§ 131E-298. Protection against insolvency. - North Carolina Statutes

§ 131E‑298. Protection against insolvency.

(a)        The Division shall require deposits in accordance with theprovisions of G.S. 131E‑285.

(b)        If a provider sponsored organization fails to comply withthe net worth requirements of G.S. 131E‑286, the Division may takeappropriate action to assure that the continued operation of the providersponsored organization will not be hazardous to the beneficiaries enrolled withthe PSO.

(c)        Every provider sponsored organization shall have andmaintain at all times an adequate plan for protection against insolvencyacceptable to the Division. In determining the adequacy of such a plan, theDivision shall consider:

(1)        A reinsurance agreement preapproved by the Division coveringexcess loss, stop‑loss, or catastrophies. The agreement shall providethat the Division will be notified no less than 60 days prior to cancellationor reduction of coverage;

(2)        A conversion policy or policies that will be offered by aninsurer to the beneficiaries in the event of the provider sponsoredorganization's insolvency;

(3)        Legally binding unconditional guaranties by adequatelycapitalized sponsoring provider or adequately capitalized sponsoringcorporations of sponsoring providers;

(4)        Legally binding obligations of sponsoring providers toforego payment for items or services provided by the sponsoring provider inorder to avoid the financial insolvency of the PSO;

(5)        Legally binding obligations of sponsoring providers orparents of sponsoring providers to make capital infusions to the PSO; and

(6)        Any other arrangements offering protection againstinsolvency that the Division may require. (1998‑227, s. 1.)