§22-21-370. Posting of securities or surety bond; custody of securities; exemption from taxation; release of securities or bond; modification orders; hearing; effect of failure to comply.

(a) To assure the faithful performance of its obligations in the event of insolvency each dental service corporation authorized under Section 22-21-364 shall, through the commissioner, deposit and maintain with the Treasurer of the State Securities of the type eligible for deposit by insurers under Section 27-6-3, which securities shall have at all times a market value as follows:

(1) A corporation which has operated no dental service plan in this state prior to January 1, 1983, shall, prior to the issuance of its certificate of authority and before receiving any subscription payments, place in trust with the Treasurer of the State, through the commissioner an initial amount of $50,000.00;

(2) A corporation operating a dental service plan business in this state prior to January 1, 1983, and having received in this state less than $300,000.00 of subscriptions, membership fees, or similar charges, shall place in trust with the Treasurer of the State, through the commissioner, a sum equal to 50 percent of the subscriptions received or $50,000.00, whichever is less;

(3) A corporation operating a dental service plan business in this state prior to January 1, 1983, and having received in this state more than $300,000.00 but less than $750,000.00 of subscriptions, membership fees, or similar charges, in this state shall place in trust with the Treasurer of the State, through the commissioner an amount not less than $75,000.00;

(4) A corporation operating a dental service plan business in this state prior to January 1, 1983, and having received in this state $750,000.00 or more of subscriptions, membership fees, or similar charges, in this state shall place in trust with the Treasurer of the State, through the commissioner, an amount equal to $100,000.00.

(b) In lieu of any deposit of securities required under subsection (a) and subject to the commissioner's approval, a dental service plan corporation may file with the Treasurer of the State a surety bond issued by a surety insurer authorized to serve as surety under the provisions of Chapter 24 of Title 27. The bond shall be for the same purpose as the deposit in lieu of which it is filed. The department shall not approve any bond under the terms of which the protection afforded against insolvency is not equivalent to the protection afforded by those securities provided for in subsection (a).

(c) Securities or bonds posted pursuant to this section shall be for the benefit of and subject to action thereon in the event of insolvency or impairment of any dental service plan corporation by any person or persons sustaining an actionable injury due to the failure of the corporation to faithfully perform its obligations to its subscribers.

(d) The commissioner shall be responsible for the safekeeping of all securities. Said securities under this section shall be deposited with the State Treasurer. Such securities shall not, on account of being in this state, be subject to taxation, but shall be held exclusively and solely to guarantee the dental service plan corporation's performance of its obligations to its subscribers.

(e) Such deposit or bond shall be maintained unimpaired as long as the dental service plan corporation continues in business in this state. Whenever the corporation ceases to do business in this state and furnishes the commissioner proof, satisfactory to the commissioner, that it has discharged or otherwise adequately provided for all its obligations to its subscribers in this state, the commissioner shall release the deposited securities to the parties entitled thereto, or shall release any bond filed with the commissioner in lieu of such deposit.

(f) The commissioner may at any time enter an order increasing the amount of the deposit or bond specified under this section if he finds that there has been a substantial change in the facts, including an increase in the amount of subscriptions, membership fees, or similar charges in force in this state on which the original determination was based. The commissioner shall hold a hearing within 30 days after receiving a request from the corporation submitted within 30 days after being notified of the modification order. Failure to meet the new requirements within 30 days after final decision or after the expiration of the 30-day period for submitting the hearing request constitutes a ground for rehabilitation.

(Acts 1982, No. 82-463, p. 741, §11.)