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Chapter 4.5. Division of Workers' Compensation
Subchapter 1. Administrative Director--Administrative Rules
Article 4. Certification Standards for Health Care Organizations

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§9771.62 Application for Authorization as a Workers' Compensation Health Care Provider Organization.

(a) An application for authorization as a workers' compensation health care provider organization shall be filed in the form specified in subsection (c) and contain the information specified in this section.

(b) Applications will be processed in the order in which they are filed; provided however, that applications under Section 4600.5(f)(2) shall have priority.

(c) Application Form (WHWCPO-1).

DIVISION OF WORKERS' COMPENSATION

SUPPLEMENTARY APPLICATION

UNDER LABOR CODE SECTION 4600.6.

Date of Application:

WORKERS' COMPENSATION HEALTH CARE PROVIDER

ORGANIZATION AUTHORIZATION

APPLICATION LABOR CODE SECTION 4600.6 (EXECUTION PAGE)

Identification of Organization.

Name of Applicant.

a. Legal name:

b. Please list all fictitious names you intend to use

A. Type of Filing: Indicate the type of filing by checking and completing the appropriate items:

1. ( ) Original application for organization authorization.

2. ( ) Amendment #___ to a pending application dated ______ for organization authorization. (Complete Item A-5 below.)

3. ( ) Notice of a proposed material modification (Complete Item A-5 below.)

4. ( ) Amendment filed by an organization because of a change in the information contained in the original application. (Complete Item A-5 below.)

5. Item numbers being amended

Exhibit numbers being amended

B. Other Agencies.

1. If applicant has made or intends to make any filing relating to its plan of operation to any other state or federal agency, check here ___, and attach Exhibit B-1 identifying each such agency, and the nature, purpose and (projected) date of each such filing.

Additional Exhibits: An original application for organization authorization must include the completed form specified in this subsection and the exhibits required.

C. Summary of Information in Application.

1. Summary Description of Organization and Operation. Provide as Exhibit C-1 a summary description of the organization and operation of applicant's business as a workers' compensation health care provider organization, covering the highlights and essential features of the information provided in response to the other portions of this application which is essential or desirable to an effective overview of the applicant's workers' compensation health care business, including a summary of the applicant's experience in the provision of workers' compensation health care.

2. Summary Description of Start-up. Provide as Exhibit C-2 a concise description of applicant's start-up program and its assumptions, including such program's operating, capitalization and financial assumptions. Indicate applicant's projected date for the beginning of operations, and discuss the factors which require such date.

D. Organization and Affiliated Persons.

1. Type of Organization.

a. Corporation. If applicant is a corporation, attach as Exhibits D-1-a-I, D-1-a- ii, D-1-a-iii and D-1-a-iv respectively, the Articles of Incorporation, Bylaws, the Corporation Information Form (Form WCHCPO 1-A) and any other organizational documents or agreements relating to the internal affairs of the applicant.

b. Partnership. If applicant is a partnership, attach as Exhibits D-1-b-I, D-1-b- ii and D-1-b-iii respectively, the Partnership Agreement, the Partnership Information Form (Form WCHCPO 1-B) and any other organizational documents or agreements relating to the internal affairs of the applicant.

c. Sole Proprietor. If applicant is a sole proprietorship, attach as Exhibit D-1-c the Sole Proprietorship Information Form. (Form WCHCPO 1-C)

d. Other Organization. If applicant is any other type of organization, attach as Exhibit D-1-d Articles of Association, trust agreement, or any other applicable documents, and any other organizational documents or agreements relating to the conduct of the internal affairs of the applicant, and attach as Exhibit D-1-d-ii the Information Form for other than Corporations, Partnerships, and Sole Proprietorships. (Form WCHCPO 1-D)

e. Individual Information Sheet. Attach as Exhibit D-1-e, an Individual Information Sheet (Form WCHCPO 2) for each natural person named in any exhibit in Item D-1.

2. Contracts with Affiliated Persons, Principal Creditors and Providers of Administrative Services.

a. Persons to Be Identified. Attach as Exhibit D-2-a, a list identifying each individual or entity who is a party to a contract with applicant, if such contract is one for the provision of administrative services to the applicant or any such party is an Affiliated Person or Principal Creditor (Rule 9771.60( c) and (j)) of the applicant. As to each such person, show the following information in columnar form:

(i) The names in alphabetical order.

(ii) The exhibit and page number of the contract (including loans and other obligations).

(iii) The type of contract or loan.

(iv) Each relationship which such individual or entity bears to the applicant (officer, director, partner, trustee, member, Principal Creditor, employee, administrative services provider, health care services provider, or shareholder).

