California Laws: Health and Safety Code Section 1376
Section 1376
(a) No plan shall conduct any activity regulated by this
chapter in contravention of such rules and regulations as the
director may prescribe as necessary or appropriate in the public
interest or for the protection of plans, subscribers, and enrollees
to provide safeguards with respect to the financial responsibility of
plans. Such rules and regulations may require a minimum capital or
net worth, limitations on indebtedness, procedures for the handling
of funds or assets, including segregation of funds, assets and net
worth, the maintenance of appropriate insurance and a fidelity bond
and the maintenance of a surety bond in an amount not exceeding fifty
thousand dollars ($50,000).
(b) The surety bond referred to in subdivision (a) shall be
conditioned upon compliance by the licensee with the provisions of
this chapter and the rules and regulations adopted pursuant to this
chapter and orders issued under this chapter. Every surety bond
shall provide that no suit may be maintained to enforce any liability
thereon unless brought within two years after the act upon which
such suit is based.
(c) For purposes of computing any minimum capital requirement
which may be prescribed by the rules and regulations of the director
under subdivision (a), any operating cost assistance or direct loan
made to a plan by the United States Department of Health and Human
Services pursuant to Public Law 93-222, as amended, may be treated as
a subordinated loan, notwithstanding any express terms thereof to
the contrary.
(d) Each solicitor and solicitor firm shall handle funds received
for the account of plans, subscribers, or groups in accordance with
such rules as the director may adopt pursuant to this subdivision.
(e) The director may, by regulation, designate requirements of
this section or regulations adopted pursuant to this section, from
which public entities and political subdivisions of the state shall
be exempt.
Section: 1376
