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2014 Florida Statutes
SECTION 35
Assets, liabilities, and investments.
Assets, liabilities, and investments.
641.35 Assets, liabilities, and investments.—
(1) ASSETS.—In any determination of the financial condition of a health maintenance organization, there shall be allowed as “assets” only those assets that are owned by the health maintenance organization and that consist of:
(a) Cash or cash equivalents in the possession of the health maintenance organization, or in transit under its control, including the true balance of any deposit in a solvent bank, savings and loan association, or trust company which is domiciled in the United States. Cash equivalents are short-term, highly liquid investments, with original maturities of 3 months or less, which are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
(b) Investments, securities, properties, and loans acquired or held in accordance with this part, and in connection therewith the following items:
1. Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.
2. Declared and unpaid dividends on stock and shares, unless the amount of the dividends has otherwise been allowed as an asset.
3. Interest due or accrued upon a collateral loan which is not in default in an amount not to exceed 1 year’s interest thereon.
4. Interest due or accrued on deposits or certificates of deposit in solvent banks, savings and loan associations, and trust companies domiciled in the United States, and interest due or accrued on other assets, if such interest is in the judgment of the office a collectible asset.
5. Interest due or accrued on current mortgage loans, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 90 days be allowed as an asset.
(c) Premiums in the course of collection, not more than 3 months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by any governmental body in the United States or by any of their instrumentalities.
(d) The full amount of reinsurance recoverable from a solvent reinsurer, which reinsurance is authorized under s. 624.610.
(e) Pharmaceutical and medical supply inventories.
(f) Goodwill created by acquisitions and mergers occurring on or after January 1, 2001.
(g) Loans or advances by a health maintenance organization to its parent or principal owner if approved by the office.
(h) Other assets, not inconsistent with the provisions of this section, deemed by the office to be available for the payment of losses and claims, at values to be determined by it.
The office, upon determining that a health maintenance organization’s asset has not been evaluated according to applicable law or that it does not qualify as an asset, shall require the health maintenance organization to properly reevaluate the asset or replace the asset with an asset suitable to the office within 30 days of receipt of written notification by the office of this determination, if the removal of the asset from the organization’s assets would impair the organization’s solvency.
(2) ASSETS NOT ALLOWED.—In addition to assets impliedly excluded by the provisions of subsection (1), the following assets expressly shall not be allowed as assets in any determination of the financial condition of a health maintenance organization:
(a) Subscriber lists, patents, trade names, agreements not to compete, and other like intangible assets.
(b) Any note or account receivable from or advances to officers, directors, or controlling stockholders, whether secured or not, and advances to employees, agents, or other persons on personal security only, other than those transactions authorized under paragraph (1)(g).
(c) Stock of the health maintenance organization owned by it directly or owned by it through any entity in which the organization owns or controls, directly or indirectly, more than 25 percent of the ownership interest.
(d) Leasehold improvements, nonmedical libraries, stationery, literature, and nonmedical supply inventories, except that leasehold improvements made prior to October 1, 1985, shall be allowed as an asset and shall be amortized over the shortest of the following periods:
1. The life of the lease.
2. The useful life of the improvements.
3. The 3-year period following October 1, 1985.
(e) Furniture, fixtures, furnishings, vehicles, medical libraries, and equipment.
(f) Notes or other evidences of indebtedness which are secured by mortgages or deeds of trust which are in default and beyond the express period specified in the instrument for curing the default.
(g) Bonds in default for more than 60 days.
(h) Prepaid and deferred expenses.
(i) Any note, account receivable, advance, or other evidence of indebtedness, or investment in:
1. The parent of the health maintenance organization;
2. Any entity directly or indirectly controlled by the health maintenance organization parent; or
3. An affiliate of the parent or the health maintenance organization,
except as allowed in subsections (1), (11), and (12). The office may, however, allow all or a portion of such asset, at values to be determined by the office, if deemed by the office to be available for the payment of losses and claims.
