A state court in Louisiana has issued an order giving Louisiana Insurance Commissioner, Jim Donelon, authority to put Louisiana Health Cooperative in rehabilitation.

The nonprofit, member-owned insurer, which was organized with a $56 million loan from the Consumer Operated and Oriented Plan (CO-OP) program, announced plans in July to wind down operations by the end of 2015.

See also: Surviving PPACA CO-OPs may have 475,000 enrollees

In a petition seeking court permission to take over the plan, Donelon said he believes he needs to take control over the health maintenance organization (HMO) because it no longer meets statutory minimum surplus requirements and because he believes letting the plan wind its affairs down might not be in the best interests of policyholders.

Drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created the CO-OP program in an effort to increase the level of competition in the U.S. health insurance market.

The Louisiana CO-OP ended up attracting only about 15,000 enrollees, or about half of what organizers had originally hoped.

The Louisiana CO-OP’s managers had said they intended to meet claim and agent commission payment obligations, but Donelon has written in a letter to Louisiana providers that, “I realize that claims have not been timely paid to you.”

“I firmly believe that all claims can and will be paid,” Donelon writes in a copy of the letter posted on the Louisiana Department of Insurance website. 

The state has the ability to get $9 million in additional cash from the Centers for Medicare & Medicaid Services (CMS) to satisfy the CO-OP’s obligations, if that proves to be necessary, Donelon says.

Donelon has put Billy Bostick in charge of managing the CO-OP.

Representatives for the CO-OP’s organizers and original management team were not immediately available to comment.

See also: Watchdog: CMS is giving 4 CO-OPs’ finances extra attention