(a) Upon being notified by the commissioner that a health maintenance organization is insolvent, the association, with the approval of the commissioner, shall appoint one or more health maintenance organizations to enroll covered individuals.
(1) Except as otherwise provided in this article, a health maintenance organization operating in a given service area shall be appointed to enroll covered individuals within that service area. If more than one health maintenance organization is operating in a given service area, the association shall allocate the covered individuals within that service area among those health maintenance organizations. The ratio of covered individuals allocated to each health maintenance organization shall approximate the ratio of that health maintenance organization's subscribers in the service area to the total number of health maintenance organization subscribers in the service area. In computing the latter ratio, the association shall use the most recent membership data filed with the commissioner by the health maintenance organizations and shall exclude from the computation all covered individuals.
(2) If no health maintenance organization is operating within a given service area, the association shall appoint to enroll covered individuals within that service area the health maintenance organization(s) that it deems best suited to provide health care services to those individuals. In determining which health maintenance organization(s) are best suited, the association shallconsider the health care delivery systems and financial resources of all candidate health maintenance organizations.
(3) A health maintenance organization appointed by the association shall enroll covered individuals under its own contract containing terms which are, in the opinion of the association, comparable to those which were extended to the covered individuals by the insolvent health maintenance organization. The rate for said contract shall be determined by the health maintenance organization's rate methodology for the contract. In selecting a contract of the appointed health maintenance organization to be used to provide services to covered individuals, the association shall consider the services, benefits, and exclusions under the contract.
(4) A health maintenance organization appointed by the association shall not exclude from coverage a preexisting condition which was not excluded under the covered individual's policy with the insolvent health maintenance organization.
(5) Except as specifically provided elsewhere in this section, a health maintenance organization appointed by the association may not terminate the coverage of a covered individual for any reason other than:
(A) Nonpayment of premiums;
(B) Attainment of medicare or medicaid eligibility;
(C) Nonresidency in the service area;
(E) Termination of eligibility.
(6) If the association appoints a health maintenance organization to enroll covered individuals residing in a service area in which the health maintenance organization is not currently functioning, the association, at the request of the health maintenance organization and with the approval of the commissioner, shall transfer to the health maintenance organization some or all of the contracts existing between the insolvent health maintenance organization and providers or other participating entities. Such transfers shall be prospective only, and the health maintenance organization receiving the contract shall not be subject to liability, of any type whatsoever, which is based upon the contract and arose before its transfer.
(7) The liability of a health maintenance organization appointed to enroll covered individuals under this subsection shall be based only upon the policy issued by the health maintenance organization, as limited by this article. In no event shall the health maintenance organization be subject to liability, of any kind whatsoever, that is based upon the covered policy issued by the insolvent health maintenance organization or upon a statement, act or omission of the insolvent health maintenance organization. The liability of the health maintenance organization shall be strictly limited by the terms of its contract with the covered individual and shall not include any liability for any amount or obligation in excess of the applicable limits of coverage forcontractually covered matters, and as limited by the terms of this article.
(8) Notwithstanding any other provision of this chapter, a covered individual shall not be entitled to convert or renew a contract which has been issued by a health maintenance organization pursuant to this subsection unless the health maintenance organization, in its discretion, agrees to the conversion or renewal.
(b) Notwithstanding any other provision of this article, coverage provided to a covered individual under this section shall terminate when the value of the benefits provided to the covered individual exceeds one hundred thousand dollars. If the value of the benefits is less than this amount, coverage nonetheless shall terminate one year from the insolvent health maintenance organization's date of insolvency or upon the expiration of the policy issued by the insolvent health maintenance organization, whichever is earlier, but in no event prior to one hundred and eighty days from the insolvent health maintenance organization's date of insolvency. When the value of the benefits provided do not exceed one hundred thousand dollars, no covered individual may be terminated under the provisions of this subsection if, at the time such coverage could otherwise be terminated:
(1) The individual is undergoing treatment for an acute injury which occurred while the individual was covered, in which case coverage shall last until such treatment is completed, but shall belimited to such treatment; or
(2) The individual is undergoing treatment for an acute illness which was diagnosed while the individual was covered, in which case coverage shall continue until such treatment is completed, but shall be limited to such treatment; or
(3) The individual is undergoing a course of inpatient treatment which began while the individual was covered, in which case coverage shall continue until such treatment is completed, but shall be limited to such treatment.
(c) If the association fails to appoint a health maintenance organization to enroll a covered individual within a reasonable period of time, the commissioner, in his or her discretion, may appoint a health maintenance organization on behalf of the association.
(d) At the request of a covered individual, the association shall defend any suit brought against that covered individual contrary to the provisions of section seven-a, article twenty-five-a of this chapter. If the association prevails in such a suit, it shall be entitled to recover its costs and attorney's fees from the plaintiff.
(e) The association shall render assistance and advice to the commissioner, upon his or her request, in any deliberation, proceeding, inquiry or presentation which concerns an insolvent health maintenance organization.
(f) The association shall have standing to appear before anycourt which has jurisdiction over an insolvent health maintenance organization. Such standing shall extend to all matters germane to the powers and duties of the association including, but not limited to, the liquidation of the health maintenance organization, and the determination or transfer of the contractual obligations, assets or liabilities of the health maintenance organization.
(g) In addition to exercising such other powers as may be granted or implied elsewhere in this article, the association may:
(1) Enter into contracts or perform such other actions as are necessary and appropriate to carry out its duties under this article;
(2) Take any legal actions as are necessary and appropriate including, but not limited to, actions for the recovery of any unpaid assessments made under section nine of this article;
(3) Borrow money as necessary to effectuate the purposes of this article and issue evidence of such indebtedness, which if not in default, shall be treated as legal investments for domestic insurers or health maintenance organizations and may be carried by a domestic insurer or health maintenance organization as an admitted asset;
(4) Employ or retain such persons to handle the financial transactions of the association and to perform such other functions as become necessary or appropriate; and
(5) Negotiate and contract with any liquidator, conservator, or ancillary receiver of an insolvent health maintenanceorganization.
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