BILL NUMBER: AB 1761	CHAPTERED
	BILL TEXT

	CHAPTER  876
	FILED WITH SECRETARY OF STATE  SEPTEMBER 30, 2012
	APPROVED BY GOVERNOR  SEPTEMBER 30, 2012
	PASSED THE SENATE  AUGUST 30, 2012
	PASSED THE ASSEMBLY  AUGUST 30, 2012
	AMENDED IN SENATE  AUGUST 14, 2012

INTRODUCED BY   Assembly Member John A. Pérez
   (Principal coauthor: Senator Alquist)

                        FEBRUARY 17, 2012

   An act to add Section 100510 to the Government Code, to add
Section 1360.5 to the Health and Safety Code, and to amend Section
790.03 of the Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1761, John A. Pérez. California Health Benefit Exchange.
   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 also provides for the
regulation of health insurers by the Department of Insurance.
Existing law requires the California Health Benefit Exchange
(Exchange) to facilitate the purchase of qualified health plans by
qualified individuals and qualified small employers by January 1,
2014. Existing law prohibits certain unfair insurance practices
specifically and unfair business practices in general.
   This bill would prohibit an individual or entity from holding
himself, herself, or itself out as representing, constituting, or
otherwise providing services on behalf of the Exchange unless that
individual or entity has a valid agreement with the Exchange to
engage in those activities. The bill would specify that it is an
unfair business practice for health care service plans, entities
engaged in the solicitation of health care service plan contracts,
and persons engaged in the business of insurance to violate this
provision. Because a willful violation of the provisions governing
health care service plans is 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 100510 is added to the Government Code, to
read:
   100510.  (a) No individual or entity shall hold himself, herself,
or itself out as representing, constituting, or otherwise providing
services on behalf of the Exchange unless that individual or entity
has a valid agreement with the Exchange to engage in those
activities.
   (b) Any individual or entity who aids or abets another individual
or entity in violation of this section shall also be in violation of
this section.
  SEC. 2.  Section 1360.5 is added to the Health and Safety Code, to
read:
   1360.5.  (a) For purposes of this section, "Exchange" means the
California Health Benefit Exchange established pursuant to Section
100500 of the Government Code.
   (b) It is an unfair business practice for a solicitor or solicitor
firm to hold himself, herself, or itself out as representing,
constituting, or otherwise providing services on behalf of the
Exchange unless the solicitor or solicitor firm has a valid agreement
with the Exchange to engage in those activities.
   (c) It is an unfair business practice for a health care service
plan to hold itself out as representing, constituting, or otherwise
providing services on behalf of the Exchange unless the plan has a
valid agreement with the Exchange to engage in those activities.
  SEC. 3.  Section 790.03 of the Insurance Code is amended to read:
   790.03.  The following are hereby defined as unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance.
   (a) Making, issuing, circulating, or causing to be made, issued or
circulated, any estimate, illustration, circular, or statement
misrepresenting the terms of any policy issued or to be issued or the
benefits or advantages promised thereby or the dividends or share of
the surplus to be received thereon, or making any false or
misleading statement as to the dividends or share of surplus
previously paid on similar policies, or making any misleading
representation or any misrepresentation as to the financial condition
of any insurer, or as to the legal reserve system upon which any
life insurer operates, or using any name or title of any policy or
class of policies misrepresenting the true nature thereof, or making
any misrepresentation to any policyholder insured in any company for
the purpose of inducing or tending to induce the policyholder to
lapse, forfeit, or surrender his or her insurance.
   (b) Making or disseminating or causing to be made or disseminated
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatsoever, any
statement containing any assertion, representation, or statement with
respect to the business of insurance or with respect to any person
in the conduct of his or her insurance business, which is untrue,
deceptive, or misleading, and which is known, or which by the
exercise of reasonable care should be known, to be untrue, deceptive,
or misleading.
   (c) Entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion, or intimidation
resulting in or tending to result in unreasonable restraint of, or
monopoly in, the business of insurance.
   (d) Filing with any supervisory or other public official, or
making, publishing, disseminating, circulating, or delivering to any
person, or placing before the public, or causing directly or
indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public any false
statement of financial condition of an insurer with intent to
deceive.
   (e) Making any false entry in any book, report, or statement of
any insurer with intent to deceive any agent or examiner lawfully
appointed to examine into its condition or into any of its affairs,
or any public official to whom the insurer is required by law to
