Section 26-A3101. GENERAL REQUIREMENTS AND LIMITATIONS

 

3101.1An HMO may invest its funds only as provided under this Chapter. Notwithstanding the provisions of these regulations, the Commissioner may, after notice and opportunity for a hearing, order an HMO to limit or withdraw from certain investments, or discontinue certain investment practices, to the extent the Commissioner finds that such investments or investment practices are hazardous to the financial condition of the HMO.

 

3101.2No investment or loan, shall be made or engaged in by an HMO unless the investment or loan has been authorized by the board of directors, or by a committee thereof charged with the duty of supervising investments and loans. Nothing contained in this Chapter shall prevent the board of directors of an HMO from depositing any of its securities with:

 

(a)A committee appointed for the purpose of protecting the interest of security holders; or

 

(b)The authorities of any state or the District where it is necessary to do so in order to secure permission to transact business therein.

 

3101.3Nothing contained in this Chapter shall prevent the board of directors of an HMO from depositing any securities as collateral for the securing of any bond required for the business of the HMO.

 

3101.4An HMO shall not pay any commission or brokerage fee for the purchase or sale of property whether real or personal, in excess of an amount that is usual and customary in the locality where such purchases or sales are made, and the HMO shall maintain information regarding payments of commissions and brokerage fees shall be maintained for at least three (3) years.

 

3101.5No HMO shall knowingly invest in or make a loan secured by any property, directly or indirectly, whether real or personal, in which any officer or director of such HMO has a financial interest, nor shall an HMO make a loan of any kind to any officer or director of such HMO, except that this subsection shall not apply in circumstances where the financial interest of such officer or director, if any, is so remote as to not give rise to a conflict of interest. Notwithstanding the provisions of this subsection, the Commissioner may approve a transaction between an HMO and its officers or directors under this section if he or she is satisfied that:

 

(a)The transaction is entered into in good faith for the advantage and benefit of the company;

 

(b)The amount of the proposed investment or loan does not violate any other provision of this Chapter, and the loan does not exceed the fair market normal value of the property securing the loan, or the amount of the investment does not exceed the interest which the HMO proposes to acquire, and the transaction is otherwise fair and reasonable; and

 

(c)The transaction will not adversely affect the liquidity of the HMO's investments, its ability to comply with requirements of this Chapter, or the payment of its claims and obligations.

 

source

Final Rulemaking published at 46 DCR 5925(July 16, 1999).