(3) LIABILITIES.—In any determination of the financial condition of a health maintenance organization, liabilities to be charged against its assets shall include:
(a) The amount, estimated consistently with the provisions of this part, necessary to pay all of its unpaid losses and claims incurred for or on behalf of a subscriber, on or prior to the end of the reporting period, whether reported or unreported, including contract and premium deficiency reserves. If a health maintenance organization, through a health care risk contract, transfers to any entity the obligation to pay any provider for any claim arising from services provided to or for the benefit of any subscriber, the liabilities of the health maintenance organization under this section shall include the amount of those losses and claims to the extent that the provider has not received payment. No liability need be established if the entity has provided to the health maintenance organization a financial instrument acceptable to the office securing the obligations under the contract or if the health maintenance organization has in place an escrow or withhold agreement approved by the office which assures full payment of those claims. Financial instruments may include irrevocable, clean, and evergreen letters of credit. As used in this paragraph, the term “entity” does not include this state, the United States, or an agency thereof or an insurer or health maintenance organization authorized in this state.
(b) The amount equal to the unearned portions of the gross premiums charged on health maintenance contracts in force.
(c) Taxes, expenses, and other obligations due or accrued at the date of the statement.
The office, upon determining that a health maintenance organization has failed to report liabilities that should have been reported, shall require a corrected report which reflects the proper liabilities to be submitted by the organization to the office within 10 working days of receipt of written notification.
(4) INVESTMENTS GENERALLY.—Health maintenance organizations may invest their funds only in accordance with the provisions of this part. Notwithstanding the provisions of this part, however, the office may, after notice and hearing, order a health maintenance organization to limit or withdraw from certain investments or to discontinue certain investment practices, to the extent that the office finds the investment practices hazardous to the financial condition of the organization. At any such hearing, the office shall have the burden of presenting a prima facie case that the investment or investment practices are hazardous to the financial condition of the organization. If the office presents such a prima facie case, then it shall be the organization’s burden to demonstrate that the investment or investment practices are not hazardous to the financial condition of the organization.
(5) ELIGIBLE INVESTMENTS.—
(a) Health maintenance organizations shall invest in or lend their funds on the security of, and shall hold as invested assets, only eligible investments as prescribed in this part.
(b) Any particular investment held by a health maintenance organization on October 1, 1985, which was a legal investment at the time it was made and which the organization was legally entitled to possess immediately prior to October 1, 1985, shall be deemed to be an eligible investment.
(c) The eligibility of an investment shall be determined as of the date of its making or acquisition, except as stated in paragraph (b).
(d) Any investment limitation based upon the amount of the organization’s assets or particular funds shall relate to such assets or funds as shown by the organization’s annual or quarterly report as of the end of the reporting period immediately preceding the date of acquisition of the investment by the organization or as shown by a current financial statement of the organization.
(6) GENERAL QUALIFICATIONS.—
(a) No security or investment other than real property and personal property acquired under subsection (10) or investments in other health care providers acquired under subsection (11) shall be eligible for acquisition unless it is interest-bearing or interest-accruing, is entitled to receive dividends if and when declared and paid or is otherwise income-producing, and is not then in default in any respect and unless the health maintenance organization is entitled to receive for its exclusive account and benefit the interest or income accruing thereon.
(b) No security or investment shall be eligible for purchase at a price above its market value unless it is approved by the office.
(c) No provision of this part shall prohibit the acquisition by a health maintenance organization of other or additional securities or property if received as a dividend, as a lawful distribution of assets, or under a lawful and bona fide agreement of merger or consolidation. Any investment so acquired which is not otherwise eligible under this part shall be disposed of pursuant to subsection (17) if property or securities.
(7) DIRECTORS MUST AUTHORIZE OR RATIFY INVESTMENTS.—No investment or loan shall be made or engaged in by any health maintenance organization unless the same has been authorized or ratified by the organization’s board of directors or by a committee, department, or section of the organization charged with the duty of supervising investments and loans. The minutes or records of any such committee, department, or section shall be maintained and regular reports of such committee, department, or section shall be submitted to the board of directors. No health maintenance organization shall subscribe to or participate in any underwriting of the purchase or sale of securities or property or enter into any agreement to withhold from sale any of its property, but the disposition of its property shall be at all times within the control of the board of directors. Nothing contained in this section shall prevent the board of directors of any health maintenance organization from depositing any of its securities with a committee appointed for the purpose of protecting the interest of security holders or with the authorities of any state or county where it is necessary to do so in order to secure permission to transact its appropriate business therein, and nothing contained in this section shall prevent the board of directors of the organization from depositing any securities as collateral for the securing of any bond required for the business of the organization.
(8) EXCESSIVE COMMISSIONS AND CERTAIN INTERESTS PROHIBITED.—
(a) No health maintenance organization shall pay any commission or brokerage for the purchase or sale of property, whether real or personal, in excess of that usual and customary at the time and in the locality where the purchases or sales are made. Information regarding payments of commissions and brokerage shall be maintained from the date of the most recent examination by the office pursuant to s. 641.27 until the date of completion of the following examination.
