2007 Minnesota Statutes

60B.17 POWERS AND DUTIES OF REHABILITATOR.
    Subdivision 1. Special deputy commissioner. The commissioner as rehabilitator shall
employ a special deputy commissioner to rehabilitate the insurer. The special deputy shall have
all of the powers of the rehabilitator granted under this section. Subject to court approval, the
commissioner shall make arrangements for compensation as are necessary to obtain a special
deputy of proven ability. The special deputy shall serve at the pleasure of the commissioner.
    Subd. 2. General power. Subject to court approval, the rehabilitator may take such action as
that person deems necessary or expedient to reform and revitalize the insurer. The rehabilitator
shall have all the powers of the officers and managers, whose authority shall be suspended, except
as they are redelegated by the rehabilitator and shall have full power to direct and manage, to
hire and discharge employees subject to any contract rights they may have, and to deal with the
property and business of the insurer.
The power of the rehabilitator of a health maintenance organization includes the power
to transfer coverage obligations to a solvent and voluntary health maintenance organization,
insurer, or nonprofit health service plan, and to assign provider contracts of the insolvent health
maintenance organization to an assuming health maintenance organization, insurer, or nonprofit
health service plan permitted to enter into such agreements. The rehabilitator shall not be required
to meet the notice requirements of section 62D.121. Transferees of coverage obligations or
provider contracts shall have no liability to creditors or obligees of the health maintenance
organization except those liabilities expressly assumed.
    Subd. 3. Advice from experts. The rehabilitator may consult with and obtain formal or
informal advice and aid of insurance experts.
    Subd. 4. Pursuit of insurer's claims against insiders. If the rehabilitator finds that there has
been criminal or tortious conduct or breach of any contractual or fiduciary obligation detrimental
to the insurer by any officer, manager, agent, broker, employee, or other person, the rehabilitator
may pursue all appropriate legal remedies on behalf of the insurer.
    Subd. 5. Reorganization plan. The rehabilitator may prepare a plan for the reorganization,
consolidation, conversion, reinsurance, merger, or other transformation of the insurer. Upon
application of the rehabilitator for approval of the plan, and after such notice and hearing as the
court prescribes, the court may either approve or disapprove the plan proposed, or may modify
it and approve it as modified. If it is approved, the rehabilitator shall carry out the plan. In the
case of a life insurer, the plan proposed may include the imposition of liens upon the equities of
policyholders of the company, if all rights of shareholders are first relinquished. A plan for a life
insurer may also propose imposition of a moratorium upon loan and cash surrender rights under
policies, for such period and to such an extent as are necessary.
    Subd. 6. Fraudulent transfers. The rehabilitator shall have the power to avoid fraudulent
transfers under sections 60B.30 and 60B.31.
    Subd. 7. Coordination of activities with guaranty associations. The rehabilitator shall
coordinate activities with those of each guaranty association having an interest in the rehabilitation
and shall submit a report detailing how coordination will be achieved to the court for its approval
within 30 days following appointment, or within the time the court, in its discretion, may establish.
    Subd. 8. Plan of rehabilitation for a health maintenance organization. (a) The
rehabilitator of a health maintenance organization, after consultation with the board of directors of
the health maintenance organization, has the sole authority to propose a plan of rehabilitation.
(b) The court shall approve a plan of rehabilitation of a health maintenance organization if it
meets the following criteria:
(1) the plan provides for payments to lien claimants equal to the value of each lien claim on
the date of approval of the plan and may provide for payment of lien claims beyond the effective
date of the plan and beyond the original repayment period for the obligation underlying the
claim where the plan provides sufficient protection for the lien claim during the period for such
claim under the rehabilitation plan;
(2) the plan provides for payment in full of each prior class of claims before payment of
the next class;
(3) the plan provides for payment in full of all claims for taxes of the United States
government, except for claims for interest accruing during the rehabilitation or claims for
penalties. The plan may provide for payment of the claims over any period of time up to ten
years after the effective date of the plan; and
(4) the plan is fair and equitable as to each class of claims for which the plan does not
provide full payment. In determining whether the plan is fair and equitable to these claimants,
the court shall consider the feasibility of the plan, the health maintenance organization's ability
to generate a significant surplus, the health maintenance organization's need to expend money
to change or expand its business, and the injury to enrollees through loss of coverage if such a
plan is not approved.
(c) The plan may provide for transfer of the health maintenance contracts and liquidation of
the health maintenance organization.
(d) The court's approval of a plan of rehabilitation discharges the health maintenance
organization from all claims except to the extent provided in the plan.
History: 1969 c 708 s 17; 1977 c 273 s 17; 1986 c 444; 1990 c 538 s 3,4; 1992 c 564
art 1 s 26