(215 ILCS 5/511.110) (from Ch. 73, par. 1065.58-110)

(Section scheduled to be repealed on January 1, 2027)

Sec. 511.110. Administrative fine.

(a) If the Director finds that one or more grounds exist for the revocation or suspension of a license issued under this Article, the Director may, in lieu of or in addition to such suspension or revocation, impose a fine upon the administrator.

(b) With respect to any knowing and wilful violation of a lawful order of the Director, any applicable portion of the Illinois Insurance Code or Part of Title 50 of the Illinois Administrative Code, or a provision of this Article, the Director may impose a fine upon the administrator in an amount not to exceed $10,000 for each such violation. In no event shall such fine exceed an aggregate amount of $50,000 for all knowing and wilful violations arising out of the same action.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/511.111) (from Ch. 73, par. 1065.58-111)

(Section scheduled to be repealed on January 1, 2027)

Sec. 511.111. Insurance Producer Administration Fund. All fees and fines paid to and collected by the Director under this Article shall be paid promptly after receipt thereof, together with a detailed statement of such fees, into a special fund in the State Treasury to be known as the Insurance Producer Administration Fund. The monies deposited into the Insurance Producer Administration Fund shall be used only for payment of the expenses of the Department and shall be appropriated as otherwise provided by law for the payment of such expenses. Moneys in the Insurance Producer Administration Fund may be transferred to the Professions Indirect Cost Fund, as authorized under Section 2105-300 of the Department of Professional Regulation Law of the Civil Administrative Code of Illinois.

(Source: P.A. 98-463, eff. 8-16-13.)

(215 ILCS 5/511.112) (from Ch. 73, par. 1065.58-112)

(Section scheduled to be repealed on January 1, 2027)

Sec. 511.112. Fiduciary accounts and duties.

(a) Administrators shall hold in a fiduciary capacity all contributions and premiums received or collected on behalf of a plan sponsor or insurer. Such funds shall not be used as general operating funds of the administrator. All contributions and premiums received or collected by the administrator from residents of this State, which the Administrator holds more than 15 days or deposits into an account which is not under the control of the plan sponsor or insurer, shall be placed in a special fiduciary account, which account shall be designated an "Administrator Trust Fund Account" ("ATF"). All resident and quasi-resident licensees required to maintain an ATF pursuant to this Section shall maintain such ATF with one or more financial institutions located within the State of Illinois and subject to jurisdiction of the Illinois courts. Funds belonging to 2 or more plans may be held in the same ATF, provided the administrator's records clearly indicate the funds belonging to each plan. Checks drawn on the ATF shall indicate on their face that they are drawn on the ATF of the administrator.

(b) The administrator may make the following disbursements from the ATF:

(1) contributions and premiums due insurers or other persons providing life, accident and health coverage for a plan;

(2) return contributions and premiums to a plan or covered individual;

(3) commissions or administrative fees due to the administrator when earned pursuant to written agreement; and

(4) transfers into the CASA of the administrator.

(c) For each plan where an ATF is required, the balance in the ATF shall at all times be the amount deposited plus accrued interest, if any, less authorized disbursements. If the balance at the financial institution with respect to the ATF is less than the amount deposited plus accrued interest, if any, less authorized disbursements, the administrator shall be deemed to have misappropriated fiduciary funds and to have acted in a financially irresponsible manner.

(d) If the ATF is interest bearing or income producing, the full nature of the account must first be disclosed to the plan sponsors or insurers on whose behalf the funds are or will be held. The administrator must secure written consent and authorization from the plan sponsors or insurers for the investment of the money and disposition of the interest or earnings. No investment shall be made which assumes any risk other than the risk that the obligor shall not pay the principal when due. The use of specialized techniques or strategies which incur additional risks to generate higher returns or to extend maturities is not permitted. Such techniques would include, but not be limited to, the following: Use of financial futures or options, buying on margins and pledging of ATF balances.

(e) Administrators may place ATF funds in interest bearing or income producing investments and retain the interest or income thereon, providing the administrator obtains the prior written authorization of the plan sponsors or insurers on whose behalf the funds are to be held. In addition to savings and checking accounts, an administrator may invest in the following:

(1) direct obligations of the United States of America or U.S. Government agency securities with maturities of not more than one year;

(2) certificates of deposit, with a maturity of not more than one year, issued by financial institutions which are insured by the Federal Deposit Insurance Corporation (FDIC) or Federal Savings and Loan Insurance Corporation (FSLIC), so long as any such deposit does not exceed the maximum level of insurance protection provided to certificates of deposits held by such institutions;

(3) repurchase agreements with financial institutions or government securities dealers recognized as primary dealers by the Federal Reserve System provided:

(A) the value of the repurchase agreement is collateralized with assets which are allowable investments for ATF funds; and

(B) the collateral has a market value at the time the repurchase agreement is entered into at least equal to the value of the repurchase agreement; and

(C) the repurchase agreement does not exceed 30 days.

(4) commercial paper, provided the commercial paper is rated at least P-1 by Moody's Investors Service, Inc. or at least A-1 by Standard & Poor's Corporation;

(5) money market funds, provided the money market fund invests exclusively in assets which are allowable investments pursuant to (1) through (4) above for ATF funds;

(6) each investment transaction must be made in the name of the administrator's ATF. The administrator must maintain evidence of any such investments. Each investment transaction must flow through the administrator's ATF.

(f) The administrator shall hold in a fiduciary capacity all moneys which the administrator receives to pay claims and claim adjustment expenses. All resident and quasi-resident licensees shall place all such money for claims and claim adjustment expenses for residents of this State, whether received from a plan sponsor or insurer or from the ATF of the administrator, in a special fiduciary account in a financial institution located in this State. The account shall be designated a "Claims Administration Service Account" ("CASA"). Funds belonging to 2 or more plans may be held in the same CASA, provided the administrator's records clearly indicate the funds belonging to each plan. Checks drawn on the CASA shall indicate on their face that they are drawn on the CASA of the administrator.

(g) No deposit shall be made into a CASA and no disbursement shall be made from a CASA except for claims and claims adjustment expenses. For each plan where a CASA is required, the balance in the CASA shall at all times be the amount deposited less claims and claims adjustment expenses paid. If the CASA balance is less than such amount, the administrator shall be deemed to have misappropriated fiduciary funds and to have acted in a financially irresponsible manner.

(h)(1) Administrators shall maintain detailed books and records which reflect all transactions involving the receipt and disbursement of:

(i) contributions and premiums received on behalf of a plan sponsor or insurer; and

(ii) claims and claim adjustment expenses received and paid on behalf of a plan sponsor or insurer.

(2) The detailed preparation, journalizing and posting of such books and records must be maintained on a timely basis and all journal entries for receipts and disbursements shall be supported by evidential matter, which must be referenced in the journal entry so that it may be traced for verification. Administrators shall prepare and maintain monthly financial institution account reconciliations of any ATF and CASA established by the administrator. The minimum detail required shall be as follows:

(i) The sources, amounts and dates of any moneys received and deposited by the administrator.

(ii) The date and person to whom a disbursement is made. If the amount disbursed does not agree with the amount billed or authorized, the administrator shall prepare a written record as to the reason.