(b) No health maintenance organization shall knowingly invest in or loan upon any property, directly or indirectly, whether real or personal, in which any officer or director of the organization has a financial interest, nor shall any organization make a loan of any kind to any officer or director of the organization, except that:
1. This paragraph shall not apply to loans in circumstances in which the financial interest of the officer or director is only nominal, trifling, or so remote as not to give rise to a conflict of interest; and
2. In any case, the office may approve a transaction between an organization and its officers or directors under this paragraph if it is satisfied that:
a. The transaction is entered into in good faith for the advantage and benefit of the organization,
b. The amount of the proposed investment or loan does not violate any other provision of this part or exceed the reasonable, normal value of the property or the interest which the company proposed to acquire,
c. The transaction is otherwise fair and reasonable, and
d. The transaction will not adversely affect, to any substantial degree, the liquidity of the organization’s investments or its ability thereafter to comply with requirements of this part or the payment of its claims and obligations.
(9) SURPLUS AND DEPOSIT RESTRICTIONS.—Every health maintenance organization must maintain an amount equal to its required minimum surplus in coin or currency of the United States on hand or on deposit in any solvent national or state bank, savings and loan association, or trust company or in eligible securities or obligations as follows:
(a) Nondemand obligations of certain financial institutions.—Direct, unconditional nondemand obligations for the payment of money issued by a solvent bank or by a mutual savings bank or trust company, savings and loan, building and loan, or credit union, subject to the following:
1. The financial institution is solvent.
2. The financial institution is incorporated under the laws of the United States or of any state thereof.
3. The obligations are of the type which are insured by an agency of the United States.
4. The investment is in the name of and owned by the health maintenance organization, unless the account is under a trusteeship with the organization named as the beneficiary.
(b) Obligations of the United States.—Direct obligations of the United States for the payment of money or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by the United States.
(c) Obligations of agencies and instrumentalities of the United States.—Direct obligations for the payment of money issued by an agency or instrumentality of the United States or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by an agency or instrumentality of the United States.
(d) Obligations of a state.—Direct, general obligations of any state of the United States for the payment of money, or obligations for the payment of money to the extent guaranteed or insured as to the payment of principal and interest by full faith and credit of any state of the United States, on the following conditions:
1. The state has the power to levy taxes for the prompt payment of the principal and interest of such obligations.
2. The state is not in default in the payment of principal or interest on any of its direct, guaranteed, or insured general obligations at the date of such investment.
(e) Obligations of political subdivisions of a state.—Direct, general obligations of any political subdivision of any state of the United States for the payment of money, or obligations for the payment of money to the extent guaranteed as to the payment of principal and interest by any political subdivision of any state of the United States, on the following conditions:
1. The obligations are payable or guaranteed from ad valorem taxes.
2. The political subdivision is not in default in the payment of principal or interest on any of its direct or guaranteed obligations.
3. No investment shall be made under this paragraph in obligations which are secured only by special assessments for local improvements.
(10) PROPERTY USED IN THE HEALTH MAINTENANCE ORGANIZATION’S BUSINESS.—Real estate, including leasehold estates, for the convenient accommodation of the organization’s business operations, including home office, branch administrative offices, hospitals, medical clinics, medical professional buildings, and any other facility to be used in the provision of health care services, or real estate for rental to any health care provider under contract with the organization to provide health care services which shall be used in the provision of health care services to members of the organization by that provider, is acceptable as an investment on the following conditions:
(a) Any parcel of real estate acquired under this subsection may include excess space for rent to others if it is reasonably anticipated that the excess will be required by the health maintenance organization for expansion or if the excess is reasonably required in order to have one or more buildings that will function as an economic unit.
(b) The real estate may be subject to a mortgage.
(c) The greater of the admitted value of the asset, as determined by statutory accounting principles, or, if approved by the office, the health maintenance organization’s equity in the real estate plus all encumbrances on the real estate owned by the organization under this subsection, when added to the value of all personal and mixed property used in the organization’s business, shall not exceed 75 percent of its admitted assets unless, with the permission of the office, it finds that the percentage of its admitted assets is insufficient to provide convenient accommodation for the organization’s business and the operations of the organization would not otherwise be impaired.
