Due to the current state of emergency declared by the Government of Puerto Rico under Executive Order EO-2020-020 (EO-20), and the threat posed by the spread of the SARS-COV-2 virus and the COVID-19 disease, the Puerto Rico Office of the Insurance Commissioner ("OIC") has issued several Normative and Circular Letters addressed to the insurance industry in Puerto Rico requiring certain actions to deal with the crisis. The following is a summary of the actions taken by OIC:
- Health Insurers and Health Services Organizations
On March 11, 2020, the OIC issued Normative Letter 2020-265-D requiring health service organizations and insurers that provide health insurance plans to cover certain COVID-19 related diagnostic tests, and hospital, clinic and emergency room services without requiring prior authorization, referrals or any other review procedure and prior service determination.
Likewise, health service organizations and insurers were further required to: (i) to keep their policyholders informed regarding available health providers; (ii) maintain a network of health services providers with sufficient capacity to meet a sudden increase in demand due to COVID-19; (iii) provide free immunization services against COVID-19 (upon approval by the Advisory Committee on the Immunization Practices of the Center of Disease Control and Prevention), and (iv) to rescind pre-authorizations or staggered treatment for any health condition associated with COVID-19.
Subsequently, Normative Letter 2020-269-D, issued by the OIC on March 20, 2020, clarified that, due to the enactment of the Families First Coronavirus Response Act by the U.S. Congress, health service organizations and insurers that provide health insurance plans must provide policyholders and beneficiaries coverage for COVID-19 test free of any charges (including deductibles, copayments and coinsurance payments) when a licensed physician orders the test, without pre-authorization or other processing requirements.
Additionally, on March 16, 2020, the OIC issued Normative Letter 2020-268-D providing further obligations for health service organizations and insurers that provide health insurance plans aimed at guaranteeing policyholders and beneficiaries access to health services in health insurance plans.
The following is a summary of the other obligations imposed by the OIC:
- A 30-day moratorium on premium payments is applicable to all health insurance payments due on March 15, 2020 up until the expiration of the emergency declaration. This moratorium should not be considered as a waiver on the payment of premiums and does not forbid the health service organization or the insurers that provide the health insurance plan and the policyholder from entering into a voluntary payment plan with the policyholders. Furthermore, no fees will be charged on scheduled automatic payments if such payments cannot be processed due to insufficient funding in the policyholders' bank accounts.
- Health insurance plans that cover medication dispatch must suspend any requirement used to manage how medications are dispensed, (excluding controlled medications). This includes suspension of waiting time for repetitions, suspension of pre-authorization requirements, step therapy, limitation by medical specialty, and limitations on quantity of medications.
- Provide coverage for medical services of providers outside of the network of the health insurance plans when the medical treatment is covered under said plan. Healthcare providers must give all the necessary information to the insurer or health service organization to request payment.
- Suspend all pre-authorization, referral or medical necessity review requirements for all health services covered in the plan, including medical equipment.
- Health service organizations and insurers must extend the terms applicable for the providers to request payment for services rendered to policyholders and beneficiaries.
Normative Letters 2020-268-D and 2020-270-D (the latter issued on March 20, 2020) also include several provisions regarding telemedicine. These normative letters require that health insurance plan providers must cover medical services rendered through telemedicine equipment in Puerto Rico, regardless of whether the physician is duly licensed to provide telemedicine services in Puerto Rico by the Puerto Rico Medical Licensing Board.
Furthermore, pursuant to Senate Joint Resolution 491 ("JR 491"), licensed physicians in Puerto Rico are authorized to invoice health service organizations and insurers health insurance plans for the services provided using telemedicine or telephone medical consultations. The telemedicine certificate waiver requirement is effective beginning on March 20, 2020 and will remain in force for a period of 90 days from that date although it is extendable for an additional 30 days, if necessary. Other changes discussed herein will remain in effect until the emergency declaration expires or the OIC expressly determines otherwise.
2. Insurers Participating in Mandatory Liability Insurance
Pursuant to EO-20, the Secretary of the Department of Transportation and Public Works ("DTOP" for its Spanish acronym) granted a moratorium for the renewal of motor vehicle Mandatory Liability Insurance ("MLI") with an expiration date of March 31, 2020; extending its validity until April 30, 2020. On March 13, 2020, the OIC issued Normative Letter CN-2020-266-D providing further guidelines to the Property &Casualty Insurers that sell MLI and that have policies in effect for 2019-2020 and will continue to provide this type of insurance for 2020-2021.
