BILL NUMBER: AB 1324	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 18, 2007
	AMENDED IN ASSEMBLY  APRIL 11, 2007

INTRODUCED BY   Assembly Member De La Torre

                        FEBRUARY 23, 2007

   An act to amend Section 1371.8 of the Health and Safety Code, and
to amend  Sections 796.04 and 10380   Section
796.04  of the Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1324, as amended, De La Torre. Health care coverage: rescinded
coverage.
   Existing law provides for regulation of health care service plans
by the Director of the Department of Managed Health Care. Existing
law provides for the regulation of health insurers by the Insurance
Commissioner.
   Existing law provides that a health care service plan or a health
insurer that authorizes a specific type of treatment by a health care
provider shall not rescind or modify this authorization after the
provider renders the health care service in good faith and pursuant
to the authorization.
   This bill would  define "authorizes" and "authorization"
under these provisions   state that a provider has
rendered health care services in good faith under specified
circumstances, and that a plan or insurer does not   avoid
its obligations under these provisions by rescinding or modifying a
health care service plan contract or a policyholder's policy or
certificate. The bill would also state that these provisions are
declaratory of existing law  . 
   Existing law provides that the falsity of a statement in a life or
disability insurance policy application shall not bar the right to
recovery under the policy unless the false statement was made either
with actual intent to deceive or it materially affected the
acceptance of the risk or hazard assumed by the insurer. 

   This bill would require both of these conditions in order for
falsity of a statement in the application to bar the right to
recovery under the policy.
   Vote: majority. Appropriation: no. Fiscal committee:  yes
  no  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1371.8 of the Health and Safety Code is amended
to read:
   1371.8.  A health care service plan that authorizes a specific
type of treatment by a provider shall not rescind or modify this
authorization after the provider renders the health care service in
good faith and pursuant to the authorization. This section shall not
be construed to expand or alter the benefits available to the
enrollee or subscriber under a plan.  "Authorizes" and
"authorization" include, but are not limited to, verification of
eligibility, authorizing a procedure, or other communication by the
plan indicating that the health care services are covered under the
plan.   A provider has rendered health care services in
good faith under this   section when the health care service
plan has authorized the services by verifying eligibility of a
member or otherwise communicating that the member is covered under an
enrollee's or subscriber's plan contract, or, in the case where an
enrollee's or subscriber's plan contract requires preapproval for a
particular service, the provider has obtained that preapproval. A
health care service plan does not avoid its obligations under this
section by rescinding or modifying the enrollee's or subscriber's
plan contract. The Legislature finds and declares that the amendments
made to this section by the act amending the section in the first
year of the 2007-08 Regular Session of the Legislature do not
constitute a change in, but are declaratory of, existing law. 
  SEC. 2.  Section 796.04 of the Insurance Code is amended to read:
   796.04.  A health insurer that provides coverage for hospital,
medical, or surgical expenses that authorizes a specific type of
treatment for services covered under a policyholder's contract or
plan by a provider shall not rescind or modify this authorization
after the provider renders the health care service in good faith and
pursuant to the authorization. This section shall not be construed to
expand or alter the benefits available or the terms and conditions
of the contract as may be agreed upon between a policyholder,
certificate holder, or trust, and the insurer.  "Authorizes"
and "authorization" include, but are not limited to, verification of
eligibility, authorizing a procedure, or other communication by the
insurer indicating that the health care services are covered under
the contract or plan.   A provider has rendered health
care services in good faith under this section when the health
insurer has authorized the services by verifying eligibility of an
insured or otherwise communicating that the insured is covered under
a policyholder's policy or certificate, or, in the case where the
policyholder's policy or certificate requires preapproval for a
particular service, the provider has obtained that preapproval. A
health insurer does not avoid its obligations under this section by
rescinding or modifying the policyholder's policy or certificate. The
Legislature finds and declares that the amendments made to this
section by the act amending the section in the first year of the
2007-08 Regular Session of the Legislatur   e do not
constitute a change in, but are declaratory of, existing law. 

  SEC. 3.    Section 10380 of the Insurance Code is
amended to read:
   10380.  The falsity of any statement in the application for any
policy covered by this chapter shall not bar the right to recovery
under the policy unless the statement was made with actual intent to
deceive and it materially affected either the acceptance of the risk
or the hazard assumed by the insurer.