Sec. 1. (a) As used in this chapter, “net worth” means the excess of total assets over total liabilities, excluding liabilities that have been subordinated in a manner acceptable to the commissioner.

     (b) For the purposes of computing net worth, the total assets must be reduced by the value assigned to the following intangible assets:

(1) Goodwill.

(2) Going concern value.

(3) Organizational expense.

(4) Start-up costs.

(5) Long term prepayments of deferred charges.

(6) Nonreturnable deposits.

(7) Obligations of officers, directors, owners, or affiliates, except short term obligations of affiliates for goods or services that:

(A) arise in the normal course of business;

(B) are payable on the same terms as equivalent transactions with nonaffiliates; and

(C) are not past due.

     (c) For purposes of computing net worth, the health maintenance organization may include in its assets the value assigned to the following:

(1) Medical equipment that:

(A) is owned by the health maintenance organization and is not subject to any lien, claim, or encumbrance;

(B) is used in the treatment, diagnosis, or care of enrollees of the health maintenance organization;

(C) has an initial cost of at least three thousand dollars ($3,000) for each piece of equipment; and

(D) has a useful life of at least two (2) years.

(2) Data processing equipment that is:

(A) owned by the health maintenance organization and is not subject to any lien, claim, or encumbrance; and

(B) used in the operation of the health maintenance organization.

     (d) The value assigned to the assets described in subsection (c) must equal the lesser of:

(1) the fair market value; or

(2) the cost of the equipment, minus its accumulated depreciation, calculated in accordance with generally accepted accounting principles.

     (e) The aggregate value of the medical equipment described in subsection (c)(1) may not exceed thirty percent (30%) of the total assets permitted to be included in the computation of net worth.

As added by P.L.26-1994, SEC.25. Amended by P.L.195-1996, SEC.6.