3. Other Controlling Persons. Does any individual or entity not named as a contracting party in Item D-2 or any exhibit thereto have any power, directly or indirectly, to manage, influence, or administer the operation, or to control the operations or decisions, of applicant?

If the appropriate response to this item is “yes,” attach as Exhibit D-3 a statement identifying each such person or entity and explaining fully such person's power or control, and summarizing every contract or other arrangement or understanding (if any) with each such person. (Each such contract should be submitted pursuant to Subsection D-2.)

4. Criminal, Civil and Administrative Proceedings. Within the preceding 10 years, has the applicant, its management company, or any Affiliate of the applicant (Rule 9771.60(c)), or any controlling person, officer, director or other person occupying a principal management or supervisory position in such organization, management company or Affiliate, or any person intended to hold such a relationship or position, been convicted of or pleaded nolo contendere to a crime, or been held to have committed any act involving dishonesty, fraud or deceit in a judicial or administrative proceeding to which such person was a party?

If “yes,” attach a separate exhibit as to each such person designated Exhibit D-4, identifying such person and fully explaining the crime or act committed. Also, attach a copy of the exhibit to any Individual Information Sheet required by Item D-1-e for such individual.

5. Employment of Barred Persons. Has the organization engaged or does the organization intend to engage, as an officer, director, employee, associate, or provider, any person named in (i) any order of the Commissioner pursuant to Section 1386(c) or Section 1388(d) of the Knox-Keene Health Care Service Plan Act of 1975, (ii) any similar order of the Insurance Commissioner under the Insurance Code barring or otherwise prohibiting such person from being employed or otherwise engaged as an officer, director, employee, associate or provider of any entity subject to the jurisdiction of the Insurance Commissioner, or (iii) any administrative orders issued by a professional licensing board or by the Department of Industrial Relations? If the appropriate response to this item is “yes,” attach as Exhibit D-5 a statement identifying each such person and explaining fully the scope of, and the circumstances giving rise to, such order.

E. Contracts with Providers.

1. Compliance with Requirements. Attach as Exhibit E a statement in tabular form for each provider contract, and for each standard form contract and its variations, if any, specifying the provisions of such contract which comply with the following provisions of the Act and rules:

Section 4600.6(g)

4600.6(I)(8)

4600.6(n)

Rules 9771.69

9771.70

9772 through 9778

2. The provisions describing the mechanism by which payments are to be rendered to the provider clearly identified by the name of the provider.

F. Workers' Compensation Health Care Contracts.

Compliance with Requirements. Attach as Exhibit F a schedule in tabular form for each workers' compensation health care contract and each standard form workers' compensation contract, identifying the particular provision of such contract which complies with the sections listed below, covering also any variations made in standard form contracts. As to any provision which varies from the applicable provision of the Act or rules, identify such provision in Exhibit F.

Section 4600.5(e)(7)(B)

4600.6(e)

Rules 9771.67

9771.69

9772 - 9778

G. Advertising.

Attach as Exhibit G a copy of any advertising which is subject to Section 4600.6 of the Code and which applicant proposes to use. With respect to each proposed advertisement indicate the contract(s) by name and by exhibit number(s) to which such advertisement relates and identify the employer segment to which the advertisement is directed.

H. Marketing of Workers' Compensation Health Care Contracts.

Attach as Exhibit H a statement describing the methods by which applicant proposes to market workers' compensation health care contracts, including the use of employees, or contracting solicitors or solicitor firms, their method or form of compensation, and the methods by which applicant will obtain compliance with Rules 9771.64, 9771.65, and 9771.83.

I. Supervision of Marketing.

Attach as Exhibit I a statement setting forth applicant's internal arrangements to supervise the marketing of its workers' compensation health care contracts, including the name and title of each person who has primary management responsibility for the employment and qualification of solicitors, advertising, contracts with solicitors and solicitor firms and for monitoring and supervising compliance with contractual and regulatory provisions.

J. Solicitation Contracts.

1. Attach as Exhibit J-1 a list of all persons (other than any employee of the organization whose only compensation is by salary) soliciting or agreeing to solicit the sale of workers' compensation health care contracts on behalf of the applicant. For each such person, identify by exhibit number that person's contract furnished pursuant to Item K-2 and, if such contract does not show the rate of compensation to be paid, specify the person's rate of compensation.

2. Attach as Exhibit J-2, a copy of each contract or proposed contract between applicant and the persons named in Exhibit J-1 for soliciting the sale of or selling workers' compensation health care contracts on behalf of applicant. If a standard form contract is used, furnish a specimen of the form, identify the provision and terms of the form which may be varied and include a copy of each variation.

