BILL NUMBER: SB 1313 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 18, 2012
AMENDED IN SENATE APRIL 10, 2012
INTRODUCED BY Senator Lieu
FEBRUARY 23, 2012
An act to amend Section 1361 of, and to add Sections 1360.2,
1361.2, 1361.4, 1363.06, 1367.004, and 1367.041
to, the Health and Safety Code, and to amend Sections
Section 781 and 790.03 of,
and to add Sections 790.16, 1748.1, 10112.26, 10127.14, 10127.45, and
10133.10 to, the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 1313, as amended, Lieu. Health care coverage.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene Act), 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 prohibits a health care service plan from
publishing or distributing an advertisement unless a copy thereof has
first been filed with the Director of the Department of Managed
Health Care at least 30 days prior to that use and the director has
not found the advertisement to be untrue, misleading, deceptive, or
in violation of the Knox-Keene Act within those 30 days, except as
specified. Under existing law, if an advertisement fails to comply
with the Knox-Keene Act, the director has the authority to require a
plan to publish a correction or retraction of an untrue, misleading,
or deceptive statement contained in the advertisement and to prohibit
the plan from publishing the advertisement or a material revision
thereof without filing a copy with the director, as specified.
Existing law authorizes the director to exempt a plan or
advertisement from these requirements.
This bill would, until January 1, 2020, prohibit a plan from
publishing or distributing an advertisement unless a copy has first
been filed with the director at least 60 days prior to that use and
the director has not found the advertisement to be untrue,
misleading, deceptive, or in violation of the Knox-Keene Act within
those 60 days. The bill would authorize the director to extend this
period of review by an additional 60 days. Under the bill, if an
advertisement fails to comply with the Knox-Keene Act, the director
would be mandated to require a plan to publish a correction or
retraction of an untrue, misleading, or deceptive statement contained
in the advertisement and to prohibit the plan from publishing the
advertisement or a material revision thereof without filing a copy
with the director, as specified. The bill would also prohibit the
director from exempting certain types of materials from these
requirements. The bill would also require health insurers and
specified insurance agents to comply with similar advertising
requirements.
Existing law prohibits a plan, solicitor, solicitor firm, or
representative from using any advertising or solicitation, or making
or permitting the use of any verbal statement, that is untrue or
misleading or any form of evidence of coverage that is deceptive, as
specified. Existing law prohibits an insurer, agent, or broker from
causing to be issued a misrepresentation of the terms of the policy
issued by the insurer, among other things, and makes a violation of
that requirement a crime. Existing law, the federal Patient
Protection and Affordable Care Act (PPACA), enacts various health
care coverage market reforms. Among other things, commencing January
1, 2014, PPACA requires every individual to be covered under minimum
essential coverage, as specified, and requires every health insurance
issuer issuing individual or group health insurance
coverage to accept every employer and individual who applies for
coverage offering coverage in the individual or small
group markets to ensure that the coverage includes a specified
essential health benefits package .
This bill would prohibit an make it an
unfair business practice for an insurer or agent from
using to use any advertising or solicitation, or
making or permitting make or permit the
use of any verbal statement, that is untrue or misleading or any
form of evidence of coverage that is deceptive, as specified
, and would specify that a violation of this provision is an unfair
business practice . The bill would prohibit a person from
making any statement to a person that is known, or should have been
known, to be a misrepresentation regarding the requirements of PPACA.
The bill would prohibit a specialized health care service plan from
offering, issuing, selling, or renewing an individual or group plan
contract that does not, at a minimum, cover basic health care
services unless the individual or group has proof of enrollment in
minimum essential coverage, as defined. The bill would also prohibit
an entity that arranges for the provision of health care services
from offering or selling a product to an individual or group unless
the individual enrollee has proof of enrollment in minimum essential
coverage. The bill would prohibit a health insurer, a specialized
health insurer, or an insurer offering policies or certificates of
specified disease or hospital confinement indemnity insurance from
offering, issuing, selling, or renewing an individual or small group
health insurance policy that does not, at a minimum, cover essential
health benefits, as defined, unless the individual or group has proof
of enrollment in minimum essential coverage, as defined. The bill
would require a health care service plan or health insurer that
offers, issues, or sells a plan contract or health insurance policy
that provides coverage that does not constitute minimum essential
coverage to include in all solicitations, marketing materials, and
the evidence of coverage a clear and easily identified disclosure to
that effect, as specified. The bill would enact other related
provisions.