(11) INVESTMENTS IN ADMINISTRATIVE AND MANAGEMENT SERVICE ENTITIES AND OTHER HEALTH CARE PROVIDERS.—A health maintenance organization may invest directly or indirectly in real estate, common and preferred stocks, bonds or debentures, including convertible debentures, or other evidences of debts of or equity in an entity if the entity is owned by or, with the approval of the office, under contract to the organization to provide management services, administrative services, or health care services for the organization, on the following conditions:
(a) Investments authorized under this subsection shall not exceed 50 percent of admitted assets, and these investments shall be included in the calculation of the overall limitation in paragraph (10)(c) relating to all real and personal property.
(b) Investments may qualify under this section only insofar as a provider of management, administrative, or health care service relationship as defined herein exists. Upon cessation of such relationship, each investment shall be subject to the rules applicable to an investment of that type and must qualify under the appropriate limitation or, failing that, become ineligible and subject to disposal under subsection (17).
(12) EXCHANGES OF FACILITIES OR ASSETS.—Health care or administrative service entities, if subsidiaries of or under contract to the health maintenance organization to provide administrative or health care services to the organization’s members, may exchange facilities or similar assets to be used in the organization’s business for stock of the organization. However, any exchange involving an entity under contract with the health maintenance organization must have the approval of the office prior to the exchange. These facilities or assets shall be valued in accordance with statutory accounting principles.
(13) OTHER INVESTMENTS.—After satisfying the requirements of subsections (9), (10), (11), and (12), any funds of the health maintenance organization in excess of the minimum surplus required to be maintained under this part may be invested in any investment listed in this subsection or in subsections (9) and (14).
(a) United States Government obligations.—A health maintenance organization may invest in bonds, notes, warrants, and other evidences of indebtedness which are direct obligations of the Government of the United States or for which the full faith and credit of the Government of the United States is pledged for the payment of principal and interest.
(b) Loans guaranteed by the United States.—
1. A health maintenance organization may invest in loans insured or guaranteed as to principal and interest by the Government of the United States, or by any agency or instrumentality of the Government of the United States, to the extent of such insurance or guaranty.
2. A health maintenance organization may invest in student loans insured or guaranteed as to principal by the Government of the United States, or by any agency or instrumentality of the Government of the United States, to the extent of such insurance or guaranty.
(c) State public obligations.—A health maintenance organization may invest in bonds, notes, warrants, and other securities not in default which are the direct obligations of any state of the United States or the District of Columbia, or for which the full faith and credit of such state or district has been pledged for the payment of principal and interest.
(d) County, municipal, and district obligations.—A health maintenance organization may invest in bonds, notes, warrants, and other securities not in default of any county, district, incorporated city, or school district in any state of the United States or the District of Columbia, which are the direct obligations of such county, district, city, or school district and for payment of the principal and interest of which the county, district, city, or school district has lawful authority to levy taxes or make assessments.
(e) Public improvement bonds.—A health maintenance organization may invest in bonds, notes, certificates of indebtedness, warrants, or other evidences of indebtedness which are payable from revenues or earnings specifically pledged therefor of any public toll bridge, structure, or improvement owned by any state, incorporated city, or legally constituted public corporation or commission, all within the United States, for the payment of the principal and interest of which a lawful sinking fund has been established and is being maintained if no default on the part of the issuer in payment of principal or interest has occurred on any of its bonds, notes, warrants, or other securities within 5 years prior to the date of investment therein.
(f) Public utility obligations.—The health maintenance organization may invest in the bonds, notes, certificates of indebtedness, warrants, or other evidences of indebtedness which are valid obligations issued, assumed, or guaranteed by the United States or any state thereof or by any county, municipal corporation, district, political subdivision, civil division, or public instrumentality of any such government or unit thereof, if by statute or other legal requirements such obligations are payable as to both principal and interest from revenues or earnings from the whole or any part of any utility supplying water, gas, sewage disposal, electricity, or any other public service, including, but not limited to, a toll road or toll bridge.
(g) Securities of certain agencies.—The health maintenance organization may invest in bonds, debentures, or other securities of the following agencies, whether or not such obligations are guaranteed by the Government of the United States:
1. The Federal National Mortgage Association, and stock thereof, when acquired in connection with the sale of mortgage loans to such association.
2. Any federal land bank, when such securities are issued under provisions of the Act of Congress entitled the “Federal Farm Loan Act” and approved July 17, 1916, and any acts amendatory or supplementary to that act.
