BILL NUMBER: AB 2569	CHAPTERED
	BILL TEXT

	CHAPTER  604
	FILED WITH SECRETARY OF STATE  SEPTEMBER 30, 2008
	APPROVED BY GOVERNOR  SEPTEMBER 30, 2008
	PASSED THE SENATE  AUGUST 29, 2008
	PASSED THE ASSEMBLY  AUGUST 31, 2008
	AMENDED IN SENATE  AUGUST 21, 2008
	AMENDED IN SENATE  AUGUST 18, 2008
	AMENDED IN SENATE  JULY 2, 2008
	AMENDED IN SENATE  JUNE 18, 2008
	AMENDED IN ASSEMBLY  APRIL 8, 2008

INTRODUCED BY   Assembly Member De Leon

                        FEBRUARY 22, 2008

   An act to add Sections 1389.7 and 1389.8 to the Health and Safety
Code, and to add Sections 10119.2 and 10119.3 to the Insurance Code,
relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2569, De Leon. 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 health plan contract or health insurance policy due to
the plan's or insurer'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 a health care service plan and individual benefit plans
issued, amended, renewed, or delivered on or after January 1, 2007,
to permit an individual who has been covered for at least 18 months
to transfer, without medical underwriting, as defined, to any other
individual plan contract or individual health benefit plan, as
defined, that provides equal or lesser benefits, as specified.
   This bill would specifically require a health care service plan or
health insurer that offers, issues, or renews individual plan
contracts or individual health benefit plans to offer to any
individual who was covered under an individual plan contract or
individual health benefit plan that was rescinded, other than the
individual whose information led to the rescission, a new individual
plan contract or individual health benefit plan, without a lapse in
coverage or medical underwriting, as defined, that provides equal
benefits. The bill would also authorize a health care service plan or
health insurer to permit these individuals to remain covered under
that individual plan contract or individual health benefit plan, with
a specified revised premium rate. The bill would also require an
agent, broker, or solicitor assisting an applicant with an
application to make a specified attestation on the written
application and the bill would specify that a declarant willfully
making a false attestation may be subject to a civil penalty up to
$10,000.
   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.


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

  SECTION 1.  Section 1389.7 is added to the Health and Safety Code,
to read:
   1389.7.  (a) Every health care service plan that offers, issues,
or renews individual plan contracts shall offer to any individual,
who was covered under an individual plan contract that was rescinded,
a new individual plan contract, without medical underwriting, that
provides equal benefits. A health care service plan may also permit
an individual, who was covered under an individual plan contract that
was rescinded, to remain covered under that individual plan
contract, with a revised premium rate that reflects the number of
persons remaining on the plan contract.
   (b) "Without medical underwriting" means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who is issued a new individual plan
contract or remains covered under an individual plan contract
pursuant to this section.
   (c) If a new individual plan contract is issued, the plan may
revise the premium rate to reflect only the number of persons covered
on the new individual plan contract.
   (d) Notwithstanding subdivision (a) and (b), if an individual was
subject to a preexisting condition provision or a waiting or an
affiliation period under the individual plan contract that was
rescinded, the health care service plan may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual plan contract. The time period in the new
individual plan contract for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual plan contract that was rescinded and the health care
service plan shall credit any time that the individual was covered
under the rescinded individual plan contract.
   (e) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to coverage
provided under this section.
   (f) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract and this contract shall be
effective as of the effective date of the original plan contract and
there shall be no lapse in coverage.
   (g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.
  SEC. 2.  Section 1389.8 is added to the Health and Safety Code, to
read:
   1389.8.  (a) Notwithstanding any other provision of law, an agent,
broker, solicitor, solicitor firm, or representative who assists an
applicant in submitting an application to a health care service plan
has the duty to assist the applicant in providing answers to health
questions accurately and completely.
   (b) An agent, broker, solicitor, solicitor firm, or representative
who assists an applicant in submitting an application to a health
care service plan shall attest on the written application to both of
the following:
   (1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
   (2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
   (c) If, in an attestation required by subdivision (b), a declarant
willfully states as true any material fact he or she knows to be
false, that person shall, in addition to any applicable penalties or
remedies available under current law, be subject to a civil penalty
of up to ten thousand dollars ($10,000). Any public prosecutor may
bring a civil action to impose that civil penalty. These penalties
shall be paid to the Managed Care Fund.
   (d) A health care service plan application shall include a
statement advising declarants of the civil penalty authorized under
this section.
  SEC. 3.  Section 10119.2 is added to the Insurance Code, to read:
   10119.2.  (a) Every health insurer that offers, issues, or renews
health insurance under an individual health benefit plan, as defined
in subdivision (a) of Section 10198.6, shall offer to any individual,
who was covered under an individual health benefit plan that was
rescinded, a new individual health benefit plan without medical
underwriting that provides equal benefits. A health insurer may also
permit an individual, who was covered under an individual health
benefit plan that was rescinded, to remain covered under that
individual health benefit plan, with a revised premium rate that
reflects the number of persons remaining on the health benefit plan.
   (b) "Without medical underwriting" means that the health insurer
shall not decline to offer coverage to, or deny enrollment of, the
individual or impose any preexisting condition exclusion on the
individual who is issued a new individual health benefit plan or
remains covered under an individual health benefit plan pursuant to
this section.
   (c) If a new individual health benefit plan is issued, the insurer
may revise the premium rate to reflect only the number of persons
covered under the new individual health benefit plan.
   (d) Notwithstanding subdivision (a) and (b), if an individual was
subject to a preexisting condition provision or a waiting or
affiliation period under the individual health benefit plan that was
rescinded, the health insurer may apply the same preexisting
condition provision or waiting or affiliation period in the new
individual health benefit plan. The time period in the new individual
health benefit plan for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual health benefit plan that was rescinded and the health
insurer shall credit any time that the individual was covered under
the rescinded individual health benefit plan.
   (e) The insurer shall notify in writing all insureds of the right
to coverage under an individual health benefit plan pursuant to this
section, at a minimum, when the insurer rescinds the individual
health benefit plan. The notice shall adequately inform insureds of
the right to coverage provided under this section.
   (f) The insurer shall provide 60 days for insureds to accept the
offered new individual health benefit plan and this plan shall be
effective as of the effective date of the original individual health
benefit plan and there shall be no lapse in coverage.
   (g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.
  SEC. 4.  Section 10119.3 is added to the Insurance Code, to read:
   10119.3.  (a) Notwithstanding any other provision of law, an agent
or broker who assists an applicant in submitting an application to a
health insurer has the duty to assist the applicant in providing
answers to health questions accurately and completely.
   (b) An agent or broker who assists an applicant in submitting an
application to a health insurer shall attest on the written
application to both of the following:
   (1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
   (2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
   (c) If, in an attestation required by subdivision (b), a declarant
willfully states as true any material fact he or she knows to be
false, that person shall, in addition to any applicable penalties or
remedies available under current law, be subject to a civil penalty
of up to ten thousand dollars ($10,000). Any public prosecutor may
bring a civil action to impose that civil penalty. These penalties
shall be paid to the Insurance Fund.
   (d) A health insurance application shall include a statement
advising declarants of the civil penalty authorized under this
section.
  SEC. 5.  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.