(iii) A description of the disbursement in such detail to identify the source document substantiating the purpose of the disbursement.

(i) Failure to maintain accurately and timely the books and records required above shall be deemed untrustworthy, hazardous or injurious to participants in the plan or the public and financially irresponsible.

(j) This Section shall not apply to nonresident administrators who are subject to substantially similar requirements in their state of domicile.

(Source: P.A. 84-1431.)

(215 ILCS 5/511.113) (from Ch. 73, par. 1065.58-113)

(Section scheduled to be repealed on January 1, 2027)

Sec. 511.113. Unauthorized Activities. Nothing in this Article shall be construed to permit any person or entity to receive, or collect charges, contributions or premiums for, or adjust or settle claims in connection with any type of life or accident or health benefit unless such person or entity is authorized through the insurance laws of a state or the ERISA of 1974, 29 USC par. 1001 et seq. as amended, to provide such benefits.

(Source: P.A. 84-887.)

(215 ILCS 5/511.114)

(Section scheduled to be repealed on January 1, 2027)

Sec. 511.114. Drug formulary; notice. All administrators must comply with Section 155.37 of this Code.

(Source: P.A. 92-440, eff. 8-17-01.)

(215 ILCS 5/511.118)

(Section scheduled to be repealed on January 1, 2027)

Sec. 511.118. Managed Care Reform and Patient Rights Act. All administrators are subject to the provisions of Sections 55 and 85 of the Managed Care Reform and Patient Rights Act.

(Source: P.A. 91-617, eff. 1-1-00.)

(215 ILCS 5/Art. XXXI.5 heading) ARTICLE XXXI 1/2. THIRD PARTY PRESCRIPTION PROGRAMS

(215 ILCS 5/512-1) (from Ch. 73, par. 1065.59-1)

Sec. 512-1. Short Title. This Article shall be known and may be cited as the "Third Party Prescription Program Act".

(Source: P.A. 82-1005.)

(215 ILCS 5/512-2) (from Ch. 73, par. 1065.59-2)

Sec. 512-2. Purpose. It is hereby determined and declared that the purpose of this Article is to regulate certain practices engaged in by third-party prescription program administrators.

(Source: P.A. 82-1005.)

(215 ILCS 5/512-3) (from Ch. 73, par. 1065.59-3)

Sec. 512-3. Definitions. For the purposes of this Article, unless the context otherwise requires, the terms defined in this Article have the meanings ascribed to them herein:

(a) "Third party prescription program" or "program" means any system of providing for the reimbursement of pharmaceutical services and prescription drug products offered or operated in this State under a contractual arrangement or agreement between a provider of such services and another party who is not the consumer of those services and products. Such programs may include, but need not be limited to, employee benefit plans whereby a consumer receives prescription drugs or other pharmaceutical services and those services are paid for by an agent of the employer or others.

(b) "Third party program administrator" or "administrator" means any person, partnership or corporation who issues or causes to be issued any payment or reimbursement to a provider for services rendered pursuant to a third party prescription program, but does not include the Director of Healthcare and Family Services or any agent authorized by the Director to reimburse a provider of services rendered pursuant to a program of which the Department of Healthcare and Family Services is the third party.

(Source: P.A. 95-331, eff. 8-21-07.)

(215 ILCS 5/512-4) (from Ch. 73, par. 1065.59-4)

Sec. 512-4. Registration. All third party prescription programs and administrators doing business in the State shall register with the Director of Insurance. The Director shall promulgate regulations establishing criteria for registration in accordance with the terms of this Article. The Director may by rule establish an annual registration fee for each third party administrator.

(Source: P.A. 82-1005.)

(215 ILCS 5/512-5) (from Ch. 73, par. 1065.59-5)

Sec. 512-5. Fiduciary and Bonding Requirements. A third party prescription program administrator shall (1) establish and maintain a fiduciary account, separate and apart from any and all other accounts, for the receipt and disbursement of funds for reimbursement of providers of services under the program, or (2) post, or cause to be posted, a bond of indemnity in an amount equal to not less than 10% of the total estimated annual reimbursements under the program.

The establishment of such fiduciary accounts and bonds shall be consistent with applicable State law. If a bond of indemnity is posted, it shall be held by the Director of Insurance for the benefit and indemnification of the providers of services under the third party prescription program.

An administrator who operates more than one third party prescription program may establish and maintain a separate fiduciary account or bond of indemnity for each such program, or may operate and maintain a consolidated fiduciary account or bond of indemnity for all such programs.

The requirements of this Section do not apply to any third party prescription program administered by or on behalf of any insurance company, Health Care Service Plan Corporation or Pharmaceutical Service Plan Corporation authorized to do business in the State of Illinois.

(Source: P.A. 82-1005.)

(215 ILCS 5/512-6) (from Ch. 73, par. 1065.59-6)

Sec. 512-6. Notice. Notice of any change in the terms of a third party prescription program, including but not limited to drugs covered, reimbursement rates, co-payments, and dosage quantity, shall be given to each enrolled pharmacy at least 30 days prior to the time it becomes effective.

(Source: P.A. 82-1005.)

(215 ILCS 5/512-7) (from Ch. 73, par. 1065.59-7)

Sec. 512-7. Contractual provisions.

(a) Any agreement or contract entered into in this State between the administrator of a program and a pharmacy shall include a statement of the method and amount of reimbursement to the pharmacy for services rendered to persons enrolled in the program, the frequency of payment by the program administrator to the pharmacy for those services, and a method for the adjudication of complaints and the settlement of disputes between the contracting parties.

(b)(1) A program shall provide an annual period of at least 30 days during which any pharmacy licensed under the Pharmacy Practice Act may elect to participate in the program under the program terms for at least one year.

(2) If compliance with the requirements of this subsection (b) would impair any provision of a contract between a program and any other person, and if the contract provision was in existence before January 1, 1990, then immediately after the expiration of those contract provisions the program shall comply with the requirements of this subsection (b).

(3) This subsection (b) does not apply if:

(A) the program administrator is a licensed health maintenance organization that owns or controls a pharmacy and that enters into an agreement or contract with that pharmacy in accordance with subsection (a); or

(B) the program administrator is a licensed health maintenance organization that is owned or controlled by another entity that also owns or controls a pharmacy, and the administrator enters into an agreement or contract with that pharmacy in accordance with subsection (a).

(4) This subsection (b) shall be inoperative after October 31, 1992.

(c) The program administrator shall cause to be issued an identification card to each person enrolled in the program. The identification card shall include:

(1) the name of the individual enrolled in the program; and

(2) an expiration date if required under the contractual arrangement or agreement between a provider of pharmaceutical services and prescription drug products and the third party prescription program administrator.

(Source: P.A. 95-689, eff. 10-29-07.)

(215 ILCS 5/512-8) (from Ch. 73, par. 1065.59-8)

Sec. 512-8. Cancellation procedures. (a) The administrator of a program shall notify all pharmacies enrolled in the program of any cancellation of the coverage of benefits of any group enrolled in the program at least 30 days prior to the effective date of such cancellation. However, if the administrator of a program is not notified at least 45 days prior to the effective date of such cancellation, the administrator shall notify all pharmacies enrolled in the program of the cancellation as soon as practicable after having received notice.

