CA Welf & Inst Code Section 14482

No prepaid health plan shall contract with any subcontractor other than the plan’s subsidiary corporation, its parent corporation, or another subsidiary of its parent corporation, or an affiliate of the prepaid health plan whose financial statements are consolidated with that of the prepaid health plan at the time of the annual audit by the independent auditors of the plan and when the quarterly and annual financial statements are filed with the Director of the Department of Managed Health Care, if any of the following persons connected with the plan have a substantial financial interest, as defined by Section 14478, in such subcontractor:

(a)

Any person also having a substantial financial interest in the plan.

(b)

Any director, officer, partner, trustee, or employee of the plan.

(c)

Any member of the immediate family of any person designated in (a) or (b).