Validity of noncomplying contracts.

(1) Any prepaid limited health services contract rider, endorsement, attachment, or addendum otherwise valid which contains any condition or provision not in compliance with the requirements of this act is not thereby rendered invalid, but must be construed and applied in accordance with such conditions and provisions as they would have applied had such contract, rider, endorsement, attachment, or addendum been in full compliance with this act. If an organization issues or delivers any contract for an amount which exceeds any limitations otherwise provided in this act, such organization is liable to the subscriber or his or her beneficiary for the full amount stated in the contract in addition to any other penalties that may be imposed under this act.

(2) Any prepaid limited health services contract delivered or issued for delivery in this state covering a subscriber, which subscriber pursuant to the provisions of this act the organization may not lawfully cover under the contract, is cancelable at any time by the organization, any provision of the contract to the contrary notwithstanding, and the organization must promptly cancel the contract in accordance with the request of the office therefor. No such illegality or cancellation may be deemed to relieve the organization of any liability incurred by it under the contract while in force or to prohibit the organization from retaining the pro rata earned premium or rate thereon. This subsection does not relieve the organization from any penalty otherwise incurred by the organization under this act for any such violation.