[§432:1-408]  Uncovered expendituresinsolvency deposit.  (a)  If, at any time, uncovered expenditures exceedsten per cent of total health care expenditures, a mutual benefit society 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.  The deposit shall have, at all times,a fair market value in an amount of one hundred twenty per cent of thesociety's outstanding liability for uncovered expenditures for members in thisState, including incurred but not reported claims, and shall be calculated asof the first day of the month and maintained for the remainder of the month. If a society is not otherwise required to file a quarterly report, it shallfile a report within forty-five days of the end of the calendar quarter withinformation sufficient to demonstrate compliance with this section.

(b)  The deposit required under this section isin addition to the deposit required under section 432:1-407 and is an admittedasset of the mutual benefit society in the determination of net worth.  Allincome from the deposits or trust accounts shall be assets of the society andmay be withdrawn from the deposit or account quarterly with the approval of thecommissioner.

(c)  A mutual benefit society that has made adeposit 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 madewith the prior written approval of the commissioner.

(d)  The deposit under this section shall beheld in trust and may be used only as provided in this section.  Thecommissioner may use the deposit of an insolvent mutual benefit society for administrativecosts associated with administering the deposit and payment of claims ofmembers of this State for uncovered expenditures in this State.  Claims foruncovered expenditures shall be paid on a pro rata basis based on assetsavailable to pay such ultimate liability for incurred expenditures.  Partialdistribution may be made pending final distribution.  Any amount of the depositremaining shall be paid into the liquidation or receivership of the society.

(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 mutual benefit societies to file annual, quarterly, or more frequentreports as the commissioner deems necessary to demonstrate compliance with thissection.  The commissioner may require that the reports include liability foruncovered expenditures as well as an audit option. [L 1997, c 367, pt of§1]