Increase of capital, surplus; methods, procedures.

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26:2J-18.3 Increase of capital, surplus; methods, procedures.

2. The commissioner may increase the amount of capital or surplus required of a health maintenance organization, or subsequently revise or redetermine that increase, using appropriate methods and procedures established by rules and regulations adopted by the commissioner, in order to provide adequate protection against risks affecting the health maintenance organization's financial condition that are not adequately or fully covered by its reserves or other assets, but under no circumstances shall a health maintenance organization's capital or surplus be less than the capital or surplus required pursuant to regulation as prescribed by the commissioner; provided, however, that any increase required by a subsequent revision or redetermination pursuant to this section, shall be made only after a formal departmental hearing, on the record, unless that hearing is waived by the affected health maintenance organization. All matters pertaining to a hearing or to an increase in capital or surplus pursuant to this section shall be confidential and not subject to subpoena or public inspection, except to the extent that the commissioner finds release of that information necessary to protect the public. The hearing shall be initiated within 20 days after written notice to the health maintenance organization. Any declaration regarding an increase required by a subsequent revision or redetermination shall contain findings specifying the factors deemed significant in regard to the particular health maintenance organization, and shall set forth the reasons supporting the increase of capital or surplus ordered by the commissioner. In determining any increase, revision or redetermination in the amount of capital or surplus, the commissioner shall consider the risks of:

a. Increases or decreases in the frequency and severity of losses under normal operating conditions, as well as increases or decreases in those values, above or below the levels contemplated by the rates that it charged for coverage and above or below those reasonably expected under normal conditions;

b. Increases or decreases in expenses under normal operating conditions, as well as increases or decreases in those values, above or below the levels contemplated by the rates it charged for coverage and above or below those reasonably expected under normal conditions;

c. Increases or decreases in the value of, or return on, invested assets under normal operating conditions, as well as increases or decreases in those values, above or below those levels anticipated under normal conditions;

d. Changes in economic, social and market conditions that could adversely or favorably affect the financial condition of the health maintenance organization, including conditions that would make liquidity more or less important than contemplated and would prevent or facilitate timely investments or force or prohibit untimely sales of assets; and

e. Any other contingencies, including reinsurance and unfunded or extra contractual obligations, which may affect the health maintenance organization's financial condition.

L.2005,c.65,s.2.


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