Deposit maintained with trustee acceptable to commissioner
Section 26. (a) Except as provided in subsections (b) and (d), each health maintenance organization shall maintain a deposit with a trustee acceptable to the commissioner through which a custodial or controlled account is utilized of cash, securities or any combination of these or other measures that are acceptable to him, which is to be used exclusively to protect the interests of policyholders, enrolled members, and the general public and which at all times shall have a value of not less than $1,000,000.
(b) Each health maintenance organization approved by the commissioner before January 1, 2004 shall provide evidence of and maintain at all times a deposit as described in subsection (a) in the amount of $500,000 not later than July 1, 2004. Not later than January 1, 2005, the health maintenance organization shall provide evidence of and maintain a deposit in the amount of an additional $500,000 to constitute the required $1,000,000 deposit.
(c) All income from the deposit shall be an asset of the health maintenance organization. A health maintenance organization that has made a securities deposit may withdraw that deposit or any part thereof after making a substitute deposit of cash, securities or any combination of these or other measures of equal amount and value. The commissioner shall approve any securities before they are deposited or substituted.
(d) The commissioner may reduce or eliminate the deposit requirement if the health maintenance organization deposits with the state treasurer, insurance commissioner or other official body of the state or jurisdiction of domicile, for the protection of policyholders, enrolled members and subscribers of such health maintenance organization and the general public, cash, acceptable securities or surety, and delivers to the commissioner a certificate to such effect, duly authenticated by the appropriate entity holding the deposit.
(e) If in the opinion of the commissioner the deposit requirement as established above would be inadequate to protect the interests of enrolled members, the deposit shall be appropriately adjusted in order to protect the interests of policyholders, enrolled members and subscribers of the health maintenance organization and the general public.
(f) The deposit shall be an admitted asset of the health maintenance organization in the determination of net worth pursuant to section 25. The commissioner may use the deposit for administrative costs directly attributable to any receivership, administrative supervision, rehabilitation or liquidation pursuant to section 20. If the health maintenance organization is ordered into receivership, administrative supervision, rehabilitation or liquidation, the deposit shall be an asset subject to the provisions of section 20.