[§432D-11]  Replacement coverage.  (a) 
For purposes of this chapter, "discontinuance" means the termination
of the contract between the group contract holder and a health maintenance
organization due to the insolvency of the health maintenance organization, and
does not refer to the termination of any agreement between any individual
enrollee and the health maintenance organization.



(b)  Any carrier providing replacement coverage
with respect to group hospital, medical, or surgical expense or service benefits
within a period of sixty days from the date of discontinuance of a prior health
maintenance organization contract or policy providing such hospital, medical,
or surgical expense or service benefits shall immediately cover all enrollees
who were validly covered under the previous health maintenance organization
contract or policy at the date of discontinuance and who would otherwise be
eligible for coverage under the succeeding carrier's contract, regardless of
any provisions of the contract relating to active employment or hospital
confinement or pregnancy.



(c)  Except to the extent benefits for the
condition would have been reduced or excluded under the prior carrier's
contract or policy, no provision in a succeeding carrier's contract of
replacement coverage which would operate to reduce or exclude benefits on the
basis that the condition giving rise to benefits preexisted the effective date
of the succeeding carrier's contract shall be applied with respect to those
enrollees validly covered under the prior carrier's contract or policy on the
date of discontinuance. [L 1995, c 179, pt of §1]