Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 90.00 - Legal Services Plans › Section 90.05 - Plan of Operation

Current through Register 1525, July 5, 2024
(1)
Internal Operations
. Membership plan sponsors are not
			 subject to the insurance company licensing process contained in M.G.L. c. 175.
			 Instead, the internal operations of these sponsors will be reviewed under 211
			 CMR 90.05.
Membership plan sponsors must present a complete overview of
				their organization in their plan of operation, including a description of the
				organizational framework, the qualifications of management and key personnel,
				the proposed method of operation, and the financial resources of the
				enterprise. There shall be four sections of the plan of operation devoted to
				these internal matters. Each section shall contain the information described
				below plus any additional information that the membership plan sponsor
				considers relevant.
The first section shall consist of a copy of the articles or
				organization and bylaws.
The second section shall provide information on the
				organization's management and personnel. It shall include biographical sketches
				of the officers and directors, details of any agreements relating to the
				corporation to which any officer or director is a party, and the officers'
				salaries and details of their employment status (full-time or part-time),
				compensation, and employment history of key management personnel and
				consultants or contractors involved in administration, marketing, enrollment,
				benefit procedures, grievance procedures, and financial matters. In addition,
				the section shall list the names and addresses of the organization's legal,
				accounting, and actuarial representatives. Finally, the section shall describe
				any financial relationships among any of the persons mentioned in the
				section.
The third section shall described the proposed method of
				operation in all the functional areas, including marketing, enrollment, benefit
				procedures, and grievance procedures. The section shall also contain the
				outline of a training program and related materials prepared for new members of
				the organization's board of directors. The program shall be relevant to the
				duties of a director and shall include information on policy issues relating to
				legal services plans and the costs of legal service delivery.
The fourth section shall describe the financial resources of
				the membership plan sponsor and other pertinent financial and contractual
				information. The section shall include:
(a) The following financial statements for
			 three years, projected on a quarterly basis for year one and annually for years
			 two and three:
1. pro forma balance
			 sheet;
2. statement of income and
			 expense;
3. statement of changes in
			 financial position;
4. cash
			 flow;
5. capital expenditure;
			 and
6. repayment schedule for
			 existing or anticipated loans or alternative financing arrangements. The
			 financial statements shall be accompanied by detailed statements and
			 justifications of the underlying assumptions used.