report, or who has authority by law to examine into its condition or
into any of its affairs, or, with like intent, willfully omitting to
make a true entry of any material fact pertaining to the business of
the insurer in any book, report, or statement of the insurer.
   (f) (1) Making or permitting any unfair discrimination between
individuals of the same class and equal expectation of life in the
rates charged for any contract of life insurance or of life annuity
or in the dividends or other benefits payable thereon, or in any
other of the terms and conditions of the contract.
   (2) This subdivision shall be interpreted, for any contract of
ordinary life insurance or individual life annuity applied for and
issued on or after January 1, 1981, to require differentials based
upon the sex of the individual insured or annuitant in the rates or
dividends or benefits, or any combination thereof. This requirement
is satisfied if those differentials are substantially supported by
valid pertinent data segregated by sex, including, but not limited
to, mortality data segregated by sex.
   (3) However, for any contract of ordinary life insurance or
individual life annuity applied for and issued on or after January 1,
1981, but before the compliance date, in lieu of those differentials
based on data segregated by sex, rates, or dividends or benefits, or
any combination thereof, for ordinary life insurance or individual
life annuity on a female life may be calculated as follows: (A)
according to an age not less than three years nor more than six years
younger than the actual age of the female insured or female
annuitant, in the case of a contract of ordinary life insurance with
a face value greater than five thousand dollars ($5,000) or a
contract of individual life annuity; and (B) according to an age not
more than six years younger than the actual age of the female
insured, in the case of a contract of ordinary life insurance with a
face value of five thousand dollars ($5,000) or less. "Compliance
date" as used in this paragraph shall mean the date or dates
established as the operative date or dates by future amendments to
this code directing and authorizing life insurers to use a mortality
table containing mortality data segregated by sex for the calculation
of adjusted premiums and present values for nonforfeiture benefits
and valuation reserves as specified in Sections 10163.1 and 10489.2
or successor sections.
   (4) Notwithstanding the provisions of this subdivision, sex-based
differentials in rates or dividends or benefits, or any combination
thereof, shall not be required for (A) any contract of life insurance
or life annuity issued pursuant to arrangements which may be
considered terms, conditions, or privileges of employment as these
terms are used in Title VII of the Civil Rights Act of 1964 (Public
Law 88-352), as amended, and (B) tax sheltered annuities for
employees of public schools or of tax-exempt organizations described
in Section 501(c)(3) of the Internal Revenue Code.
   (g) Making or disseminating, or causing to be made or
disseminated, before the public in this state, in any newspaper or
other publication, or any other advertising device, or by public
outcry or proclamation, or in any other manner or means whatever,
whether directly or by implication, any statement that a named
insurer, or named insurers, are members of the California Insurance
Guarantee Association, or insured against insolvency as defined in
Section 119.5. This subdivision shall not be interpreted to prohibit
any activity of the California Insurance Guarantee Association or the
commissioner authorized, directly or by implication, by Article 14.2
(commencing with Section 1063).
   (h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
   (1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
   (2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies.
   (3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
policies.
   (4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
   (5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
reasonably clear.
   (6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
   (7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
   (8) Attempting to settle claims on the basis of an application
that was altered without notice to, or knowledge or consent of, the
insured, his or her representative, agent, or broker.
   (9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
   (10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
   (11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
   (12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
policy coverage.
   (13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
compromise settlement.
   (14) Directly advising a claimant not to obtain the services of an
attorney.
   (15) Misleading a claimant as to the applicable statute of
limitations.
   (16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider.
   (i) Canceling or refusing to renew a policy in violation of
Section 676.10.
   (j) Holding oneself out as representing, constituting, or
otherwise providing services on behalf of the California Health
Benefit Exchange established pursuant to Section 100500 of the
Government Code without a valid agreement with the California Health
Benefit Exchange to engage in those activities.
  SEC. 4.  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.