Insurers that sell MLI policies must be aware that, when an insured renews its MLI on the registration of his or her motor vehicle for 2020-2021, and whose insurance lapsed on the period ending on March 31, 2020, the effective date of the renewal will be retroactive to April 1, 2020. In the event that the moratorium and extension in the coverage term for the current MLI of the vehicle exceeds April 30, 2020, the retroactivity of the effective date of the MLI will be the first day of the month following the one that would have corresponded to the renewal of the vehicle license.
Moreover, all renewals made during this period will be automatically underwritten by the same insurer that provided coverage for the 2019-2020 policy period. The Joint Underwriters Association ("ASC" for its Spanish acronym), as the governmental agency in charge of managing the MLI, will be collecting and transferring premiums paid by insured parties for the renewal of their MLI to the insurer that appears in their records as the insurer that covered the corresponding 2019-2020 policy period. If the insurer is no longer listed as a participating insurer of the MLI or any other particular situation exists in which a specific insurer could not be identified, the insurer will be the ASC, who will provide coverage during the term of the moratorium and subsequent renewal.
Furthermore, the OIC also determined the following will be considered unfair practices by the insurers:
- Deny coverage to an insured whose MLI expired on March 31, 2020 (or a later period if the moratorium exceeds April 30, 2020) for not having paid the premium for the period 2019-2020 while the moratorium is in effect.
- Refuse to pay claims for incidents covered under the MLI for the period subject to the moratorium, on the grounds that insured has not received the premium for the next period.
If the renewal of the MLI is not carried out within the period of the moratorium or any extension to it, the vehicle will be considered as 'uninsured' from the day after the end of the moratorium period or extension. The provisions of the normative letter only apply to those insured who renew under the provisions of the moratorium. The insurers that do not comply with the abovementioned determinations of the OIC, will be subject to administrative fines and other sanctions.
3. To All Insurers including Property & Casualty Insurers, Health Services Organization and Health Insurers
To avoid interruptions in coverage, on March 23, 2020 the OIC issued Normative Letter 2020-271-D providing that all insurance contracts and policies of any kind, including health insurance plans, whose terms expire on March 31, 2020 or later, will be extended for a additional period of 30 days, under the same terms and conditions (including, the premium payment amount) as the current policy. The policyholder must request this 30-day extension and it will last until the policy renews, a new one is purchased, a new insurance contract is signed, or until the 30-day period ends, whichever comes first.
While the extension is in effect, no insurer may cancel the policy or insurance contract and it must honor the claims that arise within this 30-day extension. This does not imply a waiver on the premium payments and the insured will have to continue to pay the premiums corresponding to the extension. However, all insurers must be aware of the provisions contained in Normative Letter 2020-267-D ("NL-267") of March 16, 2020. Through the NL-267, the OIC established that, while the state of emergency remains in place, insurers cannot refuse to renew an insurance policy for lack of payment by the insured.
The corresponding payment of the renewal premium must be paid within 30 days after the renewal period starts. No cancellation notices due to lack pf payment of premium may be sent while the 30-day extension remains in effect. If, after the extension or the state of emergency has expired, the insured has not made the corresponding premium payment, the insurer may then cancel the insurance policy, and the cancellation date will be retroactive to the original date of cancellation. Nonetheless, an insurance policy can be cancelled during the 30-day extension by written request of the insured. Also, insurers must not apply charges or late fees during the 30-day extension period.
4. Extension of terms for proceedings and filings before the OIC
Through Circular Letter 2020-1960-D, the OIC officially extended any administrative and filing terms applicable to insurers, agents, brokers and authorized representatives, including annual filings, from March 30, 2020 to April 15, 2020. In addition, all individuals and entities who own a license issued by the OIC with an expiration date of March 30, 2020, such expiration date will be extended to April 30, 2020. Exams for new licenses will be rescheduled and any term for the approval of forms, policies and other authorizations needed from the OIC, whose term for approval will lapse between March 16 and March 30, 2020, will be extended for an additional 30 days. The OIC will not grant automatic approval for the abovementioned forms, policies or authorizations because of lapses in the terms.
Do not hesitate to contact us should you need assistance to tailor your business's response to the crisis. Our Firm will continue to remain available to all our clients. Our attorneys are monitoring actions by the Federal Government, the Commonwealth of Puerto Rico, and local municipalities as additional measures are put into place to mitigate and lessen the extent of this crisis. At Goldman Antonetti & Cordova LLC, we look forward to providing client-focused assistance on how to respond to current events to minimize negative effects on your business.