44-3808. Corporation; deposit securities or surety bond; duties.
(1) A prepaid dental service corporation shall deposit with the director securities eligible for deposit by an insurance company which shall have at all times a market value of not less than fifty thousand dollars or an amount as provided by subsection (7) of this section. A deposit under this section shall be held to assure the faithful performance of the corporation's obligations under its prepaid dental service plan.
(2) In lieu of any deposit of securities required under subsection (1) of this section, a prepaid dental service corporation may file with the director a surety bond in the amount of fifty thousand dollars or an amount as provided by subsection (7) of this section. The bond shall be one issued by an insurance company authorized to do business in the State of Nebraska. The bond shall be for the same purposes as the deposit in lieu of which it is filed and it shall be subject to the director's approval. No such bond shall be canceled or subject to cancellation unless at least thirty days' advance notice thereof, in writing, is filed with the director.
(3) Securities or a bond posted by a prepaid dental service corporation pursuant to subsection (1) or (2) of this section shall be for the benefit of and subject to action thereon in the event of insolvency of the corporation by any person or persons sustaining an actionable injury due to the failure of the corporation to faithfully perform its obligations under its prepaid dental service plan.
(4) The State of Nebraska shall be responsible for the safekeeping of all securities deposited with the director under this section. The securities shall not, on account of being in this state, be subject to taxation.
(5) The depositing corporation shall, during its solvency, have the right to exchange or substitute other securities of a like quality and value for securities on deposit, to receive the interest and other income accruing on such securities, and to inspect the deposit at all reasonable times.
(6) The deposit or bond shall be maintained unimpaired as long as the corporation continues to offer a prepaid dental service plan in this state. Whenever the corporation ceases to offer a prepaid dental service plan and furnishes to the director proof satisfactory to the director that the corporation has adequately provided for all of its obligations under its prepaid dental service plans in this state, the director shall release the deposited securities on presentation of the director's receipts for such securities or shall release any bond filed in lieu of such deposit.
(7) The director may reduce the minimum market value of securities required under subsection (1) of this section or the amount of the surety bond required under subsection (2) of this section if the director finds that the reduction is justified by:
(a) The terms and number of existing contracts under its prepaid dental service plans;
(b) Support by financially sound public or private organizations or agencies;
(c) Agreements with dentists or other providers for the provisions of dental services;
(d) Agreements with other persons for insuring the payment of the cost of dental services or the provision for alternative coverage in the event the corporation is unable to perform its obligations; or
(e) Other reliable financial guarantees.
(8) No part of the securities or bond to be filed under this section shall be supplied directly or indirectly by dues payments made for the purpose of meeting requirements to practice a profession.
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