(b) When a program is terminated, all persons enrolled therein shall be so notified, and the employer shall make every reasonable effort to gain possession of any plan identification cards in such persons' possession.

(c) Any person who intentionally uses a program identification card to obtain services from a pharmacy after having received notice of the cancellation of his benefits shall be guilty of a Class C misdemeanor. Persons shall be liable to the program administrator for all monies paid by the program administrator for any services received pursuant to any improper use of the identification card.

(Source: P.A. 82-1005.)

(215 ILCS 5/512-9) (from Ch. 73, par. 1065.59-9)

Sec. 512-9. Denial of Payment. (a) No administrator shall deny payment to any pharmacy for covered pharmaceutical services or prescription drug products rendered as a result of the misuse, fraudulent or illegal use of an identification card unless such identification card had expired, been noticeably altered, or the pharmacy was notified of the cancellation of such card. In lieu of notifying pharmacies which have a common ownership, the administrator may notify a party designated by the pharmacy to receive such notice, in which case, notification shall not become effective until 5 calendar days after the designee receives notification.

(b) No program administrator may withhold any payment to any pharmacy for covered pharmaceutical services or prescription drug products beyond the time period specified in the payment schedule provisions of the agreement, except for individual claims for payment which have been returned to the pharmacy as incomplete or illegible. Such returned claims shall be paid if resubmitted by the pharmacy to the program administrator with the appropriate corrections made.

(Source: P.A. 82-1005.)

(215 ILCS 5/512-10) (from Ch. 73, par. 1065.59-10)

Sec. 512-10. Failure to Register. Any third party prescription program or administrator which operates without a certificate of registration or fails to register with the Director and pay the fee prescribed by this Article shall be construed to be an unauthorized insurer as defined in Article VII of this Code and shall be subject to all penalties contained therein.

The provisions of the Article shall apply to all new programs established on or after January 1, 1983. Existing programs shall comply with the provisions of this Article on the anniversary date of the programs that occurs on or after January 1, 1983.

(Source: P.A. 82-1005.)

(215 ILCS 5/Art. XXXI.75 heading) ARTICLE XXXI 3/4 PUBLIC INSURANCE ADJUSTERS AND REGISTERED FIRMS (Repealed)(Source: Repealed by P.A. 102-135, eff. 7-23-21.)

(215 ILCS 5/Art. XXXIIA heading) ARTICLE XXXIIA. PREMIUM FINANCE REGULATION

(215 ILCS 5/513a1) (from Ch. 73, par. 1065.60a1)

Sec. 513a1. Scope of Article.

(a) Except as provided in subsection (b), this Article applies to all persons engaged in the business of financing insurance premiums, entering into premium finance agreements, or otherwise acquiring premium finance agreements, and insurance companies and insurance producers as defined in this Code, except in connection with premiums on the kinds of business described as Class 1(a) or Class 1(b) of Section 4.

(b) Except for the provisions of Section 513a11 that apply to all premium financing agreements in which the right to cancel one or more policies of insurance on behalf of the named has been assigned to the lender, this Article does not apply to the following entities:

(1) Credit unions, as defined in the Illinois Credit Union Act.

(2) Banks, as defined in the Illinois Banking Act.

(3) Savings and loan associations, as defined in the Illinois Savings and Loan Act of 1985.

(4) Persons operating under the provisions of Section 4a of the Interest Act.

(5) Persons operating under the Consumer Installment Loan Act or the Consumer Finance Act.

(6) Persons that acquire premium finance agreements from insurance companies and entities described in paragraphs (1) through (5).

(Source: P.A. 87-811.)

(215 ILCS 5/513a2) (from Ch. 73, par. 1065.60a2)

Sec. 513a2. Definitions.

(a) "Accepted agreement" means a premium finance agreement deemed to be accepted by a premium finance company when a binder number or policy number is provided for each policy premium listed on the premium finance agreement and premium payment book or when the first premium payment notice has been sent to the named insured.

(b) "Financing insurance premiums" means to be engaged in the practice of:

(1) advancing monies directly or indirectly to an insurer pursuant to the terms of an acquired premium finance agreement; or

(2) allowing 10% or more of a producer's or registered firm's premium accounts receivable to be more than 90 days past due.

(c) "Premium finance agreement" means a promissory note, loan contract, or agreement by which an insured or prospective insured promises to pay to another person an amount advanced or to be advanced thereunder to an insurer in payment of premiums on an insurance contract together with a service charge and which contains an assignment of or is otherwise secured by the unearned premium payable by the insurer upon cancellation of the insurance contract; provided, however, that a premium finance agreement shall not include an installment sale contract, lease agreement, security agreement, or mortgage covering personal or real property that includes a charge for insurance or pursuant to which the vendor, lessor, lienholder, or mortgagee is authorized to pay or advance the premium for insurance with respect to that property.

(d) "Premium finance company" means any person engaged in the business of financing insurance premiums, of entering into premium finance agreements with insureds, or of acquiring premium finance agreements.

(Source: P.A. 90-655, eff. 7-30-98.)

(215 ILCS 5/513a3) (from Ch. 73, par. 1065.60a3)

Sec. 513a3. License required.

(a) No person may act as a premium finance company or hold himself out to be engaged in the business of financing insurance premiums, either directly or indirectly, without first having obtained a license as a premium finance company from the Director.

(b) An insurance producer shall be deemed to be engaged in the business of financing insurance premiums if 10% or more of the producer's total premium accounts receivable are more than 90 days past due.

(c) In addition to any other penalty set forth in this Article, any person violating subsection (a) of this Section may, after hearing as set forth in Article XXIV of this Code, be required to pay a civil penalty of not more than $2,000 for each offense.

(d) In addition to any other penalty set forth in this Article, any person violating subsection (a) of this Section is guilty of a Class A misdemeanor. Any individual violating subsection (a) of this Section, and misappropriating or converting any monies collected in conjunction with the violation, is guilty of a Class 4 felony.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/513a4) (from Ch. 73, par. 1065.60a4)

Sec. 513a4. Application and license.

(a) Each application for a premium finance license shall be made on a form specified by the Director and shall be signed by the applicant declaring under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the applicant's knowledge and belief. The Director shall cause to be issued a license to each applicant that has demonstrated to the Director that the applicant:

(1) is competent and trustworthy and of a good business reputation;

(2) has a minimum net worth of $50,000; and

(3) has paid the fees required by this Article.

(b) Each applicant at the time of request for a license or renewal of a license shall:

(1) certify that no charge for financing premiums shall exceed the rates permitted by this Article;

(2) certify that the premium finance agreement or other forms being used are in compliance with the requirements of this Article;

(3) certify that he or she has a minimum net worth of $50,000; and

(4) attach with the application a non-refundable annual fee of $400.

(c) An applicant who has met the requirements of subsection (a) and subsection (b) shall be issued a premium finance license.

(d) Each premium finance license shall remain in effect as long as the holder of the license annually continues to meet the requirements of subsections (a) and (b) by the due date unless the license is revoked or suspended by the Director.

