§ 58-47-120. Board; composition, powers, duties, and prohibitions. - North Carolina Statutes

§58‑47‑120.  Board; composition, powers, duties, and prohibitions.

(a)        Each group shall begoverned by a board or other governing body comprising no fewer than threepersons, elected for stated terms of office, and subject to the Commissioner'sapproval. All board members shall be residents of this State or members of thegroup. At least two‑thirds of the board shall comprise employees,officers, or directors of members; provided that the Commissioner may waivethis requirement for good cause. The group's TPA, service company, or anyowner, officer, employee, or agent of, or any other person affiliated with, theTPA or service company shall not serve as a board member. The board shallensure that all claims are paid promptly and take all necessary precautions tosafeguard the assets of the group.

(b)        The board shall beresponsible for the following:

(1)        Maintaining minutesof its meetings and making the minutes available to the Commissioner.

(2)        Providing for theexecution of its policies, including providing for day‑to‑daymanagement of the group and delineating in the minutes of its meetings theareas of authority it delegates.

(3)        Designating a chairto facilitate communication between the group and the Commissioner.

(4)        Adopting a policy ofreimbursement from the assets of the group for out‑of‑pocketexpenses incurred as board members, if so desired.

(c)        The board shallnot:

(1)        Be compensated bythe group, TPA, or service company except for out‑of‑pocketexpenses incurred as board members.

(2)        Extend credit tomembers for payment of a premium, except under payment requirements set forthin this Part.

(3)        Borrow any moneyfrom the group or in the name of the group, except in the ordinary course ofbusiness, without first informing the Commissioner of the nature and purpose ofthe loan and obtaining the Commissioner's approval.

(d)        The board shalladopt bylaws to govern the operation of the group. The bylaws shall comply withthe provisions of this section and shall include:

(1)        The method forselecting the board members, including terms of office.

(2)        The method foramending the bylaws and the plans of operation and assessment.

(3)        The method forestablishing and maintaining the group.

(4)        The procedures andrequirements for dissolving the group.

(e)        Each group shallfile a copy of its bylaws with the Commissioner. Any changes to the bylawsshall be filed with the Commissioner no later than 30 days before theireffective dates. The Commissioner may order the group to rescind or revoke anybylaw if it violates this section or any other applicable law or administrativerule.

(f)         The board shalladopt and administer a plan of operation to assure the fair, reasonable, andequitable administration of the group. All members shall comply with the plan.The plan shall comply with this section and include:

(1)        Procedures foradministering the assets of the group.

(2)        A plan ofassessment.

(3)        Loss controlservices to be provided to the members.

(4)        Rules for paymentand collection of premium.

(5)        Basis for dividends.

(6)        Reimbursement ofboard members.

(7)        Intervals formeetings of the board, which shall be held at least semiannually.

(8)        Procedures for themaintenance of records of all transactions of the group.

(9)        Procedures for theselection of the board members.

(10)      Additional provisionsnecessary or proper for the execution of the powers and duties of the group.

(11)      Qualifications forgroup membership, including underwriting guidelines and procedures to identifyany member that is in a hazardous financial condition.

(g)        The plan and anyamendments become effective upon approval in writing by the Commissioner.

(h)        Each year the boardshall review:

(1)        The performanceevaluation of the TPA or service company, if applicable.

(2)        Loss controlservices.

(3)        Investment policies.

(4)        Delinquent debts.

(5)        Membershipcancellation procedures.

(6)        Admission of newmembers.

(7)        Claimsadministration and reporting.

(8)        Payroll audits andfindings.

(9)        Excess insurance orreinsurance coverage.

The board's findings from itsreview shall be documented in the board's minutes.

(i)         G.S. 58‑7‑140applies to board members. (1997‑362, s. 3; 1999‑132, s. 13.3.)