BILL ANALYSIS Ó
SB 757
Page 1
Date of Hearing: June 28, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 757 (Lieu) - As Amended: June 13, 2011
As Proposed to be Amended
SENATE VOTE : 25-13
SUBJECT : DISCRIMINATION: HEALTH CARE
KEY ISSUE : SHOULD ALL SPECIFIED HEALTH CARE AND INSURANCE PLANS
AND POLICIES BE PROVIDED TO CALIFORNIA RESIDENTS WITHOUT REGARD
TO THEIR GENDER OR SEXUAL ORIENTATION?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
Existing law requires health care service plans, health insurers
and all other insurers regulated by the state to provide
coverage to the registered domestic partner of an employee that
is equal to the coverage it provides to a spouse. Consistently
with existing law, this bill would clarify that the obligation
to provide equal coverage to domestic partners and spouses
applies regardless of the gender or sexual orientation of those
persons. Existing law also requires that every policy marketed,
issued, or delivered to a resident of this state, regardless of
the situs of the contract must comply with the Insurance Code,
including its nondiscrimination provisions, but provides for an
exemption from this rule for policies that are issued outside of
California to an employer whose principal place of business and
majority of employees are located outside of California. This
bill would close this perceived loophole by requiring that every
policy or certificate for health insurance that is marketed,
issued, or delivered to a resident of California, regardless of
the situs of the contract or master group policy holder must
offer or provide coverage for a registered domestic partner that
is equal to the coverage provided to the spouse of an employee,
insured, or policyholder, regardless of the sexual orientation
or gender of the spouse or domestic partner, consistently with
existing law. The bill has no registered opposition.
SUMMARY : Prohibits certain discrimination on the basis of
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gender and sexual orientation in the provision of health care
plans and insurance. Specifically, this bill :
1)Provides that a group health care service plan that provides
hospital, medical, or surgical expense benefits shall provide
equal coverage to employers or guaranteed associations and in
providing that coverage, a plan may not discriminate based on
the gender or sexual orientation of the spouse or registered
domestic partner of an employee or subscriber.
2)Provides that a policy of group health insurance that provides
hospital, medical, or surgical expense benefits shall provide
equal coverage to employers or guaranteed associations, as
defined in Section 10700, for the registered domestic partner
of an employee, insured, or policyholder to the same extent,
and subject to the same terms and conditions, as provided to a
spouse of the employee, insured, or policyholder, and shall
inform employers and guaranteed associations of this coverage.
A policy may not offer or provide coverage for a registered
domestic partner that is not equal to the coverage provided to
the spouse of an employee, insured, or policyholder. In
providing that coverage, a policy may not discriminate based
on the gender or sexual orientation of the spouse or
registered domestic partner of an employee, insured, or
policyholder.
3)Requires that every policy or certificate for health insurance
that is marketed, issued, or delivered to a resident of
California, regardless of the situs of the contract or master
group policy holder must offer or provide coverage for a
registered domestic partner that is equal to the coverage
provided to the spouse of an employee, insured, or
policyholder.
EXISTING LAW :
1)A group health care service plan that provides hospital,
medical, or surgical expense benefits shall provide equal
coverage to employers or guaranteed associations, as defined
in Section 1357, for the registered domestic partner of an
employee or subscriber to the same extent, and subject to the
same terms and conditions, as provided to a spouse of the
employee or subscriber, and shall inform employers and
guaranteed associations of this coverage. A plan may not
offer or provide coverage for a registered domestic partner
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that is not equal to the coverage provided to the spouse of an
employee or subscriber. (Health and Safety Code section
1374.58.)
2)Provides that every policy or certificate of disability
insurance covering hospital, medical, or surgical expenses
marketed, issued, or delivered to a resident of this state,
regardless of the situs of the contract shall comply with the
laws of California. Existing law also provides for an
exemption from this rule for policies of disability insurance
which are issued outside of California to an employer whose
principal place of business and majority of employees are
located outside of California. (Ins. Code Sec. 10112.5.)
3)Provides that any policy of group health insurance may not
offer or provide coverage for a registered domestic partner
that is not equal to the coverage provided to the spouse of an
employee, insured, or policyholder. (Ins. Code Sec. 10121.7.)
