2017 New Jersey Revised Statutes
Section 17B:32B-8 - Maximum liability of association.

17B:32B-8 Maximum liability of association.

8. a. The maximum liability of the association for all coverage provided under this act shall be limited to the amount available from the New Jersey Insolvent Health Maintenance Organization Assistance Fund created in section 6 of this act.

b. If the association fails to act within a reasonable period of time, the commissioner shall have the powers and duties of the association provided by this act with respect to the insolvent organizations.

c. The commissioner shall, in consultation with the association, oversee the payment of eligible claims reimbursable pursuant to this act.

d. The association shall have standing to appear before any court in this State with jurisdiction over the insolvent organizations. That standing shall extend to all matters germane to the powers and duties of the association, including, but not limited to, the payment of eligible claims as provided for in this act. The association shall also have the right to appear or intervene before a court in another state with jurisdiction over the insolvent organizations or with jurisdiction over a third party against whom the association may have rights through subrogation of the organization's enrollees.

e. (1) Any person receiving payment for eligible claims under this act shall be deemed to have assigned the rights under, and any causes of action relating to, the covered health maintenance organization contract to the association to the extent of the payment received pursuant to this act, whether the payments are in full, or on account of, contractual obligations. The association may require an assignment to it of those rights and causes of action by any payee, policy or contract owner, beneficiary, member or enrollee as a condition precedent to the receipt of any right or payment conferred by this act upon that person.

(2) The subrogation rights of the association under this subsection shall have the same priority against the assets of the insolvent organization as that possessed by the person entitled to receive payment under this act.

(3) In addition to the rights of subrogation contained in paragraphs (1) and (2) of this subsection, the association shall have all common law rights of subrogation and any other equitable or legal remedy which would have been available to the insolvent organization or holder of a policy or contract with respect to that policy or contract.

f. The association may:

(1) enter into any contracts necessary or proper to carry out the provisions and purposes of this act;

(2) sue or be sued, including taking any legal actions including a summary proceeding necessary or proper to recover any unpaid assessments imposed pursuant to section 9 of this act and to settle claims or potential claims against it;

(3) borrow money to effectuate the purposes of this act. Any notes or other evidence of indebtedness of the association not in default shall be legal investment for domestic insurers and may be carried as admitted assets;

(4) employ or retain persons necessary to handle the financial transactions of the association, and to perform other functions as are necessary or proper under this act, which may include, but shall not be limited to, the oversight of the adjudication of the claims of the insolvent organization in order to ensure conformance with subsection g. of this section and recommendations to the board with respect to any remedial action necessary for the adjudication of those claims; and

(5) take any legal action necessary to avoid payment of improper claims.

g. Claims shall be adjudicated in accordance with standard industry practice, subject to available documentation and information. The guidelines shall include, but shall not be limited to, the establishment of procedures to ensure that:

(1) the eligible claims or other obligations are paid in accordance with the contractual reimbursement rate payable by the insolvent organization to a covered individual or provider to whom the payment is to be made;

(2) claims submitted by providers or covered individuals for payment are for eligible services or benefits under the contract or policy issued by the insolvent organization, the persons receiving the eligible services or benefits were covered individuals, and the eligible services or benefits were rendered by an eligible provider;

(3) in the case of a provider not in the network of the insolvent organization, any payment made to the provider in accordance with the provisions of section 15 of this act is made on the basis of reasonable and customary reimbursement and shall not be made at a rate that is disproportionate to the reimbursement rates applicable to network providers; and is made only on that portion of the payment due to the provider by the insolvent organization, net of any coinsurance payment due under the insolvent organization's contract with the covered individual;

(4) eligible claims are paid in accordance with coordination of benefits regulations or contract provisions;

(5) no eligible claims are paid that are duplicative; and

(6) claims presented for payment are in compliance with the insolvent organization's utilization review requirements. Claims shall be deemed to be in compliance with respect to benefits or services reviewed by a representative that regularly conducted utilization review on behalf of the insolvent organization on the site of a provider prior to the date of insolvency.

h. (1) At the discretion of the commissioner, the association shall employ the services of a consulting organization with expertise in the adjudication and payment of health benefits claims, other than an organization that is responsible for the payment of claims of the insolvent organizations pursuant to this act, to audit the adjudicated claims of the insolvent organization payable by the association pursuant to this act to determine whether they have been adjudicated in accordance with subsection g. of this section. The consulting organization shall employ procedures for the audit consistent with industry standards and in accordance with standards established by the board and approved by the commissioner, to determine if the adjudication of the claims of the insolvent organizations payable by the association pursuant to this act meets the standards set forth in subsection g. of this section.

(2) The consulting organization shall recommend to the board and the commissioner any remedial measures that may be necessary to ensure the accurate and timely payment of eligible claims.

(3) The cost for the audit of claims provided for in this subsection shall be borne by the members of the association as provided for in the plan of operation and shall not exceed $2,000,000, for which an assessment shall be made on each association member that is required to pay an assessment pursuant to section 9 of this act in proportion to the share its net premiums bear to the aggregate net premiums of all association members writing business in this State.


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