(a) No prepaid health plan or pilot program contract shall be approved or renewed by the department pursuant to this chapter if any state officer or state employee or his spouse or minor child has a substantial financial interest, as defined by Section 14478, in any of the following:
(1) The contract or the contracting organization.
(2) Any contract with the contracting organization.
(3) Procurement of a contract for the contracting organization.
(b) As used in subdivision (a), “state officer or state employee” means any person included in Section 14477 and includes any employee in the department who has a direct responsibility for the negotiation, development, or management of a prepaid health plan contracted under the provisions of this chapter. The director shall publish regulations determining the class of employees covered by this subdivision.