(e) The individual holder of a premium finance license shall inform the Director in writing of a change in residence address within 30 days of the change, and a corporation, partnership, or association holder of a premium finance license shall inform the Director in writing of a change in business address within 30 days of the change.

(f) Every partnership or corporation holding a license as a premium finance company shall appoint one or more partners or officers to be responsible for the firm's compliance with the Illinois Insurance Code and applicable rules and regulations. Any change in the appointed person or persons shall be reported to the Director in writing within 30 days of the change.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/513a5) (from Ch. 73, par. 1065.60a5)

Sec. 513a5. Insurance Producer Administration Fund. All fees and penalties paid to and collected by the Director under this Article shall be paid promptly after receipt, together with a detailed statement of the fees, into the Insurance Producer Administration Fund.

(Source: P.A. 98-463, eff. 8-16-13.)

(215 ILCS 5/513a6) (from Ch. 73, par. 1065.60a6)

Sec. 513a6. Felony convictions. Any person or authorized member of a partnership or corporation who, while licensed as a premium finance company, is convicted of a felony shall report the conviction to the Director within 30 days of the entry date of the judgement. Within that 30 day period, the person shall also provide the Director with a copy of the judgement, the probation or commitment order, and any other relevant document.

(Source: P.A. 87-811.)

(215 ILCS 5/513a7) (from Ch. 73, par. 1065.60a7)

Sec. 513a7. License suspension; revocation or denial.

(a) Any license issued under this Article may be suspended, revoked, or denied if the Director finds that the licensee or applicant:

(1) has wilfully violated any provisions of this Code or the rules and regulations thereunder;

(2) has intentionally made a material misstatement in the application for a license;

(3) has obtained or attempted to obtain a license through misrepresentation or fraud;

(4) has misappropriated or converted to his own use or improperly withheld monies;

(5) has used fraudulent, coercive, or dishonest practices or has demonstrated incompetence, untrustworthiness, or financial irresponsibility;

(6) has been, within the past 3 years, convicted of a felony, unless the individual demonstrates to the Director sufficient rehabilitation to warrant public trust;

(7) has failed to appear without reasonable cause or excuse in response to a subpoena issued by the Director;

(8) has had a license suspended, revoked, or denied in any other state on grounds similar to those stated in this Section; or

(9) has failed to report a felony conviction as required by Section 513a6.

(b) Suspension, revocation, or denial of a license under this Section shall be by written order sent to the licensee or applicant by certified or registered mail at the address specified in the records of the Department. The licensee or applicant may in writing request a hearing within 30 days from the date of mailing. If no written request is made the order shall be final upon the expiration of that 30 day period.

(c) If the licensee or applicant requests a hearing under this Section, the Director shall issue a written notice of hearing sent to the licensee or applicant by certified or registered mail at his address, as specified in the records of the Department, and stating:

(1) the grounds, charges, or conduct that justifies suspension, revocation, or denial under this Section;

(2) the specific time for the hearing, which may not be fewer than 20 nor more than 30 days after the mailing of the notice of hearing; and

(3) a specific place for the hearing, which may be either in the City of Springfield or in the county where the licensee's principal place of business is located.

(d) Upon the suspension or revocation of a license, the licensee or other person having possession or custody of the license shall promptly deliver it to the Director in person or by mail. The Director shall publish all suspensions and revocations after they become final in a manner designed to notify interested insurance companies and other persons.

(e) Any person whose license is revoked or denied under this Section shall be ineligible to apply for any license for 2 years. A suspension under this Section may be for a period of up to 2 years.

(f) In addition to or instead of a denial, suspension, or revocation of a license under this Section, the licensee may be subjected to a civil penalty of up to $2,000 for each cause for denial, suspension, or revocation. The penalty is enforceable under subsection (5) of Section 403A of this Code.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/513a8) (from Ch. 73, par. 1065.60a8)

Sec. 513a8. Examinations.

(a) The Director may examine any applicant for or holder of a premium finance license.

(b) All persons being examined, as well as their officers and directors, shall provide to the Director convenient and free access, at all reasonable hours at their offices, to all books, records, documents, and other papers relating to the person's insurance and premium financing business affairs. The licensee or its officers, directors, and employees shall facilitate and aid the Director in the examinations as much as it is in their power to do so.

(c) The Director may designate an examiner or examiners to conduct any examination under this Section. The Director or his designee may administer oaths and examine under oath any individual relative to the business of the person being examined.

(d) The examiners designated by the Director under this Section may make reports to the Director. Any report alleging substantive violations of this Code or the rules and regulations thereunder shall be in writing and be based upon facts obtained by the examiners. The report of examination shall be verified by the examiners.

(e) If a report is made, the Director shall either deliver a duplicate thereof to the licensee being examined or send the duplicate by certified or registered mail to the licensee's address of record. The Director shall afford the licensee an opportunity to request a hearing with reference to the facts and other evidence contained in the report. The licensee may request a hearing within 14 calendar days after he receives the duplicate of the examination report by giving the Director written notice of that request, together with written statement of the licensee's objection to the report. The Director shall, if requested to do so, conduct a hearing in accordance with Sections 402 and 403. The Director shall issue a written order based upon the examination report within 90 days after the report is filed or within 90 days after the hearing, if a hearing is held. If the report is refused or otherwise undeliverable or a hearing is not requested in a timely fashion, the right to a hearing is waived. After the hearing or the expiration of the time period in which a licensee may request a hearing, if the examination reveals that the licensee is operating in violation of any law, this Code or rules and regulations promulgated thereunder, or prior order, the Director in the written order may require the licensee to take any action the Director considers necessary or appropriate in accordance with the report or examination hearing. The order is subject to review under the Administrative Review Law.

(f) Any licensee who violates or aids and abets any violation of a written order issued under this Section shall be guilty of a business offense, and his license may be revoked or suspended under Section 513a7, and he may be fined not less than $501 nor more than $5,000.

(Source: P.A. 87-811.)

(215 ILCS 5/513a9) (from Ch. 73, par. 1065.60a9)

Sec. 513a9. Premium finance agreement.

(a) A premium finance agreement must be dated and signed by or on behalf of the named insured, and the printed portion shall be in at least 8-point type. The following items must be set forth on the first page of the accepted finance agreement:

(1) the total amount of the premiums;

(2) the amount of the down payment;

(3) the principal balance (the difference between items (1) and (2));

(4) the amount of the finance charges expressed in dollars and as an annual percentage rate;

(5) the balance payable by the insured (sum of items (3) and (4));

(6) the number of installments, the due dates thereof, and the amount of each installment expressed in dollars; and

(7) the policy numbers or binder numbers.

(b) The premium finance company is required to furnish full and complete disclosure of the terms and conditions of the premium finance agreement including, but not limited to, the specific insurance coverages financed to the named insured no later than the date that the first premium payment notice is sent to the insured.

(c) As to policies written primarily for personal, family, or household use, the premium finance company must:

(1) deliver or mail the premium check or checks in the amount of the principal balance directly to the insurer or insurers unless the insurer or insurers have given written authority to the premium finance company to deliver the checks to the producer;

(2) issue the premium check or checks payable to the insurer, insurers, or, if the insurer gives written authority to the premium finance company, to the producer; and

(3) properly identify the premium check or checks by policy number or binder number when the premium is paid to the insurer or insurers.

