Section 1399.86 Of Article 11.1. Consumer Operated And Oriented Plans From California Health And Safety Code >> Division 2. >> Chapter 2.2. >> Article 11.1.
1399.86
. (a) A CO-OP shall be subject at all times to the
prohibitions in PPACA against converting or selling to a for-profit
or nonconsumer-operated entity at any time after receiving a solvency
loan.
(b) A CO-OP shall do all of the following, in addition to any
other requirements imposed under Section 156.515 of Title 45 of the
Code of Federal Regulations:
(1) Implement policies and procedures to foster and ensure member
control of the organization. For purposes of this paragraph, a CO-OP
shall meet the following requirements:
(A) The CO-OP shall have governing documents that incorporate
governing rules that ensure that the directors of the operational
board are elected by a majority vote of a quorum of the CO-OP
members.
(B) All members of the CO-OP shall be eligible to vote for each
director on the CO-OP's operational board.
(C) Each member of the CO-OP shall have one vote in the election
of each director of the CO-OP's operational board.
(D) The first elected directors of the CO-OP's operational board
shall be elected no later than one year after the effective date on
which the CO-OP provides coverage to its first member; the entire
operational board shall be elected no later than two years after the
same date.
(E) Elections of the directors on the CO-OP's operational board
shall be contested so that the total number of candidates for vacant
positions on the operational board exceeds the number of vacant
positions, except in cases where a seat is vacated midterm due to
death, resignation, or removal.
(F) A majority of the voting directors on the operational board
shall be members of the CO-OP.
(2) Have an operational board of directors that meets the
following requirements:
(A) Each director shall have one vote unless he or she is a
nonvoting director.
(B) Positions on the board of directors may be designated for
individuals with specialized expertise, experience, or affiliation
(for example, providers, employers, including small business
consortia, and unions); however, those positions shall not constitute
a majority of the operational board even if the individuals in those
positions are also members of the CO-OP.
(C) (i) No representative of any federal, state, or local
government, or of any political subdivision or instrumentality
thereof, and no representative of any organization described in
Section 156.510(b)(1)(i) of Title 45 of the Code of Federal
Regulations may serve as staff of the CO-OP or on the CO-OP's
formation board or operational board.
(ii) No board member or staff of the CO-OP shall enter into an
agreement or transaction that would jeopardize member control as
required by Section 156.515 of Title 45 of the Code of Federal
Regulations. A board member or staff of the CO-OP shall only enter
into arm's length transactions as described in Section 156.510(b)(2)
(ii) of Title 45 of the Code of Federal Regulations.
(3) Have governing documents that incorporate ethics, conflict of
interest, and disclosure standards. These standards shall protect
against health care coverage industry involvement and interference.
In addition, these standards shall ensure that each director acts in
the sole interest of the CO-OP, its members, and its local geographic
community, as appropriate, and acts consistently with the terms of
the CO-OP's governance documents and applicable state and federal
law. At a minimum, these standards shall include the following:
(A) A mechanism to identify potential ethical or other conflicts
of interest.
(B) A duty on the CO-OP's executive officers and directors to
publicly disclose all potential conflicts of interest pursuant to the
same standards required for state boards or commissions.
(C) A process to determine the extent to which a conflict exists.
(D) A process to address any conflict of interest.
(E) A process to be followed in the event a director or executive
officer of the CO-OP violates the standards described in this
paragraph.