Existing law requires the Department of Managed Health Care and
the Department of Insurance to adopt regulations establishing
standards and requirements to provide enrollees and insureds with
appropriate access to language assistance in obtaining health care
services, as specified. Existing law requires plans and insurers to
translate specified vital documents into a language when a certain
proportion of its enrollees or insureds indicate a preference for
written materials in that language.
Under this bill, if a solicitor , solicitor firm, or
representative of a health care service plan, or an
insurance agent advertises , or markets
, sells, solicits, or negotiates the purchase of a health
care service plan contract or health insurance policy
health care service plan contracts or health insurance policies
in a language other than English, the plan or insurer would be
required to comply with those language assistance requirements.
The bill would require a solicitor, solicitor firm, or insurance
agent to disclose to the plan or insurer the non-English languages in
which the solicitor, solicitor firm, or insurance agent markets,
advertises, negotiates, or solicits contracts or policies
offered by the plan or insurer, as specified. The bill would
require a health care service plan or health insurer that advertises
or markets in a language in which vital documents do not have to be
translated to translate certain documents into that language.
Because a violation of certain of the bill's requirements would be
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1360.2 is added to the Health and Safety Code,
to read:
1360.2. (a) It is unlawful for any person, including a plan,
subject to this chapter to make any statement to any other person
that is known or should have been known to be a misrepresentation
regarding the requirements of the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152).
(b) For purposes of subdivision (a), a written or printed
statement or item of information shall be deemed to be a
misrepresentation whether or not it is literally true if, in the
total context in which the statement is made or the item of
information is communicated, the statement or item of information may
be understood by a person not possessing special knowledge regarding
health care coverage as indicating any benefit or advantage, or the
absence of any exclusion, limitation, or disadvantage, of possible
significance to an enrollee, potential enrollee, or potential
subscriber in a plan, and such is not the case.
SEC. 2. Section 1361 of the Health and Safety Code is amended to
read:
1361. (a) Except as provided in subdivision (b), no plan shall
publish or distribute, or allow to be published or distributed on its
behalf, any advertisement not subject to Section 1352.1 unless both
of the following requirements are met:
(1) Effective on or after January 1, 2013, to December 31, 2019,
inclusive, a true copy thereof has first been filed with the director
at least 60 days prior to any such use, or any shorter period as the
director by rule or order may allow. Between January 1, 2013, and
December 31, 2019, inclusive, the director may, at his or her
discretion, extend the period of review by up to 60 days. Commencing
January 1, 2020, this copy shall be filed at least 30 days prior to
any such use, or any shorter period as the director by rule or order
may allow.
(2) The director by notice has not found the advertisement, wholly
or in part, to be untrue, misleading, deceptive, or otherwise not in
compliance with this chapter or the rules thereunder, and specified
the deficiencies, within the period specified in paragraph (1), or
any shorter time as the director by rule or order may allow.
(b) Except as provided in subdivision (c), a licensed plan that
has been continuously licensed under this chapter for the preceding
18 months may publish or distribute, or allow to be published or
distributed on its behalf, an advertisement not subject to Section
1352.1 without having filed the same for the director's prior
approval if the plan and the material comply with each of the
following conditions:
(1) The advertisement or a material provision thereof has not been
previously disapproved by the director by written notice to the plan
and the plan reasonably believes that the advertisement does not
violate any requirement of this chapter or the rules thereunder.
(2) The plan files a true copy of each new or materially revised
advertisement, used by it or by any person acting on behalf of the
plan, with the director not later than 10 business days after
publication or distribution of the advertisement or within such
additional period as the director may allow by rule or order.
(c) If the director finds that any advertisement of a plan has
materially failed to comply with this chapter or the rules
thereunder, the director shall, by order, require the plan to publish
in the same or similar medium, an approved correction or retraction
of any untrue, misleading, or deceptive statement contained in the
advertising, and shall prohibit the plan from publishing or
distributing, or allowing to be published or distributed on its
behalf, the advertisement or any new materially revised advertisement
without first having filed a copy thereof with the director 30 days
prior to the publication or distribution thereof, or any shorter
period specified in the order. An order issued under this subdivision
shall be effective for 12 months from its issuance, and may be
renewed by order if the advertisements submitted under this
subdivision indicate difficulties of voluntary compliance with the
applicable provisions of this chapter and the rules thereunder.
