§432D-9  Uncovered expenditures insolvencydeposit.  (a)  If, at any time, uncovered expenditures exceed ten per centof total health care expenditures, a health maintenance organization shallplace with the commissioner or with any organization or trustee acceptable tothe commissioner through which a custodial or controlled account is maintained,an uncovered expenditures insolvency deposit consisting of cash or securitiesthat are acceptable to the commissioner.  Such deposit shall have, at alltimes, a fair market value in an amount of one-hundred-twenty per cent of thehealth maintenance organization's outstanding liability for uncoveredexpenditures for enrollees in this State, including incurred but not reportedclaims, and shall be calculated as of the first day of the month and maintainedfor the remainder of the month.  If a health maintenance organization is nototherwise required to file a quarterly report, it shall file a report withinforty-five days of the end of the calendar quarter with information sufficientto demonstrate compliance with this section.

(b)  The deposit required under this section isin addition to the deposit required under section 432D-8 and is an admittedasset of the health maintenance organization in the determination of networth.  All income from the deposits or trust accounts shall be assets of thehealth maintenance organization and may be withdrawn from the deposit or trustaccount quarterly with the approval of the commissioner.

(c)  A health maintenance organization that hasmade a deposit may withdraw that deposit or any part of the deposit if:

(1)  A substitute deposit of cash or securities ofequal amount and value is made;

(2)  The fair market value exceeds the amount of therequired deposit; or

(3)  The required deposit under subsection (a) isreduced or eliminated.

Deposits, substitutions, or withdrawals may be madeonly with the prior written approval of the commissioner.

(d)  The deposit required under this section isheld in trust and may be used only as provided in this section.  Thecommissioner may use the deposit of an insolvent health maintenanceorganization for administrative costs associated with administering the depositand payment of claims of enrollees of this State for uncovered expenditures inthis State.  Claims for uncovered expenditures shall be paid on a pro ratabasis based on assets available to pay such ultimate liability for incurredexpenditures.  Partial distribution may be made pending final distribution. Any amount of the deposit remaining shall be paid into the liquidation orreceivership of the health maintenance organization.

(e)  The commissioner may prescribe by rule thetime, manner, and form for filing claims under subsection (d).

(f)  The commissioner may require by rule ororder health maintenance organizations to file annual, quarterly, or morefrequent reports as the commissioner deems necessary to demonstrate compliancewith this section.  The commissioner may require that the reports includeliability for uncovered expenditures as well as an audit opinion. [L 1995, c179, pt of §1; am L 2003, c 212, §127]