K. Workers' Compensation Health Care Contract Enrollment Projections.

Note: All projections are to cover the period commencing from the applicant's commencement of operations as an authorized and certified workers' compensation health care provider organization for two years.

1. Projections. Attach as Exhibit K-1 projections of applicant's enrollments under workers' compensation health care provider contracts with self-insured employers, groups of self-insured employers, or insurers of employers (individually, “Employer”; collectively, “Employers”) for the periods specified in the above note. Exhibit K-1 is to contain the following information with respect to each anticipated workers' compensation health care contract:

a. The name of the Employer.

b. The number of potential employees eligible to receive workers' compensation health care from the organization who are employed by the Employer.

c. The locations within and around applicant's service area in which the potential employees live and work.

d. The estimated date (or period after authorization by the Administrative Director and certification by the Workers' Compensation Division of the Department of Industrial Relations) for entry into the workers' compensation health care contract.

e. Identification of the workers' compensation health care contract anticipated with the Employer, by reference to Exhibit F. If more than one type of workers' compensation health care contract is expected with an Employer, each contract must be covered separately.

f. The projected number of employees on a monthly basis for the initial period specified in the Note, above, and quarterly for the following year.

2. Substantiation of Projections. Attach as Exhibit K-2 for each workers' compensation health care contract specified in Exhibit K-1 a description of the facts and assumptions used in connection with the information specified in that exhibit and include documentation of the source and validity of such facts and assumptions.

3. Letters of Interest. Attach as Exhibit K-3 letters of interest or intent from each Employer listed in Exhibit K-1, on the letterhead of the Employer and signed by its representative.

L. (Reserved for future use.)

M. Current Viability.

1. Financial Statements.

a. Attach as Exhibit M-1-a the most recent audited financial statements of applicant, accompanied by a report, certificate, or opinion of an independent certified public accountant, together with all footnotes to such financial statements.

b. If the financial statements attached as Exhibit M-1-a are for a period ended more than 60 days before the date of filing of this application, also attach as Exhibit M-1-b financial statements prepared as of date no later than 60 days prior to the filing of this application consisting of at least a balance sheet, a statement of income and expenses, and any accompanying footnotes; these more recent financial statements need not be audited, so long as they are prepared in accordance with generally accepted accounting principles.

2. Provision for Extraordinary Losses. The following requirements require an initial applicant to submit legible copies of the actual policies of insurance (including any riders or endorsements) or specimen copies of the policies of insurance which show all of the terms and conditions of coverage, or with respect to those items expressly allowing for self-insurance, allow applicant to provide evidence of self-insurance at least as adequate as insurance coverage.

a. Attach as Exhibit M-2-a evidence of adequate insurance coverage or self- insurance to respond to claims for damages arising out of furnishing workers' compensation health care (malpractice insurance).

b. Attach as Exhibit M-2-b evidence of adequate insurance coverage or self-insurance (e.g., appropriate reserve set aside to fund likely liabilities associated with uninsured costs) to respond to claims for tort claims, other than with respect to claims for damages arising out of furnishing health care services.

c. Attach as Exhibit M-2-c evidence of adequate insurance coverage or self-insurance to protect applicant against losses of facilities upon which it has the risk of loss due to fire or other causes. Identify facilities covered by individual policies and indicate the basis upon which applicant believes that the insurance thereon is adequate.

d. Attach as Exhibit M-2-d, evidence of fidelity bond coverage for at least the amounts specified in Rule 9771.74, in the form of a primary commercial blanket bond or a blanket position bond written by an insurer licensed by the California Insurance Commissioner, providing 30 days' notice to the Administrative Director prior to cancellation, and covering each officer, director, trustee, partner and employee of the organization, whether or not compensated.

e. Attach as Exhibit M-2-e evidence of adequate workers' compensation insurance coverage against claims which may arise against applicant.

N. Fiscal Arrangements.

1. Maintenance of Financial Viability. Attach as Exhibit N-1 a statement describing applicant's arrangements to comply with Section 4600.6(m) of the Code and Rule 9771/73.

2. Provider Claims. Attach as Exhibit N-2 a statement describing applicant's system for processing claims from providers for payment, including the rules defining applicant's obligation to reimburse, the standards and procedures for applicant's claims processing system (including receipt, identification, handling, screening, and payment of claims), the timetable for processing claims, and procedures for monitoring the claims processing system.

