Notice of cancellation of contract.

Except for nonpayment of premium or termination of eligibility, a prepaid limited health service organization may not cancel or otherwise terminate or fail to renew a prepaid limited health services contract without giving the subscriber at least 45 days’ notice in writing of the cancellation, termination, or nonrenewal of the contract. The written notice must state the reason or reasons for the cancellation, termination, or nonrenewal. The only reasons for cancellation at such time other than the renewal period shall be as follows:

(1) The subscriber’s behavior is disruptive, unruly, abusive, unlawful, fraudulent, or uncooperative to the extent that the subscriber’s continuing participation seriously impairs the organization’s ability to provide services to other subscribers.

(2) Fraud or material misrepresentation in applying for or presenting any claim for benefits under the contract.

(3) Misuse of the documents provided as evidence of benefits available pursuant to the contract.

(4) Furnishing to the organization, by the subscriber, incorrect or incomplete information for the purposes of fraudulently obtaining services.

Prior to disenrollment, the organization must make an effort to resolve the problem through the grievance procedure and must determine that the subscriber’s behavior is not due to use of the services provided or mental illness. All prepaid limited health services contracts must contain a clause which requires that this notice be given. In the case of a prepaid limited health services contract issued to an employer holding the contract on behalf of the subscriber group, the prepaid limited health service organization may make the notification through the employer, and, if the prepaid limited health service organization elects to take this action through the employer, the organization shall be deemed to have complied with the provisions of this section upon notifying the employer of the requirements of this section and requesting the employer to forward the required notice to all subscribers.