3. Any federal home loan bank, when such securities are issued under provisions of the Act of Congress entitled the “Federal Home Loan Bank Act” and approved July 22, 1932.
4. The Home Owners’ Loan Corporation, created by the Act of Congress entitled “Home Owners’ Loan Act of 1933” and approved June 13, 1933.
5. Any federal intermediate credit bank, created by the Act of Congress entitled “Agricultural Credits Act of March 4, 1923.”
6. The Central Bank for Cooperatives and regional banks for cooperatives organized under the Farm Credit Act of 1933, or by any of such banks; and any notes, bonds, debentures, or other similar obligations, consolidated or otherwise, issued by farm credit institutions pursuant to the Farm Credit Act of 1971, Pub. L. No. 92-181.
7. Any other similar agency of the Government of the United States which is of similar financial quality.
(h) Public housing obligations.—The health maintenance organization may invest in the bonds, debentures, or other securities of public housing authorities, issued under the provisions of the Act of Congress entitled the “Housing Act of 1949” and approved July 1949, the “Municipal Housing Commission Act,” or the “Rural Housing Commission Act,” and any additional amendments, or issued by any public housing authority or agency in the United States, if such bonds, debentures, or other securities are secured by a pledge of annual contributions to be paid by the United States or any agency thereof.
(i) Obligations of State Board of Education.—The health maintenance organization may invest in bonds or motor vehicle anticipation certificates issued by the State Board of Education under authority of s. 18, Art. XII of the State Constitution of 1885 as adopted by s. 9(d), Art. XII of the State Constitution, 1968 Revision, and the additional provisions of s. 9(d) thereof.
(j) Corporate bonds and debentures.—A health maintenance organization may invest in bonds, notes, or other interest-bearing or interest-accruing obligations of any solvent corporation organized under the laws of the United States or any state, territory, or possession of the United States, including the District of Columbia, but such investment must be in securities of investment grade and may not exceed 10 percent of admitted assets for any one corporate entity. As used in this paragraph, “investment grade” means that the obligation has been determined to be in one of the top two rating classifications used by the Securities Valuation Office of the National Association of Insurance Commissioners.
(14) SPECIAL LIMITATION INVESTMENTS.—
(a) After satisfying the requirements of this part, any funds of the health maintenance organization may be invested in the following investments, subject to a cost limitation of 10 percent of its admitted assets in each category of investment:
1. Anticipation obligations of political subdivisions of a state.—Anticipation obligations of any political subdivision of any state of the United States, including, but not limited to, bond anticipation notes, tax anticipation notes, preliminary loan anticipation notes, revenue anticipation notes, and construction anticipation notes, for the payment of money within 12 months from the issuance of the obligation, on the following conditions:
a. The anticipation notes are a direct obligation of the issuer under conditions set forth in subsection (9).
b. The political subdivision is not in default in the payment of the principal or interest on any of its direct general obligations or any obligation guaranteed by such political subdivision.
c. The anticipated funds are specifically pledged to secure the obligations.
2. Revenue obligations of state or municipal public utilities.—Obligations of any state of the United States, a political subdivision thereof, or a public instrumentality of any one or more of the foregoing for the payment of money, on the following conditions:
a. The obligations are payable from revenues or earnings of a public utility of such state, political subdivision, or public instrumentality which are specifically pledged therefor.
b. The law under which the obligations are issued requires that such rates for service shall be charged and collected at all times so as to produce sufficient revenue or earning, together with any other revenues or moneys pledged, to pay all operating and maintenance charges of the public utility and all principal and interest on such charges.
c. No prior or parity obligations payable from the revenues or earnings of that public utility are in default at the date of such investment.
3. Other revenue obligations.—Obligations of any state of the United States, a political subdivision thereof, or a public instrumentality of any of the foregoing for the payment of money, on the following conditions:
a. The obligations are payable from revenues or earnings, excluding revenues or earnings from public utilities, specifically pledged therefor by such state, political subdivision, or public instrumentality.
b. No prior or parity obligation of the same issuer payable from revenues or earnings from the same source has been in default as to principal or interest during the 5 years next preceding the date of the investment, but the issuer need not have been in existence for that period, and obligations acquired under this paragraph may be newly issued.
4. Corporate stocks.—Stocks, common or preferred, of any corporation created or existing under the laws of the United States or any state thereof. The organization may invest in stocks, common or preferred, of any corporation created or existing under the laws of any foreign country if such stocks are listed and traded on a national securities exchange in the United States or, in the alternative, if such investment in stocks of any corporation created or existing under the laws of any foreign country are first approved by the office. Investment in common stock of any one corporation shall not exceed 3 percent of the health maintenance organization’s admitted assets.
