§ 56-27-112 — Prerequisites for issuance of license

The commissioner shall issue a license upon compliance with this chapter, and other proper requirements of the commissioner, and upon being satisfied that: (1) All items required to be filed are in proper form, as required by this chapter, and meet the approval of the commissioner; (2) The applicant is established as a bona fide medical service plan corporation, and the service rendered by the corporation is not an unnecessary duplication of similar services in the community served, and is desirable for public necessity and convenience, and a fair opportunity has been given to all practicing physicians of standing in the area to be served to become participating physicians; (3) The solicitations of contracts by the corporation and its conditions or methods of operation are fair and reasonable; (4) The rates charged are fair, reasonable, adequate and not unfairly discriminatory, and the benefits to be provided are fair, reasonable and not unfairly discriminatory. The rates may differ between subscribers in recognized groups and subscribers not in groups, all subject to the review and approval or disapproval of the commissioner as provided in §§ 56-26-102 and 56-26-202 and any rules promulgated under that section. Sections 56-26-102 and 56-26-202 and related rules shall apply to all medical service plans in the same manner as to accident and sickness policies subject to §§ 56-26-102 and 56-26-202 ; (5) The amount of money actually available for working capital is sufficient to carry all acquisition costs and operating expenses for a period of at least six (6) months from the date of the issuance of the certificate, or two thousand five hundred dollars ($2,500), whichever amount is larger; (6) The amount provided as working capital shall only be provided by individuals or groups who have no financial interest in the activities of the medical service corporations, or by the participating physicians. Interest charged for the capital, if any, shall not exceed six percent (6%), and payment of interest, if any, and repayment of the working capital, shall be permitted only after provision has been adequately made for operating expenses, payments to participating physicians and the establishment of legal reserves and other reserves as may be required by the commissioner; (7) The service corporation shall maintain at all times proper reserves, subject to the approval of the commissioner, for unearned subscription fees and unearned premiums, and for unpaid medical service bills, including provision for unreported and undischarged medical cases and other known liabilities. In addition, a contingency or epidemic reserve shall be accumulated annually at the rate of not less than two and one half percent (2.5%) of net premium income. When the contingency or epidemic reserves equal seventy-five thousand dollars ($75,000) or fifty-five percent (55%) of the annual premium income, whichever is higher, further accumulations may be discontinued for any length of time that they are not required to meet the requirements of this subdivision (7); (8) In the county or counties or areas in which a corporation proposes to operate, fifty-one percent (51%) or more of the resident doctors of medicine have agreed to render the medical services for which the corporation agrees to pay; and (9) A provision has been made in the subscription contract authorizing medical service other than participating physicians, in which case money benefits shall be provided as specified in the subscription contract, and approved as fair by the commissioner. The certificate of authority issued by the commissioner to operate a medical service plan or plans will be limited by the commissioner to the contracts and practices approved by the commissioner, and may be further limited to the county or counties or areas that the commissioner deems in the public interest.

Legislative History

Acts 1945, ch. 113, § 7; C. Supp. 1950, § 4186.24; T.C.A. (orig. ed.), § 56-2912; Acts 2011, ch. 344, § 13.