1. (a) The following items are mandatory requirements to be incorporated into a guarantee from a sponsoring organization in order for the HMO to report expenses and liabilities as covered.

   1. (1) The guarantee must be approved by a board resolution of the sponsoring organization;
   2. (2) The sponsoring organization must have a tangible net worth of at least $10 million for each guarantee issued;
   3. (3) The sponsoring organization must agree to file audited financial statements annually with the Financial Monitoring Unit of the department within 180 days of the end of the sponsoring organization's fiscal year;
   4. (4) The guarantee must be unconditional and may not be monetarily limited;
   5. (5) The guarantee, at a minimum, must cover otherwise "uncovered" health care expenses and liabilities, including any present or future contingencies which may arise from the delivery of health care. If the HMO is writing Medicaid, all expenses and liabilities must be covered;
   6. (6) The guarantee must not be limited in duration;
   7. (7) The guarantee must provide for 6 months advance notice to the department prior to its cancellation; and
   8. (8) The guarantee must be notarized and signed by the president and another officer of the sponsoring organization.

2. (b) If at any time a guarantee does not comply with every requirement of this section, then the HMO will no longer qualify for the following:

   1. (1) covered expenses and liabilities; and
   2. (2) lower net worth and statutory deposit requirements as specified in §11.1804(b) of this title (relating to Guarantees).

3. (c) If the sponsoring organization has guaranteed the payment of any debts, expenses, or contingent obligations of another person, or guaranteed the performance of any service or other obligation of another person, the HMO must provide a certified copy of the following:

   1. (1) the name of each person guaranteed;
   2. (2) the type of business of that person;
   3. (3) the extent of each guarantee issued, and the dollar amount of debts and contingent obligations guaranteed individually and in the aggregate.
4. (d) In addition, the HMO must certify that the guaranteed debts are reported as liabilities or contingent liabilities of the guarantor. This certification must be submitted annually with the sponsoring organization's audited financial statements. The certified copy must be notarized and signed by the president or chief financial officer of the sponsoring organization, with an acknowledgment of the guarantee by the president or chief financial officer of the HMO.

Source Note:The provisions of this §11.808 adopted to be effective November 2, 1998, 23 TexReg 11347.