(215 ILCS 125/5-6) (from Ch. 111 1/2, par. 1414)

Sec. 5-6. Supervision of rehabilitation, liquidation or conservation by the Director.

(a) For purposes of the rehabilitation, liquidation or conservation of a health maintenance organization, the operation of a health maintenance organization in this State constitutes a form of insurance protection which should be governed by the same provisions governing the rehabilitation, liquidation or conservation of insurance companies. Any rehabilitation, liquidation or conservation of a Health Maintenance Organization shall be based upon the grounds set forth in and subject to the provisions of the laws of this State regarding the rehabilitation, liquidation, or conservation of an insurance company and shall be conducted under the supervision of the Director. Insolvency, as a ground for rehabilitation, liquidation, or conservation of a Health Maintenance Organization, shall be recognized when a Health Maintenance Organization cannot be expected to satisfy its financial obligations when such obligations are to become due or when the Health Maintenance Organization has neglected to correct within the time prescribed by subsection (c) of Section 2-4, a deficiency occurring due to such organization's prescribed minimum net worth or special contingent reserve being impaired. For purpose of determining the priority of distribution of general assets, claims of enrollees and enrollees' beneficiaries shall have the same priority as established by Section 205 of the Illinois Insurance Code for policyholders and beneficiaries of insureds of insurance companies. If an enrollee is liable to any provider for services provided pursuant to and covered by the health care plan, that liability shall have the status of an enrollee claim for distribution of general assets.

Any provider who is obligated by statute or agreement to hold enrollees harmless from liability for services provided pursuant to and covered by a health care plan shall have a priority of distribution of the general assets immediately following that of enrollees and enrollees' beneficiaries as described herein, and immediately preceding the priority of distribution described in paragraph (e) of subsection (1) of Section 205 of the Illinois Insurance Code.

(b) For purposes of Articles XIII and XIII-1/2 of the Illinois Insurance Code, organizations in the following categories shall be deemed to be a "domestic company" and a "domiciliary company":

(i) a corporation authorized under the Dental Service Plan Act or the Voluntary Health Services Plans Act;

(ii) a corporation organized under the laws of this State; or

(iii) a corporation organized under the laws of another state, 20% or more of the enrollees of which are residents of this State, except where such a corporation is, in its state of incorporation, subject to rehabilitation, liquidation and conservation under the laws relating to insurance companies.

(c) In the event of the insolvency of a health maintenance organization, no enrollee of such organization shall be liable to any provider for medical services rendered by such provider, except for applicable co-payments or deductibles for covered services or fees for services not covered by the health maintenance organization, with respect to the amounts such provider is not paid by the Association pursuant to the provisions of Section 6-8 (8)(b) and (c). No provider, whether or not the provider is obligated by statute or agreement to hold enrollees harmless from liability, shall seek to recover any such amount from any enrollee until the Association has made a final determination of its liability (or the resolution of any dispute or litigation resulting therefrom) with respect to the matters specified in such provisions. In the event that the provider seeks to recover such amounts before the Association's final determination of its liability (or the resolution of any dispute or litigation resulting therefrom), the provider shall be liable for all reasonable costs and attorney fees incurred by the Director or the Association in enforcing this provision or any court orders related hereto.

(Source: P.A. 89-206, eff. 7-21-95; 90-177, eff. 7-23-97; 90-372, eff. 7-1-98; 90-655, eff. 7-30-98.)