ROBERT L. EHRLICH, JR., Governor                             Ch. 356

14-115.

(a) (1) In this section the following words have the meanings indicated.

(2)     "Board" means the board of directors of a nonprofit health service
plan.

(3)     "Immediate family member" means a spouse, child, child's spouse,
parent, spouse's parent, sibling, or sibling's spouse.

(b) [Subsections (c) through (f) of this section apply] THIS SECTION APPLIES
to a nonprofit health service plan that is [incorporated under the laws of the State and
operates under a certificate of authority issued by the Commissioner under this
subtitle] ISSUED A CERTIFICATE OF AUTHORITY IN THE STATE, WHETHER OR NOT
ORGANIZED UNDER THE LAWS OF THIS STATE.

(c) (1) The business and affairs of a nonprofit health service plan shall be
managed under the direction of a board of directors.

(2) The board and its individual members are fiduciaries and shall act:

(i) in good faith;

(ii) in a manner that is reasonably believed to be in the best interests
of the corporation AND ITS CONTROLLED AFFILIATES OR SUBSIDIARIES THAT OFFER
HEALTH BENEFIT PLANS; [and]

(III) IN A MANNER THAT IS REASONABLY BELIEVED TO BE IN
FURTHERANCE OF THE CORPORATION'S NONPROFIT MISSION; AND

[(iii)] (IV) with the care that an ordinarily prudent person in a like
position would use under similar circumstances.

(3) THE PRINCIPAL FUNCTIONS OF THE BOARD SHALL INCLUDE:

(I) ENSURING THAT THE CORPORATION EFFECTIVELY CARRIES
OUT THE NONPROFIT MISSION ESTABLISHED UNDER § 14-102(C) OF THIS SUBTITLE;

(II) SELECTING CORPORATE MANAGEMENT AND EVALUATING ITS
PERFORMANCE;

(III)   ENSURING TO THE EXTENT PRACTICABLE THAT HUMAN
RESOURCES AND OTHER RESOURCES ARE SUFFICIENT TO MEET CORPORATE
OBJECTIVES;

(IV)    SUBJECT TO THE PROVISIONS OF SUBSECTION (D) OF THIS
SECTION, NOMINATING AND SELECTING SUITABLE CANDIDATES FOR THE BOARD;
AND

(V) ESTABLISHING A SYSTEM OF GOVERNANCE AT THE BOARD
LEVEL, INCLUDING AN ANNUAL EVALUATION OF BOARD PERFORMANCE.

(4) EACH MEMBER OF THE BOARD SHALL DEMONSTRATE A
COMMITMENT TO THE MISSION OF THE NONPROFIT HEALTH SERVICE PLAN.

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