Okla. Stat. tit. 36, § 36-6913

Commissioner - Determination of liabilities - Liability of

subscriber for health maintenance organization's debts - Insolvency

plan - Notice of termination of agreement.

A. 1. Before issuing any certificate of authority, the

Insurance Commissioner shall require that the health maintenance

organization have an initial net worth of One Million Five Hundred

Thousand Dollars ($1,500,000.00) and that the HMO shall thereafter

maintain the minimum net worth required under paragraph 2 of this

subsection.

2. Except as provided in paragraphs 3 and 4 of this subsection,

every health maintenance organization shall maintain a minimum net

worth equal to the greater of:

a. One Million Five Hundred Thousand Dollars

($1,500,000.00),

b. two percent (2%) of annual premium revenues as

reported on the most recent annual financial statement

filed with the Commissioner on the first One Hundred

Fifty Million Dollars ($150,000,000.00) of premium and

one percent (1%) of annual premium on the premium in

excess of One Hundred Fifty Million Dollars

($150,000,000.00),

c. an amount equal to the sum of three (3) months of

uncovered health care expenditures as reported on the

most recent financial statement filed with the

Commissioner, or

d. an amount equal to the sum of:

(1) eight percent (8%) of annual health care

expenditures, except those paid on a capitated

basis or managed hospital payment basis, as

reported on the most recent financial statement

filed with the Commissioner, and

(2) four percent (4%) of annual hospital expenditures

paid on a managed hospital payment basis, as

reported on the most recent financial statement

filed with the Commissioner.

3. Every health maintenance organization licensed before

November 1, 2003, shall maintain a minimum net worth of the greater

of Seven Hundred Fifty Thousand Dollars ($750,000.00) or:

a. twenty-five percent (25%) of the amount required by

paragraph 2 of this subsection by December 31, 2003,

b. fifty percent (50%) of the amount required by

paragraph 2 of this subsection by December 31, 2004,

c. seventy-five percent (75%) of the amount required by

paragraph 2 of this subsection by December 31, 2005,

and

Oklahoma Statutes - Title 36. Insurance Page 1397

d. one hundred percent (100%) of the amount required by

paragraph 2 of this subsection by December 31, 2006.

4. a. In determining net worth, no debt shall be considered

fully subordinated unless the subordination clause is

in a form acceptable to the Commissioner. An interest

obligation relating to the repayment of any

subordinated debt shall be similarly subordinated.

b. The interest expenses relating to the repayment of a

fully subordinated debt shall be considered covered

expenses.

c. A debt incurred by a note meeting the requirements of

this section, and otherwise acceptable to the

Insurance Commissioner, shall not be considered a

liability and shall be recorded as equity.

B. 1. Unless otherwise provided below, each health maintenance

organization shall deposit with the Commissioner or, at the

discretion of the Commissioner, with any organization or trustee

acceptable to the Commissioner through which a custodial or

controlled account is utilized, cash, securities, or any combination

of these or other measures that are acceptable to the Commissioner,

which at all times shall have a value of not less than Five Hundred

Thousand Dollars ($500,000.00).

2. The deposit shall be an admitted asset of the health

maintenance organization in the determination of net worth.

3. All income from deposits shall be an asset of the

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.

Any securities shall be approved by the Commissioner before being

deposited or substituted.
income from deposits shall be an asset of the

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.

Any securities shall be approved by the Commissioner before being

deposited or substituted.

4. The deposit shall be used to protect the interests of the

health maintenance organization's enrollees and to ensure

continuation of health care services to enrollees. If a health

maintenance organization is placed in receivership or liquidation,

the deposit shall be an asset subject to the provisions of the

Uniform Insurers Liquidation Act.

5. The Insurance Commissioner may reduce or eliminate the

deposit requirement if a health maintenance organization deposits

with the Commissioner or other official body of the state or

jurisdiction of domicile for the protection of all subscribers and

enrollees of the health maintenance organization, wherever located,

cash, acceptable securities or surety, and delivers to the

Commissioner a certificate to that effect, duly authenticated by the

appropriate state official holding the deposit.

Oklahoma Statutes - Title 36. Insurance Page 1398

C. 1. Every health maintenance organization shall, when

determining liabilities, include an amount estimated in the

aggregate to provide for:

a. any unearned premium,

b. the payment of all claims for incurred health care

expenditures, whether reported or unreported, that are

unpaid and for which the organization is or may be

liable, and

c. the expense of adjustment or settlement of those

claims.

2. The liabilities shall be computed in accordance with rules

promulgated by the Commissioner upon reasonable consideration of the

ascertained experience and character of the health maintenance

organization.

D. 1. Every contract between a health maintenance organization

and a participating provider of health care services shall be in

writing and shall provide that, in the event the health maintenance

organization fails to pay for health care services as set forth in

the contract, a subscriber or an enrollee shall not be liable to the

provider for any sums owed by the health maintenance organization.

2. In the event that the participating provider contract has

not been reduced to writing as required by this subsection or that

the contract fails to contain the required prohibition, the

participating provider shall not collect or attempt to collect from

a subscriber or an enrollee sums owed by the health maintenance

organization.

3. No participating provider or the provider's agent, trustee

or assignee may maintain an action at law against a subscriber or

enrollee to collect sums owed by the health maintenance

organization.

E. The Commissioner shall require that each health maintenance

organization have a plan for handling insolvency that allows for

continuation of benefits for the duration of the contract period for

which premiums have been paid and continuation of benefits to

subscribers or enrollees who are confined on the date of insolvency

in an inpatient facility until their discharge or expiration of

benefits. In considering such a plan, the Commissioner may require:

1. Insurance to cover the expenses to be paid for continued

benefits after an insolvency;

2. Provisions in provider contracts that obligate the provider

to provide services for the duration of the period after the health

maintenance organization's insolvency for which premium payment has

been made and until the enrollees' discharge from inpatient

facilities;

3. Insolvency reserves;

4. Acceptable letters of credit; or

Oklahoma Statutes - Title 36. Insurance Page 1399

5. Any other arrangements to ensure continuation of benefits as

specified above.

F. An agreement to provide health care services between a
th

maintenance organization's insolvency for which premium payment has

been made and until the enrollees' discharge from inpatient

facilities;

3. Insolvency reserves;

4. Acceptable letters of credit; or

Oklahoma Statutes - Title 36. Insurance Page 1399

5. Any other arrangements to ensure continuation of benefits as

specified above.

F. An agreement to provide health care services between a

provider and a health maintenance organization shall require that if

the provider terminates the agreement, the provider shall give the

organization at least ninety (90) days' advance notice of such

termination.