BILL NUMBER: AB 730	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 26, 2009

INTRODUCED BY   Assembly Member De La Torre

                        FEBRUARY 26, 2009

   An act to amend  Section   Sections 394 and
 10400 of the Insurance Code, relating to health insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 730, as amended, De La Torre. Health insurance: unlawful
 rescission   postclaims underwriting  of
policy: penalties.
   Existing law provides for the  licensing and 
regulation of health insurers by the  Department of 
Insurance  Commissioner  . Existing law 
provides that the Insurance Commissioner may approve insurance
policies and associated materials in languages other than English, if
certain conditions are met, including that the English version is
the official version. Under existing law, the commissioner is
required to promulgate regulations requiring every health insurer to
provide insureds with appropriate access to translated written
materials and oral interpretation services in obtaining covered
benefits under individual and   group policies of health
insurance, as specified.  
   This bill would specify that individual and group policies of
health insurance are subject to the latter requirements and not the
former provisions. 
    Existing law  prohibits a health insurer from engaging
in the practice of postclaims underwriting, which is defined to mean
the rescinding, canceling, or limiting of a health insurance policy
or certificate due to the insurer's failure to complete medical
underwriting and resolve all reasonable questions arising from
written information submitted on or with an insurance application.
Existing law provides that any person willfully violating various
provisions governing disability insurance policies, including health
insurance policies, or orders of the commissioner in that regard,
shall forfeit to the state a sum not to exceed $118 for each
violation.
   This bill would provide that a health insurer that unlawfully
 rescinds   engages in the postclaims
underwriting of  a health insurance policy shall be liable to
the state for a civil penalty to be fixed by the commissioner in an
amount not to exceed $5,000, except that if the insurer knew, or had
reason to know, that the act of  rescission  
postclaims underwriting  was unlawful, the civil penalty shall
be fixed by the commissioner in an amount not to exceed $10,000 for
each act or violation. The bill would make other related changes.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

   SECTION 1.    Section 394 of the   Insurance
Code   is amended to read: 
   394.  (a)  The   Except as provided in
subdivision (c), the  commissioner may approve insurance
policies and associated materials in languages other than English if
the following conditions are met:
   (1) The policyholder is given a copy of the same material in
English.
   (2) The English version is the official version.
   (3) A policyholder document in a language other than English shall
contain a disclosure statement in both that language and in English
that states that the English version is the official version and the
foreign language version is for informational purposes only.
   (b) An insurer that knowingly misrepresents information provided
in a language other than English shall be subject to Article 6.5
(commencing with Section 790) of Chapter 1 of Part 2. 
   (c) Policies of health insurance, as defined by Section 106, and
associated materials in languages other than English shall not be
subject to subdivision (a) and shall instead be subject to Sections
10133.8 and 10133.9. 
   SECTION 1.   SEC. 2.   Section 10400 of
the Insurance Code is amended to read:
   10400.  (a) Any person willfully violating any provision of this
chapter or order of the commissioner made in accordance therewith
shall be liable to the state for a civil penalty to be fixed by the
commissioner in an amount not to exceed one hundred eighteen dollars
($118) for each violation. The commissioner may also suspend or
revoke the license of an insurer or agent for any willful violation
in that regard.
   (b) Notwithstanding subdivision (a), a health insurer that
unlawfully  rescinds   engages in the postclaims
underwriting of  a health insurance policy  , as defined in
Section 10384,  shall be liable to the state for a civil
penalty to be fixed by the commissioner, in an amount not to exceed
five thousand dollars ($5,000) for each  unlawful rescission
  act of postclaims underwriting  of a policy,
except that if the insurer knew, or had reason to know, that the act
of  rescission   postclaims underwriting 
was unlawful, the civil penalty shall be fixed by the commissioner in
an amount not to exceed ten thousand dollars ($10,000) for each act
or violation.