(d) A licensed plan or other person regulated under this chapter
may, within 30 days after receipt of any notice or order under this
section, file a written request for a hearing with the director.
(e) The director may classify plans and advertisements and exempt
certain classes, wholly or in part, either unconditionally or upon
specified terms and conditions or for specified periods, from the
application of subdivisions (a) and (b), except for the following:
(1) Advertisements or marketing materials that include
claims endorsements or ratings about quality of
care.
(2) Advertisement or marketing materials about new health care
products.
(3) Enrollment-related materials, including, but not limited to,
disclosure forms, contract documents, and enrollment forms.
(4) Any other materials as provided by regulation.
SEC. 3. Section 1361.2 is added to the Health
and Safety Code, to read:
1361.2. If a solicitor, solicitor firm, or representative of a
health care service plan advertises, markets, sells, solicits, or
negotiates the purchase of a health care service plan contract in a
language other than English, the health care service plan shall meet
the requirements of Sections 1367.04 and 1367.07, and, if applicable,
Section 1367.041, and any rules or regulations adopted thereunder.
SEC. 4. SEC. 3. Section 1361.4 is
added to the Health and Safety Code, to read:
1361.4. A person licensed pursuant to Section 1351 whose license
is revoked or suspended pursuant to the grounds set forth in this
article, Article 3 (commencing with Section 1349), or Article 5
(commencing with Section 1367), and a person who engages in
solicitation, as defined in subdivision (l) of Section 1345 who is
disciplined pursuant to Section 1388, shall be prohibited from doing
any of the following:
(a) Becoming a navigator as determined by the California Health
Benefit Exchange pursuant to subdivision (l) of Section 100502 of the
Government Code in accordance with subdivision (i) of Section 1311
of the federal Patient Protection and Affordable Care Act (Public Law
111-148), as amended by the federal Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152).
(b) Becoming licensed as a life licensee agent as defined in
Section 1622 of the Insurance Code.
(c) Becoming a designated individual or organization authorized to
receive a fee under Section 12693.32 of the Insurance Code.
SEC. 5. SEC. 4. Section 1363.06 is
added to the Health and Safety Code, to read:
1363.06. The director shall adopt rules to implement Section 2715
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-15).
In so doing, the director shall minimize duplication with disclosure
requirements under California law.
SEC. 6. SEC. 5. Section 1367.004 is
added to the Health and Safety Code, to read:
1367.004. (a) (1) On and after January 1, 2014, a specialized
health care service plan shall not offer, issue, sell, or renew for
any group a plan contract that does not, at a minimum, cover basic
health care services unless the group provides proof of coverage that
constitutes minimum essential coverage, as defined in Section 5000A
(f) of the Internal Revenue Code and any rules or regulations issued
thereunder.
(2) On and after January 1, 2014, a specialized health care
service plan shall not offer, issue, sell, or renew for any
individual a plan contract that does not, at a minimum, cover basic
health care services unless the individual enrollee has proof of
enrollment in coverage that constitutes minimum essential coverage,
as defined in Section 5000A(f) of the Internal Revenue Code and any
rules or regulations issued thereunder.
(3) For products offered through the California Health Benefit
Exchange, the Exchange may provide proof of coverage of essential
health benefits for an individual or small group.
(b) On and after January 1, 2014, any entity that arranges for the
provision of health care services shall not offer or sell a product
or service to an individual or group unless the individual enrollee
has proof of enrollment in coverage that constitutes minimum
essential coverage as defined in Section 5000A(f) of the Internal
Revenue Code and any rules or regulations issued thereunder.
(c) On and after January 1, 2014, a health care service plan,
including a specialized health care service plan, that offers,
issues, or sells a plan contract that provides coverage that does not
constitute minimum essential coverage, as defined in Section 5000A
(f) of the Internal Revenue Code and any rules or regulations issued
thereunder, shall include in all solicitations, marketing materials,
and the evidence of coverage a clear and easily identified disclosure
that the contract does not meet the requirements of federal law with
respect to minimum essential coverage and may expose an individual
enrolled in the contract to significant federal tax penalties unless
the individual also obtains coverage that provides minimum essential
coverage as required by federal law.
