Oregon Administrative Rules › Chapter 410 - OREGON HEALTH AUTHORITY, HEALTH SYSTEMS DIVISION: MEDICAL ASSISTANCE PROGRAMS › Division 141 - OREGON HEALTH PLAN › Section 410-141-5065 - FINANCIAL SOLVENCY REGULATION: Letters of Credit; Other Security

Current through Register Vol. 63, No. 7, July 1, 2024
(1) A letter of
			 credit for purposes of OAR 410-141-5055  must be clean, irrevocable,
			 unconditional and issued or confirmed by a Qualified United States Financial
			 Institution. The letter of credit shall contain an issue date and date of
			 expiration and shall stipulate that the beneficiary need only draw a sight
			 draft under the letter of credit and present it to obtain funds and that no
			 other document need be presented.
(2) The letter of credit shall also indicate
			 that it is not subject to any condition or qualifications outside of the letter
			 of credit. In addition, the letter of credit itself shall not contain reference
			 to any other agreements, documents or entities.
(3) As used in this section, "beneficiary"
			 means the CCO for whose benefit the letter of credit has been established and
			 any successor of the beneficiary by operation of law. If a court of law
			 appoints a successor in interest to the named beneficiary, then the named
			 beneficiary includes and is limited to the court-appointed domiciliary receiver
			 (including conservator, rehabilitator or liquidator).
(4) The heading of the letter of credit may
			 include a boxed section containing the name of the applicant and other
			 appropriate notations to provide a reference for the letter of credit. The
			 boxed section shall be clearly marked to indicate that such information is for
			 internal identification purposes only.
(5) The letter of credit shall contain a
			 statement to the effect that the obligation of the Qualified United States
			 Financial Institution under the letter of credit is in no way contingent upon
			 reimbursement with respect thereto.
(6) The term of the letter of credit shall be
			 for at least one year and shall contain an "evergreen clause" that prevents the
			 expiration of the letter of credit without due notice from the issuer. The
			 "evergreen clause" shall provide for a period of not less than 30 days' notice
			 prior to expiration date or nonrenewal.
(7) The letter of credit shall state whether
			 it is subject to and governed by the laws of this state or the Uniform Customs
			 and Practice for Documentary Credits of the International Chamber of Commerce
			 (Publication 500), or any successor publication, and all drafts drawn
			 thereunder shall be presentable at an office in the United States of a
			 Qualified United States Financial Institution.
(8) If the letter of credit is made subject
			 to the Uniform Customs and Practice for Documentary Credits of the
			 International Chamber of Commerce (Publication 500), or any successor
			 publication, the letter of credit shall specifically address and provide for an
			 extension of time to draw against the letter of credit in the event that one or
			 more of the occurrences specified in Article 17 of Publication 500, or any
			 successor publication, occur.
(9)
			 The letter of credit shall be issued or confirmed by a Qualified United States
			 Financial Institution authorized to issue letters of credit.
(10) The following apply to reinsurance
			 agreement provisions:
(a) The reinsurance
			 agreement in conjunction with which the letter of credit is obtained may
			 contain provisions described in this subsection. All of the provisions of this
			 subsection must be applied without diminution because of insolvency on the part
			 of the cedent CCO or reinsurer. The provisions are as follows:
(A) A provision requiring the reinsurer to
			 provide letters of credit to the cedent CCO and specify what they are to
			 cover.
(B) A provision stipulating
			 that the reinsurer and cedent CCO agree that the letter of credit provided by
			 the reinsurer pursuant to the provisions of the reinsurance agreement may be
			 drawn upon at any time, notwithstanding any other provisions in the agreement,
			 and must be used by the cedent CCO or its successors in interest only for one
			 or more of the following reasons:
(i) To pay
			 or reimburse the cedent CCO for:
(I) The
			 reinsurer's share under the specific reinsurance agreement of unearned
			 capitated revenue returned, but not yet recovered from the
			 reinsurers;
(II) The reinsurer's
			 share, under the specific reinsurance agreement, of benefits or losses paid by
			 the cedent CCO, but not yet recovered from the reinsurers, under the terms and
			 provisions of the Member Contracts reinsured under the reinsurance agreement;
			 and
(III) Any other amounts
			 necessary to secure the credit or reduction from liability for reinsurance
			 taken by the cedent CCO.
(ii) When the letter of credit will expire
			 without renewal or be reduced or replaced by a letter of credit for a reduced
			 amount and when the reinsurer's entire obligations under the specific
			 reinsurance remain unliquidated and undischarged ten days prior to the
			 termination date, to withdraw amounts equal to the reinsurer's share of the
			 liabilities, to the extent that the liabilities have not yet been funded by the
			 reinsurer and exceed the amount of any reduced or replacement letter of credit,
			 and deposit those amount in a separate account in the name of the cedent CCO in
			 a Qualified United States Financial Institution apart from its general assets,
			 in trust for such uses and purposes specified in subparagraph (i) of this
			 paragraph as may remain after withdrawal and for any period after the
			 termination date.