Welfare and Institutions Code section 14303.2

The department shall have authority to amend a prepaid health plan contract in accordance with the terms of the reorganization of a prepaid health plan or a merger of the plan with its subsidiary corporation, its parent corporation, or another subsidiary of its parent corporation, provided the following conditions are met:

(a)

The resulting or surviving organization assures the continued and accessible delivery of health care services to enrollees.

(b)

The plan has satisfactorily demonstrated the fiscal and administrative soundness of the newly proposed organization.

(c)

If the proposed reorganization or merger results in any change of the plan’s service area or delivery of health care services, or if the director otherwise deems it to be appropriate, the following additional conditions shall be met:

(1)

Public notice is given and if necessary a public hearing is held as required by Section 14300.

(2)

The enrollees of the plan are informed of the impending reorganization or merger, any resulting changes in the service area or delivery of health care services, and such other information required by subdivision (a) of Section 14406 at least 30 days in advance of the reorganization or merger.

(3)

The enrollees of the plan are given the option of disenrolling for any cause within 60 days following the effective date of the reorganization or merger.

(d)

The plan meets such other requirements as deemed necessary by the department in order to carry out the purpose of this chapter.