(b) After satisfying the requirements of this part, the health maintenance organization may invest its funds and accumulations in the following investments, subject to a cost limitation of 5 percent of admitted assets in each category of investment:
1. Obligations of the International Bank for Reconstruction and Development.—Obligations issued or guaranteed by the International Bank for Reconstruction and Development.
2. Obligations of the Inter-American Development Bank.—Obligations issued or guaranteed by the Inter-American Development Bank.
3. Obligations of the Asian Development Bank.—Obligations issued or guaranteed by the Asian Development Bank.
4. Obligations of the State of Israel.—Direct obligations of the State of Israel for the payment of money, or obligations for the payment of money which are guaranteed as to the payment of principal and interest by the State of Israel, on the condition that the State of Israel shall not be in default in the payment of principal or interest on any of its direct, general obligations on the date of such investment.
5. Obligations of the African Development Bank.—Obligations issued or guaranteed by the African Development Bank.
6. Obligations of the Government of Canada or any province thereof.—Obligations issued or guaranteed by the Government of Canada or any province thereof.
7. Obligations of the International Finance Corporation.—Obligations issued or guaranteed by the International Finance Corporation.
(15) INVESTMENT OF EXCESS FUNDS.—
(a) After satisfying the requirements of this part, any funds of a health maintenance organization in excess of its statutorily required reserves and surplus may be invested:
1. Without limitation in any investments otherwise authorized by this part; or
2. In such other investments not specifically authorized by this part, provided such investments do not exceed the lesser of 5 percent of the health maintenance organization’s admitted assets or 25 percent of the amount by which a health maintenance organization’s surplus exceeds its statutorily required minimum surplus. A health maintenance organization may exceed the limitations of this subparagraph only with the prior written approval of the office.
(b) Nothing in this section authorizes a health maintenance organization to:
1. Invest any funds in excess of the amount by which its actual surplus exceeds its statutorily required minimum surplus; or
2. Make any investment prohibited by this code.
(16) PROHIBITED INVESTMENTS AND INVESTMENT UNDERWRITING.—
(a) In addition to investments excluded pursuant to other provisions of this act, a health maintenance organization shall not directly or indirectly invest in or lend its funds upon the security of:
1. Issued shares of its own capital stock, except in connection with a plan approved by the office for purchase of the shares by the organization’s officers, employees, or agents. However, no such stock shall constitute an asset of the organization in any determination of its financial condition.
2. Except with the consent of the office, securities issued by any corporation or enterprise the controlling interest of which is, or will after such acquisition by the organization be, held directly or indirectly by the organization or any combination of the organization and its directors, officers, parent corporation, subsidiaries, or controlling stockholders. Investments in health care providers under subsections (11) and (12) shall not be subject to this provision.
3. Any note or other evidence of indebtedness of any director, officer, or controlling stockholder of the health maintenance organization.
(b) No health maintenance organization shall underwrite or participate in the underwriting of an offering of securities or property by any other person.
(17) TIME LIMIT FOR DISPOSAL OF INELIGIBLE PROPERTY AND SECURITIES; EFFECT OF FAILURE TO DISPOSE.—
(a) Any property or securities lawfully acquired by a health maintenance organization which it could not otherwise have invested in or loaned its funds upon at the time of such acquisition shall be disposed of within 6 months from the date of acquisition, unless within such period the security has attained to the standard of eligibility; except that any security or property acquired under any agreement of merger or consolidation may be retained for a longer period if so provided in the plan for such merger or consolidation, as approved by the office. Upon application by the organization and proof to the office that forced sale of any such property or security would materially injure the interests of the health maintenance organization, the office shall extend the disposal period for an additional reasonable time.
(b) Notwithstanding the provisions of paragraph (a), any ineligible property or securities shall not be allowed as an asset of the organization.
(18) The provisions of this section supersede any inconsistent provision of s. 106 of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. s. 77r).
History.—s. 19, ch. 72-264; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 799, 804, 809(1st), ch. 82-243; s. 33, ch. 85-177; s. 18, ch. 88-388; s. 76, ch. 89-360; ss. 126, 184, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 23, ch. 2001-213; s. 8, ch. 2002-247; s. 9, ch. 2002-282; s. 96, ch. 2003-1; s. 1586, ch. 2003-261.