SEC. 7. SEC. 6. Section 1367.041 is
added to the Health and Safety Code, to read:
1367.041. (a) A health care service plan that advertises or
markets in a language other than English, which language does not
meet the minimum enrollee thresholds established under Sections
1367.04 and 1367.07 or the regulations adopted thereunder, shall
translate into that language the documents listed in clauses (i),
(iii), and (v) of subparagraph (B) of paragraph (1) of subdivision
(b) of Section 1367.04 and in subparagraphs (F) and (G) of paragraph
(7) of subdivision (b) of Section 1300.67.04 of Title 28 of the
California Code of Regulations.
(b) Once the enrollee population of the non-English-language
population meets a threshold listed in subparagraph (A) of paragraph
(1) of subdivision (b) of Section 1367.04, the plan shall translate
all vital documents as required under Sections 1367.04 and 1367.07
and the regulations adopted thereunder.
(c) If a solicitor advertises or markets health care service plan
contracts in a language other than English, the health care service
plan for which the solicitor is advertising or marketing shall meet
the requirements of Sections 1367.04 and 1367.07 and, if applicable,
Section 1367.041, and any rules or regulations adopted thereunder.
(d) A solicitor or solicitor firm shall disclose to the health
care service plan for which the solicitor or solicitor firm markets,
advertises, or solicits health care service plan coverage each of the
non-English languages in which the solicitor or solicitor firm
markets, advertises, or solicits that coverage.
SEC. 8. SEC. 7. Section 781 of the
Insurance Code is amended to read:
781. (a) A person shall not make any statement that is known, or
should have been known, to be a misrepresentation (1) to any other
person for the purpose of inducing, or tending to induce, the other
person either to take out a policy of insurance, or to refuse to
accept a policy issued upon an application therefor and instead take
out any policy in another insurer, or (2) to a policyholder in any
insurer for the purpose of inducing or tending to induce him or her
to forfeit or surrender his or her insurance therein, or inducing or
tending to induce a lapse in that insurance.
(b) A person shall not make any representation or comparison of
insurers or policies to an insured that is misleading for the purpose
of inducing or tending to induce him or her to forfeit, change, or
surrender his or her insurance, or inducing or tending to induce a
lapse in that insurance, whether on a temporary or permanent plan.
(c) (1) A person shall not make any statement to any other person
that is known or should have been known to be a misrepresentation
regarding the requirements of the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152).
(2) For purposes of this subdivision, a written or printed
statement or item of information shall be deemed to be a
misrepresentation whether or not it is literally true if, in the
total context in which the statement is made or the item of
information is communicated, the statement or item of information may
be understood by a person not possessing special knowledge regarding
health care coverage as indicating any benefit or advantage, or the
absence of any exclusion, limitation, or disadvantage, of possible
significance to an insured, potential insured, or potential
policyholder, and such is not the case.
SEC. 9. 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
which 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) Marketing, soliciting, or advertising policies of health
insurance, as defined in subdivision (b) of Section 106, or
categories of coverage described in subdivision (a) of Section 10604,
in a language other than English if the health insurer does not meet
the requirements set forth in Sections 10133.8 and 10133.9, and, if
applicable, Section 10133.10.
SEC. 10. SEC. 8. Section 790.16 is
added to the Insurance Code, to read:
790.16. (a) No It is an unfair method of
competition and an unfair and deceptive act or practice in the
business of insurance for an insurer or agent, as defined in
Section 1622, shall to use or permit
the use of any advertising or solicitation that is untrue or
misleading, or any form of evidence of coverage that is deceptive.
For purposes of this section:
(1) A written or printed statement or item of information shall be
deemed untrue if it does not conform to fact in any respect which
is, or may be significant to an insured or policyholder, or potential
insured or policyholder of a policy.
(2) A written or printed statement or item of information shall be
deemed misleading whether or not it may be literally true, if, in
the total context in which the statement is made or such item of
information is communicated, such statement or item of information
may be understood by a person not possessing special knowledge
regarding health care coverage, as indicating any benefit or
advantage, or the absence of any exclusion, limitation, or
disadvantage of possible significance to an insured, or potential
insured or policyholder, of a policy, and such is not the case.