COMMENTS : The author explains the reason for the bill as
follows:
California has strong laws prohibiting discrimination in
the issuance of insurance policies in the state, including
a requirement that all California licensed and regulated
insurers and health plans to provide equal coverage to
domestic partners. However, some out-of-state insurance
companies are attempting to evade complying with the
California law that prohibits the sale or issuance of
discriminatory insurance policies. Some out-of-state
insurers are refusing to insure the domestic partners of
gay and lesbian Californians, despite the clear intent of
the California Legislature to prohibit the sale of any such
discriminatory policy in California.
Multi-state companies that do business in California often
contract with out-of-state insurance companies to provide
coverage for their employees. Because some of these
out-of-state insurance companies believe there is a
loophole in the law, they are discriminating against
employees who live in California and who are in a domestic
partnership by refusing to provide equal coverage to
domestic partners. Because of this practice,
California-based insurance companies are at a disadvantage
in the marketplace because of the price savings available
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to out-of-state companies that sell discriminatory
policies.
This bill further states that insurance companies or
policies may not discriminate on the basis of a person's
gender or sexual orientation.
The sponsor, Equality California, writes:
This bill would provide that any health insurance policy
issued to or intended to cover any person residing in
California shall provide coverage for registered domestic
partners that is equal to the coverage provided to a spouse
and comply with the nondiscrimination requirements of
California law.
California has established strong laws prohibiting
discrimination in the issuance of insurance policies in the
state. Existing laws require California-based insurers to
provide the same coverage to domestic partners that they
provide to spouses.
SB 757 would clarify that any health care service plan
contract, health insurance policy, or any other insurance
policy that is issued to or intended to cover any person
residing in California must provide coverage for domestic
partners that is equal to the coverage provided to a spouse
and comply with all nondiscrimination requirements in
California law. While California based insurers must
already comply with this requirement, this bill would apply
to any out-of-state insurance company providing policies to
California residents.
Out-Of-State Insurers Required To Comply With California Law .
The California Department of Insurance (CDI) has jurisdiction
only to regulate insurance providers that are licensed with the
state. In order to become licensed with the state, the
insurance company must apply for the license with the CDI. This
application is specifically for insurance companies seeking to
do business within the State of California. If a company
contracts with an insurance provider that is based in
California, or markets to California residents, that insurance
provider must abide by California law.
There are, however, California residents who are employed by an
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employer whose headquarters is located in another state. The
out-of-state employer generally contracts with one insurance
company for all of their employees. Typically the insurance
company is located within the state where employer is
incorporated or headquartered, or the state where most of its
employees reside. There are currently twelve other states that
exercise jurisdiction over health insurance policies for their
residents. The twelve states are Alaska, Arkansas, Connecticut,
Delaware, Indiana, Kansas, Mississippi, Montana, North Carolina,
Oklahoma, Utah and Washington. In these states, health insurers
are required to provide benefits consistent with the state law
in which an employee resides.
This bill would make California one of these extraterritorial
states by requiring that every policy or certificate for health
insurance that is marketed, issued, or delivered to a resident
of California, regardless of the situs of the contract or master
group policy holder must offer or provide coverage for a
registered domestic partner that is equal to the coverage
provided to the spouse of an employee, insured, or policyholder.
The sponsor of this bill, Equality California, notes
"multi-state companies that do business in California often
contract with out-of-state health insurance companies to provide
benefits to employees. Those employees that live in California
and who are in a domestic partnership are often the victims of
discrimination because those out-of-state insurers do not
provide equal benefits to domestic partners. Because of this
practice, domestic partners and employers are often forced to
switch insurers to purchase coverage that treats spouses and
domestic partners equally." This is a potential loop-hole in
the law which this bill seeks to fix by requiring that any
policy delivered to a resident of this state must comply with
California's nondiscrimination laws.