3. Other Business. If the applicant is or will engage in any business other than as a workers' compensation health care provider organization, attach as Exhibit N-3 a statement describing such other business, its relationship to applicant's business as an organization, and the anticipated financial risks and liabilities of such other business. If the financial statements and projections in Exhibits M-1-a, do not include such other business, explain.

(d) Information Forms Required by Item D-1:

(1) Corporation Information Form (WCHCPO 1-A).

STATE OF CALIFORNIA

DIVISION OF WORKERS' COMPENSATION

D-1-a-iii CORPORATION

INFORMATION FORM

To be used in response to Item D-1-a of Form WCHCPO 1.

1. Name of Applicant (as in Item 1-a)

2. State of Incorporation.

3. Date of Incorporation.

4. Is applicant a nonprofit corporation? ( ) Yes ( ) No

5. Is applicant exempted from taxation as a nonprofit corporation? ( ) Yes ( ) No

6. Names of principal officers, directors and shareholders: List (a) each person who is a director or principal officer or who performs similar functions or duties and (b) each person who holds of record or beneficially 5 percent or more of the voting securities of applicant or 5 percent or more of applicant's equity securities. If this is an amended exhibit, place an asterisk (*) before the names for whom a change in title, status or stock ownership is being reported and a double asterisk (**) before the names of persons which are added to those furnished in the most recent previous filing.

Full Name Beginning Type of Capital Titleor

Last First Middle Date Partner Contribution Duties

Mo. Year (percentage)

7. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:

(2) Partnership Information Form (WCHCPO 1-B)

STATE OF CALIFORNIA

DIVISION OF WORKERS' COMPENSATION

EXHIBIT D-1-ii PARTNERSHIP

INFORMATION FORM.

To be used in response to Item D-1-b of Form WCHCPO 1.

1. Name of Applicant (as in Item 1-a).

2. State of organization.

3. Date of organization.

4. Names of Partners and Principal Management: List all general, limited and special partners and all persons who perform principal management functions. If this is an amended exhibit, place an asterisk (*) before the names of persons for whom a change in title, status or partnership interest is being reported and place a double asterisk (**) before the names of persons which are added to those furnished in the most recent previous filing.



Full Name Beginning Type of Capital Title or

Last First Middle Date Partner Contribution Duties

Mo. Year (percentage)

5. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:

(3) Sole Proprietor Information Form (WCHCPO 1-C).

STATE OF CALIFORNIA

DIVISION OF WORKERS' COMPENSATION

EXHIBIT D-1-c SOLE PROPRIETORSHIP

INFORMATION FORM

To be used in response to Item D-1-c of Form WCHCPO 1.

1. Name of Applicant (as in Item 1-a).

2. Residence Address.

3. Names of persons performing principal management functions: List each person who occupies a principal management position or who performs principal management functions for the applicant. If this is an amended exhibit, place an asterisk (*) before the names of persons for whom a change in title or duties is being reported and place a double asterisk (**) before the names of persons which are being added to those furnished in the most recent previous filing of this exhibit.

Full Name Beginning Title and

Last First Middle Date Duties

Mo. Year

4. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:

(4) Information Form for Miscellaneous Types of Entities (WCHCPO 1-D).

STATE OF CALIFORNIA

DIVISION OF WORKERS' COMPENSATION

EXHIBIT D-1-d INFORMATION FORM FOR

MISCELLANEOUS TYPES OF ENTITIES.

To be used in response to Item D-1-d of Form WCHCPO 1.

1. Name of Applicant (as in Item 1-a)

2. State of Organization

3. Date of Organization

4. Form of Organization (describe briefly)

5. Names of Principal Officers and Beneficial Owners: List below the names of (a) each person who is a principal officer or trustee of the applicant or who performs principal management functions, and (b) each person who owns of record or beneficially over 5 percent of any class of equity security of the applicant. If this is an amended exhibit, place an asterisk (*) before the name of each person for whom a change in title, status or interest is reported, and a double asterisk (**) before the name of persons which are added to those reported in the most recent previous filing.

Full Name Beginning Class of Equity Percent of Title and

Last First Date Security Class Duties

Mo. Year

6. If this is an amended exhibit, list below the names reported in the most recent filing of this exhibit which are deleted by this amendment:

NOTE

Authority cited: Stats. 1997, Ch. 346, Section 5. Reference: Sections 4600.3, 4500.5 and 4600.6, Labor Code.

HISTORY

1. New section filed 4-15-98; operative 4-15-98. Submitted to OAL for printing only pursuant to Stats. 1997, Ch. 346, Section 5 (Register 98, No. 16).

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