(a) No prepaid health plan or pilot program shall be deemed to transact insurance or to be subject to any provision of the Insurance Code by virtue of negotiating, executing, or performing a prepaid health plan or pilot program contract under this chapter, or by virtue of compliance with the provisions of such a prepaid health plan or pilot program contract, including, but not limited to, creation, segregation, or maintenance of security to protect or safeguard the performance of such a prepaid health plan or pilot program contract. The director may require such security in respect to any such contract including, but not limited to, securities, surety bonds, or evidences of governmental debt, of the kinds, in the manner, and to the extent provided by the prepaid health plan or pilot program contract.

(b) Prepaid health plans or pilot programs to which the state is a party under the provisions of this chapter, and contracts and arrangements embodying such plans or programs shall not be subject to the provisions of law prescribing the forms of hospital or medical service or insurance contracts or requiring approval thereof or of the form thereof, by any state officer or agency except the director or the department.

This exemption applies, but is not limited to: (1) Chapter 4 (commencing with Section 10270) of Part 2 of Division 2 of the Insurance Code, (2) § 11069 of the Insurance Code, and (3) § 11513 of the Insurance Code. However, the exemption provided for in this section shall not exempt any insurer subject to taxation under Part 7 (commencing with Section 12001) of Division 2 of the Revenue and Taxation Code from the tax imposed under such part on gross premiums derived from contracts under this chapter.

(Added by Stats. 1977, Ch. 1036.)