A health carrier that takes an action that adversely affects a subject of abuse on the basis of a medical condition that the health carrier knows or has reason to know is abuse-related shall explain the reason for its action to the applicant or insured, in writing, and shall be able to demonstrate that its action, and any applicable plan provision:

(1)  Does not have the purpose or effect of treating abuse status as a medical condition or underwriting criterion;

(2)  Is not based upon any actual or perceived correlation between a medical condition and abuse;

(3)  Is permissible by law and applies in the same manner and to the same extent to all applicants and the insured with a similar medical condition without regard to whether the condition or claim is abuse-related; and

(4)  Is based on a determination, made in conformance with sound actuarial principles and supported by reasonable statistical evidence, that there is a correlation between the medical condition and a material increase in insurance risk.