BILL NUMBER: AB 730	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 29, 2009
	AMENDED IN ASSEMBLY  MARCH 26, 2009

INTRODUCED BY   Assembly Member De La Torre

                        FEBRUARY 26, 2009

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


	LEGISLATIVE COUNSEL'S DIGEST


   AB 730, as amended, De La Torre. Health insurance: unlawful
postclaims underwriting  of policy  : penalties.

   Existing law provides for the regulation of health insurers by the
Department of Insurance. 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 provides for the regulation of health insurers
by the Department of Insurance. 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
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 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) 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. 
   SEC. 2.   SECTION 1.   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 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 act of
postclaims underwriting of a policy, except that if the insurer knew,
or had reason to know, that the act of 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. 
   (c) The civil penalties and disciplinary actions provided for in
this section shall be determined at a hearing conducted in accordance
with the Administrative Procedure Act (Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code), and the commissioner shall have all the powers granted by that
act.