The following words and phrases when used in this article shall have, unless the context clearly indicates otherwise, the meanings given to them in this section:

“Adjusted RBC report” means an RBC report that has been recalculated by the Insurance Department in accordance with section 502-B(c).

“Authorized control event” means any of the following events:

(1) Filing of an RBC report that indicates that the health organization's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC.

(2) Notification by the Insurance Department to a health organization of an adjusted RBC report that indicates an event under paragraph (1).

(3) Failure to respond, in a manner satisfactory to the Insurance Commissioner, to a corrective order, provided the health organization has not challenged the corrective order under section 509-B.¹

(4) If the health organization has challenged a corrective order under section 509-B and the Insurance Commissioner has, after a hearing, rejected the challenge or modified the corrective order, failure to respond, in a manner satisfactory to the Insurance Commissioner, to the corrective order subsequent to rejection or modification by the Insurance Commissioner.

“Commissioner” means the Insurance Commissioner of the Commonwealth.

“Company action level event” means any of the following events:

(1) Filing of an RBC report that indicates that the health organization's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC.

(1.1) Filing of an RBC report that indicates the health organization's total adjusted capital is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and the health organization's trend test result triggers regulatory attention, as determined in accordance with the Trend Test Calculation included in the RBC instructions.

(2) Notification by the Insurance Department to a health organization of an adjusted RBC report that indicates an event under paragraph (1) or (1.1).

“Corrective order” means an order issued by the Insurance Commissioner specifying corrective actions that the Insurance Commissioner has determined are required under section 506-B(b).

“Department” means the Insurance Department of the Commonwealth.

“Domestic health organization” means a health organization incorporated or organized under the laws of this Commonwealth.

“Foreign health organization” means a health organization that is licensed by the Insurance Department to do business in this Commonwealth and incorporated or organized under the laws of a jurisdiction other than this Commonwealth.

“Health organization” means a health maintenance organization as defined in the act of December 29, 1972 (P.L. 1701, No. 364), known as the “Health Maintenance Organization Act,”² a hospital plan corporation as defined in 40 Pa.C.S. Ch. 61 (relating to hospital plan corporations), a professional health services plan corporation as defined in 40 Pa.C.S. Ch. 63 (relating to professional health services plan corporations), a preferred provider organization as defined in the act of May 17, 1921 (P.L. 682, No. 284), known as “The Insurance Company Law of 1921,”³ except that the term does not include a life or health insurer or a property or casualty insurer subject to Article V- A.⁴

“Mandatory control level event” means any of the following events:

(1) Filing of an RBC report that indicates that the health organization's total adjusted capital is less than its mandatory control level RBC.

(2) Notification by the Insurance Department to a health organization of an adjusted RBC report that indicates an event under paragraph (1).

“NAIC” means the National Association of Insurance Commissioners or successor organization.

“RBC” means risk-based capital.

“RBC instructions” means the RBC report including RBC instructions adopted by the NAIC for health organizations as required by the Insurance Commissioner under section 11 of the act of December 29, 1972 (P.L. 1701, No. 364), known as the “Health Maintenance Organization Act,”⁵ 40 Pa.C.S. §§ 6125 (relating to reports and examinations) and 6331 (relating to reports and examinations) and the act of May 17, 1921 (P.L. 682, No. 284), known as “The Insurance Company Law of 1921.”

“RBC level” means a health organization's company action level RBC, regulatory action level RBC, authorized control level RBC or mandatory control level RBC where:

(1) “Company action level RBC” means the product of 2 .0 and the authorized control level RBC.

(2) “Regulatory action level RBC” means the product of 1.5 and the authorized control level RBC.

(3) “Authorized control level RBC” means the amount of a health organization's authorized control level RBC calculated under the RBC formula in accordance with the RBC instructions.

(4) “Mandatory control level RBC” means the product of .70 and the authorized control level RBC.

“RBC plan” means a comprehensive financial plan filed in accordance with section 505-B(a).⁶

“RBC report” means a report of RBC levels.

“Regulatory action level event” means any of the following events:

(1) Filing of an RBC report that indicates that the health organization's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC.

(2) Notification by the Insurance Department to a health organization of an adjusted RBC report that indicates an event under paragraph (1).

(3) Failure to file an RBC report by the required date unless the Insurance Department determines that the health organization has provided an adequate explanation for the failure to file and the health organization has filed the report within ten days of the filing date under this article.

(4) Failure to submit an RBC plan or revised RBC plan within the time set forth under this article.

(5) Notification by the Insurance Department to the health organization that:

(i) the RBC plan or revised RBC plan is unsatisfactory under section 506-B;⁷ and

(ii) the notification constitutes a regulatory action level event.

(6) Notification by the Insurance Department that the health organization has failed to comply with its RBC plan or revised RBC plan if the failure has a substantial adverse effect on the ability of the health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan.

“Revised RBC plan” means an RBC plan that has been rejected by the Insurance Department and revised by the health organization.

“Total adjusted capital” means the sum of the total assets less total liabilities as calculated and reported in accordance with required NAIC annual statement instructions and accounting practices and procedures manual for annual financial statements and any other items required by the RBC instructions.