(d) As to all other policies the premium finance company may:

(1) deliver or mail the premium check or checks in the amount of the principal balance directly to the producer; and

(2) issue the premium check or checks payable to the producer.

(e) A premium finance company that pays the financed premium to the producer pursuant to subsection (d) establishes the producer as the agent of the premium finance company for payment of the premium and for receipt of any return premium.

(Source: P.A. 89-265, eff. 1-1-96; 90-381, eff. 8-14-97.)

(215 ILCS 5/513a10) (from Ch. 73, par. 1065.60a10)

Sec. 513a10. Maximum service charge.

(a) No service charge shall be made for financing premiums other than as permitted by this Article.

(b) The service charge is to be computed on the principal balance from the effective date of the insurance coverage for which the premiums are being advanced to and including the date when the final installment of the premium finance agreement is payable.

(c) The service charge shall be a maximum of $10 per $100 per year plus an allowable charge as follows:

(d) The service charge or any other charge made by the licensee does not have to be refunded upon cancellation or prepayment. The allowable charge is considered to be part of the service charge.

(e) A premium finance agreement may provide for a delinquency charge of not less than $1 nor more than 5% of any installment in default for more than 5 days.

(f) Any other charges shall be disclosed in the premium finance agreement.

(Source: P.A. 87-811.)

(215 ILCS 5/513a11) (from Ch. 73, par. 1065.60a11)

Sec. 513a11. Cancellation requirements upon default.

(a) When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the premium finance agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless the request for cancellation is effectuated under this Section.

(b) Not less than 10 days written notice shall be mailed to the named insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within the 10 day period.

(c) After expiration of the 10 day period, the premium finance company may request, in the name of the named insured, cancellation of the insurance contract or contracts by mailing or hand delivering to the insurer a request for cancellation, and the insurance contract shall be cancelled as if the request for cancellation had been submitted by the named insured, but without requiring the return of the insurance contract or contracts. The premium finance company shall also mail a copy of the request for cancellation to the named insured at his last known address.

(d) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under provisions of this Section. The insurer shall give the notice to any governmental agency, mortgagee, or other third party on or before the fifth business day after it receives the notice of cancellation from the premium finance company. For purposes of this Section, any governmental agency, mortgagee, or other third party may opt to receive notices electronically.

(e) In the event that the collection of return premiums for the account of the named insured results in a surplus over the amount due from the named insured, the premium finance company shall refund the excess to the named insured; however, no refund is required if it amounts to less than $5.

(f) All cancellation provisions required of the premium finance company and insurer are applicable to any policy to which Section 143.11 applies.

(Source: P.A. 93-713, eff. 1-1-05.)

(215 ILCS 5/513a12) (from Ch. 73, par. 1065.60a12)

Sec. 513a12. Books and records.

(a) Until payment in full and 3 years thereafter every licensee shall maintain each premium finance agreement or duplicate originals thereof and all original documents relating thereto (except those papers returned to the insured) so as to be readily available for examination by the Director.

(b) Every licensee shall maintain a register, ledger, or combination of records for each premium finance agreement that can readily show:

(1) the date of acquisition;

(2) the name of the insured;

(3) the identifying number;

(4) the principal balance;

(5) the amount of all charges assessed;

(6) the balance; and

(7) a distribution of proceeds showing the dates, amounts, and names of the persons to whom any part of the proceeds were distributed.

(Source: P.A. 87-811.)

(215 ILCS 5/513a13)

Sec. 513a13. Electronic delivery of notices and documents.

(a) As used in this Section:

"Delivered by electronic means" includes:

(1) delivery to an electronic mail address at which a party has consented to receive notices or documents; or

(2) posting on an electronic network or site accessible via the Internet, mobile application, computer, mobile device, tablet, or any other electronic device, together with separate notice of the posting, which shall be provided by electronic mail to the address at which the party has consented to receive notice or by any other delivery method that has been consented to by the party.

"Party" means any recipient of any notice or document required as part of a premium finance agreement including, but not limited to, an applicant or contracting party. For the purposes of this Section, "party" includes the producer of record.

(b) Subject to the requirements of this Section, any notice to a party or any other document required under applicable law in a premium finance agreement or that is to serve as evidence of a premium finance agreement may be delivered, stored, and presented by electronic means so long as it meets the requirements of the Uniform Electronic Transactions Act.

(c) Delivery of a notice or document in accordance with this Section shall be considered equivalent to delivery by first class mail or first class mail, postage prepaid.

(d) A notice or document may be delivered by electronic means by a premium finance company to a party under this Section if:

(1) the party has affirmatively consented to that method of delivery and has not withdrawn the consent;

(2) the party, before giving consent, is provided with a clear and conspicuous statement informing the party of:

(A) the right of the party to withdraw consent to have a notice or document delivered by electronic means, at any time, and any conditions or consequences imposed in the event consent is withdrawn;

(B) the types of notices and documents to which the party's consent would apply;

(C) the right of a party to have a notice or document delivered in paper form; and

(D) the procedures a party must follow to withdraw consent to have a notice or document delivered by electronic means and to update the party's electronic mail address;

(3) the party:

(A) before giving consent, is provided with a statement of the hardware and software requirements for access to, and retention of, a notice or document delivered by electronic means; and

(B) consents electronically, or confirms consent electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means as to which the party has given consent; and

(4) after consent of the party is given, the premium finance company, in the event a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies:

(A) provides the party with a statement that describes:

(i) the revised hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and

(ii) the right of the party to withdraw consent without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and

(B) complies with paragraph (2) of this subsection (d).

(e) Delivery of a notice or document in accordance with this Section does not affect requirements related to content or timing of any notice or document required under applicable law.

(f) The legal effectiveness, validity, or enforceability of any premium finance agreement executed by a party may not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with subparagraph (B) of paragraph (3) of subsection (d) of this Section.

(g) A withdrawal of consent by a party does not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective.

A withdrawal of consent by a party is effective within a reasonable period of time after receipt of the withdrawal by the premium finance company.

Failure by a premium finance company to comply with paragraph (4) of subsection (d) of this Section and subsection (j) of this Section may be treated, at the election of the party, as a withdrawal of consent for purposes of this Section.

(h) This Section does not apply to a notice or document delivered by a premium finance company in an electronic form before the effective date of this amendatory Act of the 100th General Assembly to a party who, before that date, has consented to receive notice or document in an electronic form otherwise allowed by law.

(i) If the consent of a party to receive certain notices or documents in an electronic form is on file with a premium finance company before the effective date of this amendatory Act of the 100th General Assembly and, pursuant to this Section, a premium finance company intends to deliver additional notices or documents to the party in an electronic form, then prior to delivering such additional notices or documents electronically, the premium finance company shall:

(1) provide the party with a statement that describes:

(A) the notices or documents that shall be delivered by electronic means under this Section that were not previously delivered electronically; and

(B) the party's right to withdraw consent to have notices or documents delivered by electronic means without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and

(2) comply with paragraph (2) of subsection (d) of this Section.

