 requirements for it to receive and process filings, communications or other
			 documents from parties during the course of an administration proceeding.
			 Therefore, AID strongly advises Respondents represented by an attorney to
			 notify or copy by regular mail, or electronic mail, the director of
			 administrative legal services at AID with any replies to a NOPH, pre-hearing
			 motions, discovery requests, briefs, or other formal and substantially
			 important filings related to the administrative hearing. The Respondent should
			 identify the AID tracking number and style of the matter in order for AID to
			 maintain an accurate, chronological administrative record of such activities
			 for purposes of tracking and appeal. AID should provide the appropriate contact
			 information of the AID Legal Division administrative director in the AID cover
			 letter accompanying a NOPH. Licensees not represented by attorneys are strongly
			 advised to also copy the AID Legal Division administrative director, as
			 identified in the NOPH cover letter, with copies of significant communications
			 related to the administrative proceeding, although it is not a violation of the
			 Rule for failure of any licensee to do so. AID simply requests these practices
			 or procedures be encouraged to help facilitate its regulatory obligation to
			 maintain an accurate and complete chronological record of activities related to
			 the proceeding in the event that the licensee later appeals a ruling or order
			 of the Commissioner.
22.
Administrative Actions Following a Limited Scope Market Conduct
			 Examination
. The provisions of Section III of this Rule shall
			 apply to administrative actions undertaken by AID against licensees arising
			 from findings pursuant to a limited scope market conduct report, unless such
			 action pertains to a hearing under Ark. Code Ann. §
										23-61-205(a)(3)(C)
			 in which case the procedures under that Section shall apply.
23.
Denials of Insurance Producer
			 Licensing or Renewals
. Although a denial by the Commissioner or
			 AID related to an insurance producer's application or renewal for a license is
			 not typically formulated into an administrative order, a producer, or person
			 seeking a license as a producer, may request an administrative hearing over the
			 denial. In such event, the administrative actions, practices and procedures
			 after such a request shall follow Section III of this Rule.
24.
Denials of Insurer, HMO or
			 Other Business Organization Licensing or Renewals
. Other than
			 actions relating to denials of licensing or renewals by AID or the Commissioner
			 pertaining to matters described in Section III(A)(1) of this Rule, the
			 Commissioner or AID may set an administrative hearing for a review of a denial
			 of licensing or renewal of a business organization, upon a request in writing
			 by the organization. In such event, the administrative actions, practices and
			 procedures after such a request shall follow Section III of this
			 Rule.
25.
Settlement
			 Conferences
. In his or her discretion, the Commissioner, or
			 appointed hearing officer, is authorized to require parties in an adjudicative
			 proceeding under Section III of this Rule to participate in a settlement
			 conference at a date, time or location specified by the Commissioner or hearing
			 officer, unless the parties mutually agree to a different time, date and
			 location. No statements made during the conference, or prepared for purposes of
			 this conference, shall be admissible in any adjudicative hearing. A conference
			 under this Section, if requested, shall be attended by the identified parties,
			 and attorneys if any, and may be required to occur as a condition before an
			 adjudicative hearing is held on the matter. The conference may be held in
			 person, over the phone, or through live video conferencing.