BILL NUMBER: AB 2549	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 19, 2008
	AMENDED IN ASSEMBLY  APRIL 3, 2008

INTRODUCED BY   Assembly Member Hayashi

                        FEBRUARY 22, 2008

   An act to add Section 1389.35 to the Health and Safety Code, and
to add Section 10384.5 to the Insurance Code, relating to health care
coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2549, as amended, Hayashi. Health care coverage: rescission.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance.
Existing law prohibits a plan or insurer from rescinding, canceling,
or limiting a contract or policy due to the  plan 
 plan's  or policy's failure to complete medical
underwriting and resolve all reasonable questions arising from
written information on or with an application before issuing a
contract or policy. Existing law requires that an individual contract
or policy be renewed except for nonpayment of the required premiums
or fraud or intentional misrepresentation of material fact under the
terms of the coverage by the individual.
   This bill would prohibit a health care service plan or health
insurer from rescinding an individual health care service plan
contract or individual health insurance policy for any reason after
 6   18  months following the issuance of
the contract or policy  . The bill would authorize a
subscriber, enrollee, policyholder, or insured who believes his or
her individual contract or policy was wrongfully rescinded to request
review of that rescission. 
   Because a willful violation of the bill's provisions relative to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 1389.35 is added to the Health and Safety Code,
to read:
   1389.35.   (a)   
Notwithstanding any other provision of law, after  six
  18  months following the issuance of an
individual health care service plan contract, a plan shall not
rescind the contract for any reason.  Nothing in this section
shall be construed to allow a health care service plan to rescind a
plan contract within the 18-month time period contrary to other
applicable   law.  
   (b) A subscriber or enrollee who believes that his or her
individual health care service plan contract was wrongfully rescinded
may request a review of the rescission by submitting a complaint to
the director. 
  SEC. 2.  Section 10384.5 is added to the Insurance Code, to read:
   10384.5.   (a)   
Notwithstanding any other provision of law, after  six
  18  months following the issuance of an
individual health insurance policy, a health insurer shall not
rescind the policy for any reason.  Nothing in this section shall
be construed to allow a health insurer to rescind a health insurance
policy within the 18-month time period contrary to other applicable
law.  
   (b) A policyholder or insured who believes that his or her
individual health insurance policy was wrongfully rescinded may
request a review of the rescission by submitting a complaint to the
commissioner. 
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.