NRS680A.320. Transaction with parent corporation, financial holding company, depository institution, subsidiary or affiliated person.

      1.  For the purposes of this section:

      (a) An “affiliated person” is a person controlled by any combination of the insurer, the parent corporation, a subsidiary or the principal stockholders or officers or directors of any of the foregoing.

      (b) “Depository institution” has the meaning ascribed to it in section 3 of the Federal Deposit Insurance Act, 12 U.S.C. § 1813(c)(1).

      (c) “Financial holding company” means a bank holding company that satisfies the requirements of section 4(l)(1) of the Bank Holding Company Act of 1956, 12 U.S.C. § 1841(l)(1).

      (d) “Health facility” has the meaning ascribed to it in NRS 439A.015.

      (e) A “subsidiary” is a person of which either the insurer and the parent corporation or the insurer or the parent corporation holds practical control.

      2.  No insurer may engage directly or indirectly in any transaction or agreement with its parent corporation, a financial holding company, a depository institution, or any subsidiary or affiliated person which will result or tend to result in:

      (a) Substitution contrary to the interest of the insurer and through any method of any asset of the insurer with an asset or assets of inferior quality or lower fair market value;

      (b) Deception as to the true operating results of the insurer;

      (c) Deception as to the true financial condition of the insurer;

      (d) Allocation to the insurer of a proportion of the expense of combined facilities or operations which is unfair and unfavorable to the insurer;

      (e) Unfair or excessive charges against the insurer for services, facilities, supplies or reinsurance;

      (f) Unfair and inadequate charges by the insurer for reinsurance, services, facilities or supplies furnished by the insurer to others;

      (g) Payment by the insurer for services, facilities, supplies or reinsurance not reasonably needed by the insurer;

      (h) Depletion of the insurer’s surplus, through payment of dividends or other distribution or withdrawal, below the amount thereof reasonably required for conduct of the insurer’s business and maintenance of growth with safety to policyholders; or

      (i) Payment by the insurer for services or products for which the health facility has charged less than fair market value, unless the reduced charge is reflected in the form of reduced premiums. In determining what constitutes fair market value, consideration must be given to reasonable agreements for the preferential provision of health care, in accordance with regulations adopted by the Commissioner. An insurer which pays less than fair market value for services or products in a transaction which is subject to the provisions of this paragraph shall annually file a certification with the Commissioner that the reduced payment has been reflected in the form of reduced premiums, together with documentation supporting the certification.

      3.  In all transactions between the insurer and its parent corporation, or involving the insurer and any subsidiary or affiliated person, full recognition must be given to the paramount duty and obligation of the insurer to protect the interests of policyholders, both existing and future.

      4.  If a health facility is a parent, subsidiary or affiliate of an insurer or of a parent or facility of an insurer, and the insurer purchases medical or any other services or products from the health facility, the health facility may not:

      (a) Attempt artificially to reduce or increase its margin of profit by altering the charges to the insurer.

      (b) Alter its true operating results or financial condition through charges to the insurer for services or products.

Ê This subsection does not prohibit activities authorized pursuant to paragraph (i) of subsection 2.

      5.  If a health facility is found, after notice and a hearing, to have violated the provisions of subsection 4, the Commissioner may impose an administrative fine of not more than $5,000 for each violation.

      (Added to NRS by 1971, 1590; A 1987, 884; 1989, 599; 2001, 2183)