2010 Tennessee Code
Title 56 - Insurance
Chapter 29 - Hospital and Medical Service Corporations
56-29-105 - Contracts between board member and corporation.

56-29-105. Contracts between board member and corporation.

(a)  Any corporation organized and governed by this chapter prior to July 1, 1981, should have the board of directors of the corporation composed of the following groups in equal numbers:

     (1)  Administrators or trustees of hospitals that have contracted with the corporation to render hospital service to the subscribers;

     (2)  Physicians, exclusive of group one (1); and

     (3)  The general public, exclusive of groups one (1) and two (2).

(b)  As the terms of board members of corporations organized prior to July 1, 1981, and governed by this chapter terminate, the positions shall be refilled in the manner enumerated in subsection (c), and any corporation organized on or after July 1, 1981, and governed by this chapter shall likewise comply with the composition of board members provided in subsection (c).

(c)  The board of directors of the corporations should at all times be composed of the following groups:

     (1)  Administrators of hospitals that have contracted with the corporation to render hospital service to the subscribers;

     (2)  Physicians, exclusive of group one (1); and

     (3)  The general public, exclusive of groups one (1) and two (2); provided, that in all cases over fifty percent (50%) of the board members shall be composed of members of group (3), and the remaining board members shall be divided equally between members of group one (1) and of group two (2).

(d)  (1)  No contract for equipment or supplies may be entered into between a corporation subject to this chapter and one (1) or more board members unless the contract has been competitively bid.

     (2)  The compensation of a board member shall not exceed ten thousand dollars ($10,000) per year; provided, that, in addition to the compensation, a board member may receive payment for particular services actually rendered, such as legal counsel, medical service, accounting or other required services, upon specific approval of the board of directors, the approval being made a part of the minutes of the board of directors. Any such payment to members of the board shall be reported annually to the secretary of state on forms provided by the secretary of state. The reports shall be retained by the secretary of state for three (3) years.

     (3)  Each director shall identify and report any conflict of interest the director has due to serving as a member of the board. The written report must be filed annually with the secretary of state by January 10.

     (4)  Each director must fully disclose and report all income received from any corporation, partnership or other business interest that transacts business with or receives funds from a hospital and medical service corporation organized and governed under this chapter.

     (5)  The board of directors of any corporation organized and governed by this chapter shall collectively represent the customers served by the corporation.

[Acts 1949, ch. 234, § 3; C. Supp. 1950, § 4186.45 (Williams, § 4186.48); T.C.A. (orig. ed.), § 56-3105; Acts 1981, ch. 67, § 1; 1995, ch. 143, § 1; 1995, ch. 477, §§ 1, 3.]