In 2003, the Legislature provided that registered domestic
partners should have the same rights, protections, and benefits
as are granted to spouses. (AB 205 (Goldberg) Chapter 421,
Statutes of 2003.) The following year, the California
Legislature enacted the California Insurance Equality Act which
required all insurance plans to provide equal coverage to
registered domestic partners as to spouses. (AB 2208 (Kehoe)
Chapter 488, Statutes of 2004.) However, because of the
exemption for insurance policies issued outside of California to
businesses whose principal place of business and the majority of
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its employees reside, the California Insurance Equality Act is
unenforceable against these policies. As a result, some
residents of California who are in a domestic partnership may be
discriminated against in the provision of benefits if they are
employed by an out-of-state company who contracts for insurance
benefits with another out-of-state company. Rather than
allowing companies to profit from this type of discrimination,
out-of-state insurers should be held to the same standard as
in-state insurers when offering benefits to California
residents.
Courts have found that California may constitutionally regulate
an out-of-state insurer marketing directly to a California
resident. (People v. United Nat'l Life Ins. Co. (1967) 66
Cal.2d 577.) It may be somewhat more cumbersome to regulate an
out-of-state insurer who has contracted with an out-of-state
company that has employees in California. However, CDI
indicates that it could bring an injunction against an insurer
under Insurance Code section 12928.6 in those few circumstances
where that might be necessary.
Author's Proposed Clarifying Amendments. To address a drafting
error, the author appropriately proposes to amend sections 1 and
3 of the bill as follows:
1367.30. Notwithstanding any other provision of law, every
group health care service plan contract marketed, issued, or
delivered to a resident of this state, regardless of the situs
of the contract or the subscriber, and irrespective of whether
issued to an employer whose principal place of business or
majority of employees are outside of California , shall be
subject to Section 1374.58.
10112.5 (b). Notwithstanding any other provision of law, every
policy or certificate of group health insurance marketed, issued
or delivered to a resident of this state, regardless of the
situs of the contract or master group policyholder, and
irrespective of whether issued to an employer whose principal
place of business or majority of employees are outside of
California , shall be subject to Section 10121.7
In addition, to better clarify the intent of the bill to cover
both sexual orientation and gender discrimination with respect
to both spouses and domestic partners, and to clarify the bill's
interplay with existing law, the author wishes to amend sections
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2 and 4 of the bill as follows:
1374.58. (a) A group health care service plan that provides
hospital, medical, or surgical expense benefits shall provide
equal coverage to employers or guaranteed associations, as
defined in
Section 1357, for the registered domestic partner of an employee
or subscriber to the same extent, and subject to the same terms
and conditions, as provided to a spouse of the employee or
subscriber, and shall inform employers and guaranteed
associations of this coverage. A plan may not offer or provide
coverage for a registered domestic partner that is not equal to
the coverage provided to the spouse of an employee or
subscriber , and may not discriminate in coverage between spouses
or domestic partners of a different sex and spouses or domestic
partners of the same sex. The prohibitions and requirements
imposed by this section are in addition to any other
prohibitions and requirements imposed by law . In providing that
coverage, a plan may not discriminate based on the gender or
sexual orientation of the spouse or registered domestic partner
of an employee or subscriber.
10121.7. (a) A policy of group health insurance that provides
hospital, medical, or surgical expense benefits shall provide
equal coverage to employers or guaranteed associations, as
defined in Section 10700, for the registered domestic partner of
an employee, insured, or policyholder to the same extent, and
subject to the same terms and conditions, as provided to a
spouse of the employee, insured, or policyholder, and shall
inform employers and guaranteed associations of this coverage. A
policy may not offer or provide coverage for a registered
domestic partner that is not equal to the coverage provided to
the spouse of an employee, insured, or policyholder , and may not
discriminate in coverage between spouses or domestic partners of
a different sex and spouses or domestic partners of the same
sex . The prohibitions and requirements imposed by this section
are in addition to any other prohibitions and requirements
imposed by law. In providing that coverage, a policy may not
discriminate based on the gender or sexual orientation of the
spouse or registered domestic partner of an employee, insured,
or policyholder.
REGISTERED SUPPORT / OPPOSITION :
SB 757
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Support
Equality California (sponsor)
California Association of Marriage and Family Therapists
California School Employees Association
Greater San Diego Business Association
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334