(j) A premium finance company shall deliver a notice or document by any other delivery method permitted by law other than electronic means if:

(1) the premium finance company attempts to deliver the notice or document by electronic means and has a reasonable basis for believing that the notice or document has not been received by the party; or

(2) the premium finance company becomes aware that the electronic mail address provided by the party is no longer valid.

(k) The producer of record shall not be subject to civil liability for any harm or injury that occurs as a result of a party's election to receive any notice or document by electronic means or by a premium finance company's failure to deliver a notice or document by electronic means unless the harm or injury is caused by the willful and wanton misconduct of the producer of record.

(l) This Section shall not be construed to modify, limit, or supersede the provisions of the federal Electronic Signatures in Global and National Commerce Act, as amended.

(Source: P.A. 102-38, eff. 6-25-21.)

(215 ILCS 5/Art. XXXIIB heading) ARTICLE XXXIIB. PHARMACY BENEFIT MANAGERS (Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b1)

Sec. 513b1. Pharmacy benefit manager contracts.

(a) As used in this Section:

"340B drug discount program" means the program established under Section 340B of the federal Public Health Service Act, 42 U.S.C. 256b.

"340B entity" means a covered entity as defined in 42 U.S.C. 256b(a)(4) authorized to participate in the 340B drug discount program.

"340B pharmacy" means any pharmacy used to dispense 340B drugs for a covered entity, whether entity-owned or external.

"Biological product" has the meaning ascribed to that term in Section 19.5 of the Pharmacy Practice Act.

"Maximum allowable cost" means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.

"Maximum allowable cost list" means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.

"Pharmacy benefit manager" means a person, business, or entity, including a wholly or partially owned or controlled subsidiary of a pharmacy benefit manager, that provides claims processing services or other prescription drug or device services, or both, for health benefit plans.

"Retail price" means the price an individual without prescription drug coverage would pay at a retail pharmacy, not including a pharmacist dispensing fee.

"Third-party payer" means any entity that pays for prescription drugs on behalf of a patient other than a health care provider or sponsor of a plan subject to regulation under Medicare Part D, 42 U.S.C. 1395w-101 et seq.

(b) A contract between a health insurer and a pharmacy benefit manager must require that the pharmacy benefit manager:

(1) Update maximum allowable cost pricing information at least every 7 calendar days.

(2) Maintain a process that will, in a timely manner, eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data used in formulating maximum allowable cost prices and product availability.

(3) Provide access to its maximum allowable cost list to each pharmacy or pharmacy services administrative organization subject to the maximum allowable cost list. Access may include a real-time pharmacy website portal to be able to view the maximum allowable cost list. As used in this Section, "pharmacy services administrative organization" means an entity operating within the State that contracts with independent pharmacies to conduct business on their behalf with third-party payers. A pharmacy services administrative organization may provide administrative services to pharmacies and negotiate and enter into contracts with third-party payers or pharmacy benefit managers on behalf of pharmacies.

(4) Provide a process by which a contracted pharmacy can appeal the provider's reimbursement for a drug subject to maximum allowable cost pricing. The appeals process must, at a minimum, include the following:

(A) A requirement that a contracted pharmacy has 14 calendar days after the applicable fill date to appeal a maximum allowable cost if the reimbursement for the drug is less than the net amount that the network provider paid to the supplier of the drug.

(B) A requirement that a pharmacy benefit manager must respond to a challenge within 14 calendar days of the contracted pharmacy making the claim for which the appeal has been submitted.

(C) A telephone number and e-mail address or website to network providers, at which the provider can contact the pharmacy benefit manager to process and submit an appeal.

(D) A requirement that, if an appeal is denied, the pharmacy benefit manager must provide the reason for the denial and the name and the national drug code number from national or regional wholesalers.

(E) A requirement that, if an appeal is sustained, the pharmacy benefit manager must make an adjustment in the drug price effective the date the challenge is resolved and make the adjustment applicable to all similarly situated network pharmacy providers, as determined by the managed care organization or pharmacy benefit manager.

(5) Allow a plan sponsor contracting with a pharmacy benefit manager an annual right to audit compliance with the terms of the contract by the pharmacy benefit manager, including, but not limited to, full disclosure of any and all rebate amounts secured, whether product specific or generalized rebates, that were provided to the pharmacy benefit manager by a pharmaceutical manufacturer.

(6) Allow a plan sponsor contracting with a pharmacy benefit manager to request that the pharmacy benefit manager disclose the actual amounts paid by the pharmacy benefit manager to the pharmacy.

(7) Provide notice to the party contracting with the pharmacy benefit manager of any consideration that the pharmacy benefit manager receives from the manufacturer for dispense as written prescriptions once a generic or biologically similar product becomes available.

(c) In order to place a particular prescription drug on a maximum allowable cost list, the pharmacy benefit manager must, at a minimum, ensure that:

(1) if the drug is a generically equivalent drug, it is listed as therapeutically equivalent and pharmaceutically equivalent "A" or "B" rated in the United States Food and Drug Administration's most recent version of the "Orange Book" or have an NR or NA rating by Medi-Span, Gold Standard, or a similar rating by a nationally recognized reference;

(2) the drug is available for purchase by each pharmacy in the State from national or regional wholesalers operating in Illinois; and

(3) the drug is not obsolete.

(d) A pharmacy benefit manager is prohibited from limiting a pharmacist's ability to disclose whether the cost-sharing obligation exceeds the retail price for a covered prescription drug, and the availability of a more affordable alternative drug, if one is available in accordance with Section 42 of the Pharmacy Practice Act.

(e) A health insurer or pharmacy benefit manager shall not require an insured to make a payment for a prescription drug at the point of sale in an amount that exceeds the lesser of:

(1) the applicable cost-sharing amount; or

(2) the retail price of the drug in the absence of prescription drug coverage.

(f) Unless required by law, a contract between a pharmacy benefit manager or third-party payer and a 340B entity or 340B pharmacy shall not contain any provision that:

(1) distinguishes between drugs purchased through the 340B drug discount program and other drugs when determining reimbursement or reimbursement methodologies, or contains otherwise less favorable payment terms or reimbursement methodologies for 340B entities or 340B pharmacies when compared to similarly situated non-340B entities;

(2) imposes any fee, chargeback, or rate adjustment that is not similarly imposed on similarly situated pharmacies that are not 340B entities or 340B pharmacies;

(3) imposes any fee, chargeback, or rate adjustment that exceeds the fee, chargeback, or rate adjustment that is not similarly imposed on similarly situated pharmacies that are not 340B entities or 340B pharmacies;

(4) prevents or interferes with an individual's choice to receive a covered prescription drug from a 340B entity or 340B pharmacy through any legally permissible means, except that nothing in this paragraph shall prohibit the establishment of differing copayments or other cost-sharing amounts within the benefit plan for covered persons who acquire covered prescription drugs from a nonpreferred or nonparticipating provider;

(5) excludes a 340B entity or 340B pharmacy from a pharmacy network on any basis that includes consideration of whether the 340B entity or 340B pharmacy participates in the 340B drug discount program;

(6) prevents a 340B entity or 340B pharmacy from using a drug purchased under the 340B drug discount program; or

(7) any other provision that discriminates against a 340B entity or 340B pharmacy by treating the 340B entity or 340B pharmacy differently than non-340B entities or non-340B pharmacies for any reason relating to the entity's participation in the 340B drug discount program.