(3) An evidence of coverage shall be deemed to be deceptive if the
evidence of coverage taken as a whole and with consideration given
to typography and format, as well as language, shall be such as to
cause a reasonable person, not possessing special knowledge of
policies, and evidence of coverage therefor to expect benefits,
service charges, or other advantages which the evidence of coverage
does not provide or which the insurer issuing such coverage or
evidence of coverage does not regularly make available to insureds or
policyholders covered under such evidence of
coverage.
(b) No It is an unfair method
of competition and an unfair and deceptive act or practice for an
insurer or agent shall , as defined in
Section 1622, to use or permit the use of any verbal statement
that is untrue, misleading, or deceptive or make any representations
about coverage offered by the insurer or its cost that does not
conform to fact. All verbal statements are to be held to the same
standards as those for printed matter provided in subdivision (a).
(c) A violation of this section shall constitute an unfair
business practice.
SEC. 11. SEC. 9. Section 1748.1 is
added to the Insurance Code, to read:
1748.1. A person licensed pursuant to Section 1622 whose license
is revoked or suspended pursuant to the grounds set forth in Article
6 (commencing with Section 1666) of Chapter 5 of Part 2 of Division
1, or an insurer whose certificate of authority is revoked or
suspended, shall be prohibited from doing any of the following:
(a) Becoming a navigator as determined by the California Health
Benefit Exchange pursuant to subdivision (l) of Section 100502 of the
Government Code in accordance with subdivision (i) of Section 1311
of the federal Patient Protection and Affordable Care Act (Public Law
111-148), as amended by the federal Health Care and Education
Reconciliation Act of 2010 (Public Law 111-152).
(b) Engaging in solicitation, as defined in Section 1345 of the
Health and Safety Code, or being approved by the Department of
Managed Health Care to become a solicitor or solicitor firm.
(c) Being approved for licensure by the Department of Managed
Health Care, as set forth in Section 1351 of the Health and Safety
Code.
(d) Becoming a designated individual or organization authorized to
receive a fee under Section 12693.32.
SEC. 12. SEC. 10. Section 10112.26
is added to the Insurance Code, to read:
10112.26. (a) (1) On and after January 1, 2014, a health insurer,
as defined in subdivision (b) of Section 106, shall not offer,
issue, sell, or renew for any individual or any small group a policy
of health insurance that does not, at a minimum, cover essential
health benefits, as defined by the state pursuant to regulations,
rules, or guidance, adopted pursuant to the federal Patient
Protection and Affordable Care Act (Public Law 111-148), as amended
by the federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), unless the individual insured has proof of
enrollment in coverage that constitutes minimum essential coverage,
as defined in Section 5000A(f) of the Internal Revenue Code and any
rules or regulations issued thereunder.
(2) On and after January 1, 2014, a specialized health insurer and
an insurer offering policies or certificates of specified disease or
hospital confinement indemnity insurance shall not offer, issue,
sell, or renew for any small group a policy of health insurance that
does not, at a minimum, cover essential health benefits, as defined
by the state pursuant to regulations, rules, or guidance, adopted
pursuant to the federal Patient Protection and Affordable Care Act
(Public Law 111-148), as amended by the federal Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152), unless the
group provides proof of enrollment in coverage that constitutes
minimum essential coverage, as defined in Section 5000A(f) of the
Internal Revenue Code and any rules or regulations issued thereunder.
(3) On and after January 1, 2014, a specialized health insurer and
an insurer offering policies or certificates of specified disease or
hospital confinement indemnity insurance shall not offer, issue,
sell, or renew for any individual a policy of health insurance that
does not, at a minimum, cover essential health benefits, as defined
by the state pursuant to regulations, rules, or guidance, adopted
pursuant to the federal Patient Protection and Affordable Care Act
(Public Law 111-148), as amended by the federal Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152), unless the
individual insured has proof of enrollment in coverage that
constitutes minimum essential coverage, as defined in Section 5000A
(f) of the Internal Revenue Code and any rules or regulations issued
thereunder.
(4) For products offered through the California Health Benefit
Exchange, the Exchange may provide proof of coverage of essential
health benefits for an individual or small group.
