Section 45-06-13-08 - Guarantees1.General policy. A provider-sponsored organization, or the legal entity of which the provider-sponsored organization is a component, may apply to the department to use the financial resources of a guarantor for the purpose of meeting the requirements in section 45-06-13-05. The department has the discretion to approve or deny approval of the use of a guarantor. 2.Request to use a guarantor. To apply to use the financial resources of a guarantor, a provider-sponsored organization must submit to the department the following material: a. Documentation that the guarantor meets the requirements for a guarantor under subsection 3; and b. The guarantor's independently audited financial statements for the current year-to-date and for the two most recent fiscal years. The financial statements must include the guarantor's balance sheets, the profit and loss statements, and cash flow statements. 3.Requirements for guarantor. To serve as a guarantor, an organization must meet the following requirements: a. Be a legal entity authorized to conduct business within a state of the United States. b. Not be under federal or state bankruptcy or rehabilitation proceedings. c. Have a net worth, not including other guarantees, intangibles, and restricted reserves, equal to three times the amount of the provider-sponsored organization guarantee. d. If the guarantor is regulated by a state insurance commissioner, or other state official with authority for risk-bearing entities, it must meet the net worth requirement in subdivision c with all guarantees and all investments in and loans to organizations covered by guarantees excluded from its assets. e. If the guarantor is not regulated by a state insurance commissioner or other similar state official, it must meet the net worth requirement in subdivision c with all guarantees and all investments in and loans to organizations covered by a guarantee and to related parties, subsidiaries, and affiliates excluded from its assets. 4.Guarantee document. If the guarantee request is approved, a provider-sponsored organization must submit to the department a written guarantee document signed by an appropriate authority of the guarantor. The guarantee document must contain the following provisions: a. State the financial obligation covered by the guarantee; b. Agree to unconditionally fulfill the financial obligation covered by the guarantee; c. Agree not to subordinate the guarantee to any other claim on the resources of the guarantor; d. Declare that the guarantor must act on a timely basis, in any case not more than five business days, to satisfy the financial obligation covered by the guarantee; and e. Meet other conditions as the department may establish from time to time. 5.Reporting requirement. A provider-sponsored organization shall submit to the department the current internal financial statements and annual financial statements of the guarantor according to the schedule, manner, and form that the department requests. 6.Modification, substitution, and termination of a guarantee. A provider-sponsored organization may not modify, substitute, or terminate a guarantee unless the provider-sponsored organization: a. Requests the department's approval at least ninety days before the proposed effective date of the modification, substitution, or termination; b. Demonstrates to the department's satisfaction that the modification, substitution, or termination will not result in insolvency of the provider-sponsored organization; and c. Demonstrates how the provider-sponsored organization will meet the requirements of this section. 7.Nullification. If at any time the guarantor or the guarantee ceases to meet the requirements of this section, the department shall notify the provider-sponsored organization that it ceases to recognize the guarantee document. In the event of this nullification, a provider-sponsored organization shall: a. Meet the applicable requirements of this section within fifteen business days; and b. If required by the department, meet a portion of the applicable requirements in less than the time period granted in subdivision a. N.D. Admin Code 45-06-13-08
Effective August 1, 2000.General Authority: NDCC 26.1-01-07.6
Law Implemented: NDCC 26.1-01-07.6