As used in this subsection, "pharmacy benefit manager" and "third-party payer" do not include pharmacy benefit managers and third-party payers acting on behalf of a Medicaid program.

(g) A violation of this Section by a pharmacy benefit manager constitutes an unfair or deceptive act or practice in the business of insurance under Section 424.

(h) A provision that violates subsection (f) in a contract between a pharmacy benefit manager or a third-party payer and a 340B entity that is entered into, amended, or renewed after July 1, 2022 shall be void and unenforceable.

(i)(1) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information in a court, in an administrative hearing, before a legislative commission or committee, or in any other proceeding, if the pharmacist or pharmacy has reasonable cause to believe that the disclosed information is evidence of a violation of a State or federal law, rule, or regulation.

(2) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information to a government or law enforcement agency, if the pharmacist or pharmacy has reasonable cause to believe that the disclosed information is evidence of a violation of a State or federal law, rule, or regulation.

(3) A pharmacist or pharmacy shall make commercially reasonable efforts to limit the disclosure of confidential and proprietary information.

(4) Retaliatory actions against a pharmacy or pharmacist include cancellation of, restriction of, or refusal to renew or offer a contract to a pharmacy solely because the pharmacy or pharmacist has:

(A) made disclosures of information that the pharmacist or pharmacy has reasonable cause to believe is evidence of a violation of a State or federal law, rule, or regulation;

(B) filed complaints with the plan or pharmacy benefit manager; or

(C) filed complaints against the plan or pharmacy benefit manager with the Department.

(j) This Section applies to contracts entered into or renewed on or after July 1, 2022.

(k) This Section applies to any group or individual policy of accident and health insurance or managed care plan that provides coverage for prescription drugs and that is amended, delivered, issued, or renewed on or after July 1, 2020.

(Source: P.A. 102-778, eff. 7-1-22; 103-154, eff. 6-30-23; 103-453, eff. 8-4-23.)

(215 ILCS 5/513b2)

Sec. 513b2. Licensure requirements.

(a) Beginning on July 1, 2020, to conduct business in this State, a pharmacy benefit manager must register with the Director. To initially register or renew a registration, a pharmacy benefit manager shall submit:

(1) A nonrefundable fee not to exceed $500.

(2) A copy of the registrant's corporate charter, articles of incorporation, or other charter document.

(3) A completed registration form adopted by the Director containing:

(A) The name and address of the registrant.

(B) The name, address, and official position of each officer and director of the registrant.

(b) The registrant shall report any change in information required under this Section to the Director in writing within 60 days after the change occurs.

(c) Upon receipt of a completed registration form, the required documents, and the registration fee, the Director shall issue a registration certificate. The certificate may be in paper or electronic form, and shall clearly indicate the expiration date of the registration. Registration certificates are nontransferable.

(d) A registration certificate is valid for 2 years after its date of issue. The Director shall adopt by rule an initial registration fee not to exceed $500 and a registration renewal fee not to exceed $500, both of which shall be nonrefundable. Total fees may not exceed the cost of administering this Section.

(e) The Department shall adopt any rules necessary to implement this Section.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b3)

Sec. 513b3. Examination.

(a) The Director, or his or her designee, may examine a registered pharmacy benefit manager.

(b) Any pharmacy benefit manager being examined shall provide to the Director, or his or her designee, convenient and free access to all books, records, documents, and other papers relating to such pharmacy benefit manager's business affairs at all reasonable hours at its offices.

(c) The Director, or his or her designee, may administer oaths and thereafter examine the pharmacy benefit manager's designee, representative, or any officer or senior manager as listed on the license or registration certificate about the business of the pharmacy benefit manager.

(d) The examiners designated by the Director under this Section may make reports to the Director. Any report alleging substantive violations of this Article, any applicable provisions of this Code, or any applicable Part of Title 50 of the Illinois Administrative Code shall be in writing and be based upon facts obtained by the examiners. The report shall be verified by the examiners.

(e) If a report is made, the Director shall either deliver a duplicate report to the pharmacy benefit manager being examined or send such duplicate by certified or registered mail to the pharmacy benefit manager's address specified in the records of the Department. The Director shall afford the pharmacy benefit manager an opportunity to request a hearing to object to the report. The pharmacy benefit manager may request a hearing within 30 days after receipt of the duplicate report by giving the Director written notice of such request together with written objections to the report. Any hearing shall be conducted in accordance with Sections 402 and 403 of this Code. The right to a hearing is waived if the delivery of the report is refused or the report is otherwise undeliverable or the pharmacy benefit manager does not timely request a hearing. After the hearing or upon expiration of the time period during which a pharmacy benefit manager may request a hearing, if the examination reveals that the pharmacy benefit manager is operating in violation of any applicable provision of this Code, any applicable Part of Title 50 of the Illinois Administrative Code, a provision of this Article, or prior order, the Director, in the written order, may require the pharmacy benefit manager to take any action the Director considers necessary or appropriate in accordance with the report or examination hearing. If the Director issues an order, it shall be issued within 90 days after the report is filed, or if there is a hearing, within 90 days after the conclusion of the hearing. The order is subject to review under the Administrative Review Law.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b4)

Sec. 513b4. Denial, revocation, or suspension of registration; administrative fines.

(a) Denial of an application or suspension or revocation of a registration in accordance with this Section shall be by written order sent to the applicant or registrant by certified or registered mail at the address specified in the records of the Department. The written order shall state the grounds, charges, or conduct on which denial, suspension, or revocation is based. The applicant or registrant may in writing request a hearing within 30 days from the date of mailing. Upon receipt of a written request, the Director shall issue an order setting: (i) a specific time for the hearing, which may not be less than 20 nor more than 30 days after receipt of the request; and (ii) a specific place for the hearing, which may be in either the city of Springfield or in the county in Illinois where the applicant's or registrant's principal place of business is located. If no written request is received by the Director, such order shall be final upon the expiration of said 30 days.

(b) If the Director finds that one or more grounds exist for the revocation or suspension of a registration issued under this Article, the Director may, in lieu of or in addition to such suspension or revocation, impose a fine upon the pharmacy benefit manager as provided under subsection (c).

(c) With respect to any knowing and willful violation of a lawful order of the Director, any applicable portion of this Code, Part of Title 50 of the Illinois Administrative Code, or provision of this Article, the Director may impose a fine upon the pharmacy benefit manager in an amount not to exceed $50,000 for each violation.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b5)

Sec. 513b5. Failure to register. Any pharmacy benefit manager that operates without a registration or fails to register with the Director and pay the fee prescribed by this Article is an unauthorized insurer as defined in Article VII of this Code and shall be subject to all penalties provided for therein.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b6)

Sec. 513b6. Insurance Producer Administration Fund. All fees and fines paid to and collected by the Director under this Article shall be paid promptly after receipt thereof, together with a detailed statement of such fees, into the Insurance Producer Administration Fund. The moneys deposited into the Insurance Producer Administration Fund may be transferred to the Professions Indirect Cost Fund, as authorized under Section 2105-300 of the Department of Professional Regulation Law of the Civil Administrative Code of Illinois.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/Art. XXXIII heading) ARTICLE XXXIII. URBAN PROPERTY INSURANCE

(215 ILCS 5/513b7)

Sec. 513b7. Pharmacy audits.

