BILL NUMBER:  AB 2
  VETOED	DATE: 10/12/2009




To the Members of the California State Assembly:

I am returning Assembly Bill 2 without my signature.

I have repeatedly indicated I would support a bill that provides
strong statutory protections for consumers against inappropriate
rescissions by health plans.  However, this bill continues to have a
provision that benefits trial lawyers rather than consumers.  I
remain comfortable sending this bill back for a second time without
my signature because of the strong consumer protections the
Department of Managed Health Care and Department of Insurance have
successfully implemented over the past two years.  The number of
rescissions industry-wide has decreased significantly since 2005.
Millions of dollars have been assessed against health plans and
insurers; corrective action plans have been received and approved;
revised consumer disclosures have been reviewed for literacy,
consistency and compliance with the settlement agreements; and
lastly, the two departments are working together to ensure that all
health plans meet the same standards of fairness and full disclosure.
  The market has changed ? and it is because of my Administration's
strong action in this area.

The precedent-setting 4th District Court of Appeals decision in
Hailey v. Blue Shield relied heavily on the Department of Managed
Health Care's amicus brief.  The court's reliance on this brief
speaks to the strong work of the Department and the balance required
when enacting consumer protections and ensuring access to the
individual health plan market.  I have no interest in overturning
that appellate decision and the definitive interpretation of the
post-claims underwriting statute.

In addition, I have signed targeted measures that prohibit plans from
financially incentivizing their employees to rescind or cancel
policies; require plans to offer coverage to families when the
individual on the contract has been rescinded or cancelled; and most
recently, I have signed Assembly Bill 108 that will prohibit a health
plan from rescinding or canceling a contract after 24 months.

I would request that the Legislature send me a bill that codifies the
Hailey decision, as I have asked for since 2008.  When that occurs,
I will be happy to sign that bill.

Sincerely,



Arnold Schwarzenegger