Tenn. Comp. R. & Regs. 0780-01-95-.11 - AUDITS AND AUDIT REPORTS

(1) Pursuant to T.C.A. § 56-7-3101(b)(1)(A), the Commissioner may, at any time the Commissioner believes it is reasonably necessary, audit any PBM licensed by the Department to determine whether the PBM is compliant with Tennessee laws pertaining to PBMs, including but not limited to T.C.A. Title 56, Chapter 7, Parts 31 and 32 and T.C.A. Title 56, Chapter 8, Part 1.

(2) The Commissioner shall have, and a PBM shall provide the Commissioner, convenient and free access to all books, records, securities, documents, and any and all files relating to the PBM's property, assets, business, and affairs any time the Commissioner determines it is necessary. The officers, directors, employees, and agents of the PBM shall facilitate and aid in the audit so far as it is in their power to do so.

(3) Pursuant to T.C.A. § 56-1-204, the Commissioner may administer oaths and examine under oath any person relative to the business of the PBM being audited.

(4) When conducting an audit of a PBM pursuant to paragraph (1) of this rule, the Commissioner may retain subject matter experts, attorneys, appraisers, independent actuaries, independent certified public accountants, certified financial examiners, or other professionals and specialists to assist in the audit.

(5) The Commissioner shall make a full and true report of the audit, which shall comprise only facts ascertained from the books, papers, records, securities, or documents of the PBM, or other evidence obtained by investigation of the Commissioner, or ascertained from the testimony of officers or agents or other persons examined under oath concerning the business, affairs, assets, and obligations of the PBM. The report of the audit shall be verified by the oath of the auditor in charge of the audit and shall be prima facie evidence in any action or proceeding in the name of the state against the PBM, its officers or agents upon the facts stated in the report.

(6) In the conduct of an audit, the Commissioner shall, to the extent deemed prudent by the Commissioner, adhere to the criteria set forth in the National Association of Insurance Commissioners Market Regulation Handbook and Financial Condition Examiners Handbook, as applicable, that were in effect when the audit commenced. The Commissioner may also employ other guidelines or procedures the Commissioner deems appropriate. The Commissioner shall disclose in writing to the PBM any other guidelines or procedures to be used prior to commencing an audit.

(7) Upon receipt of the verified report from the auditor in charge, the Commissioner shall transmit the report to the PBM examined, together with a notice that affords the PBM no less than thirty calendar days, or such shorter time period as determined by the Commissioner based on the circumstances of the audit, to make a written submission or rebuttal with respect to any matters contained in the audit report.

(8) Upon expiration of the end of the PBM's rebuttal period, the Commissioner shall fully consider and review the report, together with any submissions or rebuttals from the PBM and any relevant portions of the auditor's work papers, and enter an order:

(a) Adopting the report as filed or with modifications or corrections; or

(b) Rejecting the report with directions to the auditors to reopen the audit for purposes of obtaining additional data, documentation, or information, and refiling pursuant to paragraph (7).

(9) If the audit reveals that the PBM is operating in violation of any law, rule, or prior order of the Commissioner, the Commissioner may, by order issued pursuant to the Uniform Administrative Procedures Act compiled in T.C.A. Title 4, Chapter 5, require the PBM to take any action the Commissioner considers necessary or appropriate to cure the violation, including but not limited to the payment of civil penalties. No PBM shall violate any order issued under this paragraph.

Notes

Tenn. Comp. R. & Regs. 0780-01-95-.11

Emergency rules filed December 29, 2022; effective through June 27, 2023. New rules filed March 29, 2023; effective June 27, 2023. Amendments filed March 28, 2024; effective 6/26/2024.

Authority: T.C.A. §§ 56-7-3101, 56-7-3206, and 56-7-3210.