                                 CODE OF VIRGINIA

ISSUANCE OF LICENSE; FEE; MINIMUM NET WORTH; IMPAIRMENT (§ 38.2-4302)

A. The Commission shall issue a license to a health maintenance organization
after the receipt of a complete application and payment of a $500 nonrefundable
application fee if the Commission is satisfied that the following conditions are
met:

   1. The persons responsible for the conduct of the affairs of the applicant are
   competent, trustworthy, and reputable;

   2. The health care plan constitutes an appropriate mechanism for the health
   maintenance organization to provide or arrange for the provision of, as a
   minimum, basic health care services or limited health care services on a
   prepaid basis, except to the extent of reasonable requirements for copayments,
   deductibles, or both;

   3. The health maintenance organization is financially responsible and may
   reasonably be expected to meet its obligations to enrollees and prospective
   enrollees. In making this determination, the Commission may consider:
   				a. The financial soundness of the health care plan&#8217;s arrangements
   for health care services and the schedule of prepaid charges used for those
   services;
   				b. The adequacy of working capital;
   				c. Any agreement with an insurer, a health services plan, a government, or
   any other organization for insuring the payment of the cost of health care
   services or the provision for automatic applicability of an alternative
   coverage if the health care plan is discontinued;
   				d. Any contracts with health care providers that set forth the health care
   services to be performed and the providers&#8217; responsibilities for
   fulfilling the health maintenance organization&#8217;s obligations to its
   enrollees;
   				e. The deposit of acceptable securities in an amount satisfactory to the
   Commission, submitted in accordance with &#xA7; 38.2-4310 as a guarantee that
   the obligations to the enrollees will be duly performed;
   				f. The applicant&#8217;s net worth which shall include minimum net worth
   in an amount at least equal to the sum of uncovered expenses, but not less
   than $600,000, up to a maximum of $4 million; uncovered expenses shall be
   amounts determined from the most recently ended calendar quarter pursuant to
   regulations promulgated by the Commission; and
   				g. A financial statement of the health maintenance organization on the
   form required by &#xA7; 38.2-4307;

   4. The enrollees will be given an opportunity to participate in matters of
   policy and operation as required by &#xA7; 38.2-4304; and

   5. Nothing in the method of operation is contrary to the public interest, as
   shown in the information submitted pursuant to &#xA7; 38.2-4301 or Chapter 58
   (&#xA7; 38.2-5800 et seq.) or by independent investigation. Issuance of a
   license shall not constitute approval of the forms submitted under
   subdivisions B 6, 7, and 12 of &#xA7; 38.2-4301.

B. A licensed health maintenance organization shall have and maintain at all
times the minimum net worth described in subdivision A 3 f.

   1. If the Commission finds that the minimum net worth of a domestic health
   maintenance organization is impaired, the Commission shall issue an order
   requiring the health maintenance organization to eliminate the impairment
   within a period not exceeding 90 days. The Commission may by order served upon
   the health maintenance organization prohibit the health maintenance
   organization from issuing any new contracts while the impairment exists. If at
   the expiration of the designated period the health maintenance organization
   has not satisfied the Commission that the impairment has been eliminated, an
   order for the rehabilitation or liquidation of the health maintenance
   organization may be entered.

   2. If the Commission finds an impairment of the minimum net worth of any
   foreign health maintenance organization, the Commission may order the health
   maintenance organization to eliminate the impairment and restore the minimum
   net worth to the amount required by this section. The Commission may, by order
   served upon the health maintenance organization, prohibit the health
   maintenance organization from issuing any new contracts while the impairment
   exists. If the health maintenance organization fails to comply with the
   Commission&#8217;s order within a period of not more than 90 days, the
   Commission may, in the manner set out in &#xA7; 38.2-4316, suspend or revoke
   the license of the health maintenance organization.

   3. Prior to December 31, 1999, a health maintenance organization with less
   than minimum net worth which is licensed on and after June 30, 1998, may
   continue to operate as a licensed health maintenance organization without a
   finding of impairment if the licensee has net worth (i) on June 30, 1998, and
   up to December 31, 1998, in an amount at least equal to the sum of uncovered
   expenses, but not less than $300,000, up to a maximum of $2 million; (ii) on
   December 31, 1998, and up to June 30, 1999, in an amount at least equal to the
   sum of uncovered expenses, but not less than $400,000, up to a maximum of $2.5
   million; and (iii) on June 30, 1999, and up to December 31, 1999, in an amount
   at least equal to the sum of uncovered expenses, but not less than $500,000,
   up to a maximum of $3 million.

HISTORY: 1980, c. 720, § 38.1-865; 1981, c. 317; 1986, c. 562; 1992, c. 481;
1998, cc. 42, 891; 2000, c. 503; 2003, cc. 752, 767; 2004, c. 175; 2018, c. 706.