(a) As used in this Section:

"Audit" means any physical on-site, remote electronic, or concurrent review of a pharmacist or pharmacy service submitted to the pharmacy benefit manager or pharmacy benefit manager affiliate by a pharmacist or pharmacy for payment.

"Auditing entity" means a person or company that performs a pharmacy audit.

"Extrapolation" means the practice of inferring a frequency of dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency of dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.

"Misfill" means a prescription that was not dispensed; a prescription that was dispensed but was an incorrect dose, amount, or type of medication; a prescription that was dispensed to the wrong person; a prescription in which the prescriber denied the authorization request; or a prescription in which an additional dispensing fee was charged.

"Pharmacy audit" means an audit conducted of any records of a pharmacy for prescriptions dispensed or nonproprietary drugs or pharmacist services provided by a pharmacy or pharmacist to a covered person.

"Pharmacy record" means any record stored electronically or as a hard copy by a pharmacy that relates to the provision of a prescription or pharmacy services or other component of pharmacist care that is included in the practice of pharmacy.

(b) Notwithstanding any other law, when conducting a pharmacy audit, an auditing entity shall:

(1) not conduct an on-site audit of a pharmacy at any time during the first 3 business days of a month or the first 2 weeks and final 2 weeks of the calendar year or during a declared State or federal public health emergency;

(2) notify the pharmacy or its contracting agent no later than 14 business days before the date of initial on-site audit; the notification to the pharmacy or its contracting agent shall be in writing and delivered either:

(A) by mail or common carrier, return receipt requested; or

(B) electronically, not including facsimile, with electronic receipt confirmation and delivered during normal business hours of operation, addressed to the supervising pharmacist and pharmacy corporate office, if applicable, at least 14 business days before the date of an initial on-site audit;

(3) limit the audit period to 24 months after the date a claim is submitted to or adjudicated by the pharmacy benefit manager;

(4) provide in writing the list of specific prescription numbers to be included in the audit 14 business days before the on-site audit that may or may not include the final 2 digits of the prescription numbers;

(5) use the written and verifiable records of a hospital, physician, or other authorized practitioner that are transmitted by any means of communication to validate the pharmacy records in accordance with State and federal law;

(6) limit the number of prescriptions audited to no more than 100 prescriptions per audit and an entity shall not audit more than 200 prescriptions in any 12-month period, except in cases of fraud or knowing and willful misrepresentation; a refill shall not constitute a separate prescription and a pharmacy shall not be audited more than once every 6 months;

(7) provide the pharmacy or its contracting agent with a copy of the preliminary audit report within 45 days after the conclusion of the audit;

(8) be allowed to conduct a follow-up audit on site if a remote or desk audit reveals the necessity for a review of additional claims;

(9) accept invoice audits as validation invoices from any wholesaler registered with the Department of Financial and Professional Regulation from which the pharmacy has purchased prescription drugs or, in the case of durable medical equipment or sickroom supplies, invoices from an authorized distributor other than a wholesaler;

(10) provide the pharmacy or its contracting agent with the ability to provide documentation to address a discrepancy or audit finding if the documentation is received by the pharmacy benefit manager no later than the 45th day after the preliminary audit report was provided to the pharmacy or its contracting agent; the pharmacy benefit manager shall consider a reasonable request from the pharmacy for an extension of time to submit documentation to address or correct any findings in the report;

(11) be required to provide the pharmacy or its contracting agent with the final audit report no later than 90 days after the initial audit report was provided to the pharmacy or its contracting agent;

(12) conduct the audit in consultation with a pharmacist in specific cases if the audit involves clinical or professional judgment;

(13) not chargeback, recoup, or collect penalties from a pharmacy until the time period to file an appeal of the final pharmacy audit report has passed or the appeals process has been exhausted, whichever is later, unless the identified discrepancy is expected to exceed $25,000, in which case the auditing entity may withhold future payments in excess of that amount until the final resolution of the audit;

(14) not compensate the employee or contractor conducting the audit based on a percentage of the amount claimed or recouped pursuant to the audit;

(15) not use extrapolation to calculate penalties or amounts to be charged back or recouped unless otherwise required by federal law or regulation; any amount to be charged back or recouped due to overpayment may not exceed the amount the pharmacy was overpaid;

(16) not include dispensing fees in the calculation of overpayments unless a prescription is considered a misfill, the medication is not delivered to the patient, the prescription is not valid, or the prescriber denies authorizing the prescription; and

(17) conduct a pharmacy audit under the same standards and parameters as conducted for other similarly situated pharmacies audited by the auditing entity.

(c) Except as otherwise provided by State or federal law, an auditing entity conducting a pharmacy audit may have access to a pharmacy's previous audit report only if the report was prepared by that auditing entity.

(d) Information collected during a pharmacy audit shall be confidential by law, except that the auditing entity conducting the pharmacy audit may share the information with the health benefit plan for which a pharmacy audit is being conducted and with any regulatory agencies and law enforcement agencies as required by law.

(e) A pharmacy may not be subject to a chargeback or recoupment for a clerical or recordkeeping error in a required document or record, including a typographical error or computer error, unless the pharmacy benefit manager can provide proof of intent to commit fraud or such error results in actual financial harm to the pharmacy benefit manager, a health plan managed by the pharmacy benefit manager, or a consumer.

(f) A pharmacy shall have the right to file a written appeal of a preliminary and final pharmacy audit report in accordance with the procedures established by the entity conducting the pharmacy audit.

(g) No interest shall accrue for any party during the audit period, beginning with the notice of the pharmacy audit and ending with the conclusion of the appeals process.

(h) An auditing entity must provide a copy to the plan sponsor of its claims that were included in the audit, and any recouped money shall be returned to the plan sponsor, unless otherwise contractually agreed upon by the plan sponsor and the pharmacy benefit manager.

(i) The parameters of an audit must comply with manufacturer listings or recommendations, unless otherwise prescribed by the treating provider, and must be covered under the individual's health plan, for the following:

(1) the day supply for eye drops must be calculated so that the consumer pays only one 30-day copayment if the bottle of eye drops is intended by the manufacturer to be a 30-day supply;

(2) the day supply for insulin must be calculated so that the highest dose prescribed is used to determine the day supply and consumer copayment; and

(3) the day supply for topical product must be determined by the judgment of the pharmacist or treating provider upon the treated area.

(j) This Section shall not apply to:

(1) audits in which suspected fraud or knowing and willful misrepresentation is evidenced by a physical review, review of claims data or statements, or other investigative methods;

(2) audits of claims paid for by federally funded programs not applicable to health insurance coverage regulated by the Department; or

(3) concurrent reviews or desk audits that occur within 3 business days after transmission of a claim and in which no chargeback or recoupment is demanded.

(Source: P.A. 103-102, eff. 1-1-24.)