(a) Following receipt of an application filed pursuant to § 56-51-106, the department shall review the application and notify the applicant of any deficiencies contained in the application. The department shall issue a certificate of authority to an applicant who has filed a completed application in conformity with § 56-51-106, upon payment of the fees specified by § 56-51-145 and upon the department being satisfied that the following conditions are met:

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Terms Used In Tennessee Code 56-51-107

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Contract: A legal written agreement that becomes binding when signed.
  • Department: means the department of commerce and insurance. See Tennessee Code 56-51-102
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Limited health service: means dental care services, vision care services, mental health services, substance abuse services, and pharmaceutical services. See Tennessee Code 56-51-102
  • Person: means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type organization, organization, partnership, receiver, reciprocal or interinsurance exchange, trustee or society. See Tennessee Code 56-16-102
  • Prepaid limited health service organization: means any person, corporation, partnership, or any other entity that, in return for a prepayment from a health maintenance organization or a state or federal agency, undertakes to provide or arrange for, or provide access to, the provision of a limited health service to enrollees through an exclusive panel of providers. See Tennessee Code 56-51-102
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Subscriber: means an individual on whose behalf a contract or arrangement has been entered into with a prepaid limited health service organization for health care services or other persons who also receive health care services as a result of the contract. See Tennessee Code 56-51-102
  • Working capital: means current assets minus current liabilities. See Tennessee Code 56-51-102
(1) The requirements of § 56-51-106 have been fulfilled;
(2) The entity has met the applicable minimum net worth requirements and working capital requirements as provided under § 56-32-112;
(3) The entity furnished evidence of adequate insurance coverage, including, but not limited to, general liability or professional liability coverage, or an adequate plan for self-insurance to respond to claims for injuries arising out of the furnishing of covered services;
(4) The ownership, control, and management of the entity are competent and trustworthy and possess managerial experience that would make the proposed operation beneficial to the subscribers. The department shall not grant or continue authority to transact the business of a prepaid limited health service organization in this state at any time during which the department has good reason to believe that the ownership, control, or management of the organization includes any person whose business operations are or have been marked by business practices or conduct that is to the detriment of the public, stockholders, investors, or creditors;
(5) The entity has demonstrated compliance with § 56-51-138 by obtaining a blanket fidelity bond in the amount of at least fifty thousand dollars ($50,000), issued by a licensed insurance carrier in this state, that will reimburse the entity in the event that anyone handling the funds of the entity either misappropriates or absconds with the funds. All employees handling the funds must be covered by the blanket fidelity bond. However, the fidelity bond need not cover an individual who owns one hundred percent (100%) of the stock of the organization if the stockholder maintains total control of the organization’s financial assets, books and records, and fidelity bond coverage is not available for the individual. An agent licensed under this title may, either directly or indirectly, represent the prepaid limited health service organization in the solicitation, negotiation, effectuation, procurement, receipt, delivery, or forwarding of any subscriber‘s contract, or collect or forward any consideration paid by the subscriber to the prepaid limited health service organization. The licensed agent shall not be required to post the bond required by this subsection (a);
(6) The prepaid limited health service organization has a grievance procedure that will facilitate the resolution of subscriber grievances and that includes both formal and informal steps available within the organization;
(7) The applicant is financially responsible and may reasonably be expected to meet its obligations to enrollees and to prospective enrollees. In making this determination, the department may consider:

(A) The financial soundness of the applicant’s arrangements for limited health services and the minimum standard rates, deductibles, copayments, and other patient charges used in connection with the arrangements;
(B) The adequacy of surplus, other sources of funding, and provisions for contingencies; and
(C) The manner in which the requirements of § 56-51-137 have been fulfilled;
(8) The agreements with providers for the provision of limited health services contain the provisions required by § 56-51-128;
(9) Any deficiencies identified by the department have been corrected; and
(10) All requirements of this chapter have been met.
(b) If the certificate of authority is denied, the department shall notify the applicant and shall specify the reasons for denial in the notice.
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