(a) Optional imposition of sanction. The State may impose temporary management only if it finds (through onsite survey, enrollee complaints, financial audits, or any other means) that--
(1) There is continued egregious behavior by the MCO, including but not limited to behavior that is described in Sec. 438.700, or that is contrary to any requirements of sections 1903(m) and 1932 of the Act; or
(2) There is substantial risk to enrollees' health; or
(3) The sanction is necessary to ensure the health of the MCO's enrollees--
(i) While improvements are made to remedy violations under Sec. 438.700; or
(ii) Until there is an orderly termination or reorganization of the MCO.
(b) Required imposition of sanction. The State must impose temporary management (regardless of any other sanction that may be imposed) if it finds that an MCO has repeatedly failed to meet substantive requirements in section 1903(m) or section 1932 of the Act, or this subpart. The State must also grant enrollees the right to terminate enrollment without cause, as described in Sec. 438.702(a)(3), and must notify the affected enrollees of their right to terminate enrollment.
(c) Hearing. The State may not delay imposition of temporary management to provide a hearing before imposing this sanction.
(d) Duration of sanction. The State may not terminate temporary management until it determines that the MCO can ensure that the sanctioned behavior will not recur.