Cross-Collateralization is used to re-pay debit balances owed to one company using the payouts of another company. The debit balance is made up of the following:
- Chargeback of payouts.
- Lapsed, cancelled, NTO, or closed incomplete fees.
- Reversal of earn payout, caused by provider error, NSF checks.
- E&O Insurance coverage monthly premiums.
- Any payments the Member has contracted with The Company and /or the affiliated broker dealer to have deducted.
Note: Cross-Collateralization does not apply to the advance balance. It only applies to the debit balance. The debit balance is not policy-specific. For example, if a policy for Provider A is charged back due to a lapse, earned payouts from a Provider B Insurance policy may be cross-collateralized to re-pay the chargeback.
Cross-Collateralization is done using the following order:
- Funds are collected from the original source of the debt (A Midland policy is repaid using another Midland policy earned payout).
- Funds are collected from any affiliated company of the original source of the debt.
- Funds are collected from all other sources.