(b) On and after January 1, 2014, a health insurer, including a
specialized health insurer, that offers, issues, or sells a policy of
health insurance that provides coverage that does not constitute
minimum essential coverage, as defined in Section 5000A(f) of the
Internal Revenue Code and any rules or regulations issued thereunder,
shall include in all solicitations, marketing materials, and the
evidence of coverage a clear and easily identified disclosure that
the policy does not meet the requirements of federal law with respect
to minimum essential coverage and may expose an individual covered
under the policy to significant federal tax penalties unless the
individual also obtains coverage that provides minimum essential
coverage as required by federal law.
SEC. 13. SEC. 11. Section 10127.14
is added to the Insurance Code, to read:
10127.14. The commissioner shall adopt rules to implement Section
2715 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-15). In so doing, the commissioner shall minimize duplication
with disclosure requirements under California law.
SEC. 14. SEC. 12. Section 10127.45
is added to the Insurance Code, to read:
10127.45. (a) Except as provided in subdivision (b), no insurer
offering policies of health insurance, as defined in subdivision (b)
of Section 106, or categories of coverage described in subdivision
(a) of Section 10604, shall publish or distribute, or allow to be
published or distributed on its behalf, any advertisement until both
of the following occur:
(1) A true copy thereof has first been filed with the
commissioner, at least 60 days prior to any such use beginning
January 1, 2013, to December 31, 2019, inclusive, or any shorter
period as the commissioner by rule or order may allow. Between
January 1, 2013, and December 31, 2019, inclusive, the commissioner
may, at his or her discretion, extend the period of review by up to
60 days. Commencing January 1, 2020, this copy shall be filed at
least 30 days prior to any such use, or any shorter period, as the
commissioner by rule or order may allow.
(2) The commissioner by notice has not found the advertisement,
wholly or in part, to be untrue, misleading, deceptive, or otherwise
not in compliance with this code or the rules thereunder, and
specified the deficiencies, within the period specified in paragraph
(1), or any shorter time as the commissioner by rule or order may
allow.
(b) Except as provided in subdivision (c), an insurer or agent
that has been continuously licensed under this code for the preceding
18 months may publish or distribute, or allow to be published or
distributed on its behalf, an advertisement without having filed the
advertisement for the commissioner's prior approval, if the insurer
or agent and the material comply with each of the following
conditions:
(1) The advertisement or a material provision thereof has not been
previously disapproved by the commissioner by written notice to the
insurer or agent and the insurer or agent reasonably believes that
the advertisement does not violate any requirement of this code or
the rules thereunder.
(2) The insurer or agent files a true copy of each new or
materially revised advertisement, used by it or by any person acting
on behalf of the insurer or agent, with the commissioner not later
than 10 business days after publication or distribution of the
advertisement or within such additional period as the commissioner
may allow by rule or order.
(c) If the commissioner finds that any advertisement of an insurer
or agent has materially failed to comply with this code or the rules
thereunder, the commissioner shall, by order, require the insurer or
agent to publish in the same or similar medium, an approved
correction or retraction of any untrue, misleading, or deceptive
statement contained in the advertising, and shall prohibit the
insurer or agent from publishing or distributing, or allowing to be
published or distributed on its behalf the advertisement or any new
materially revised advertisement without first having filed a copy
thereof with the commissioner 30 days prior to the publication or
distribution thereof, or any shorter period specified in the order.
An order issued under this subdivision shall be effective for 12
months from its issuance, and may be renewed by order if the
advertisements submitted under this subdivision indicate difficulties
of voluntary compliance with the applicable provisions of this code
and the rules thereunder.
(d) An insurer or agent or other person regulated under this code
may, within 30 days after receipt of any notice or order under this
section, file a written request for a hearing with the commissioner.
(e) The commissioner may classify certain types of insurance and
advertisements and exempt certain classes, wholly or in part, either
unconditionally or upon specified terms and conditions or for
specified periods, from the application of subdivisions (a) and (b),
except for the following:
(1) Advertisements or marketing materials that include
claims endorsements or ratings about quality of
care.
(2) Advertisement or marketing materials about new health care
products.
(3) Enrollment-related materials, including, but not limited to,
disclosure forms, contract documents, and enrollment forms.
(4) Any products described in subdivision (a) of Section 10112.26.
(4)
(5) Any other materials as provided by regulation.
(f) Two copies of a proposed advertisement, marketing document, or
educational material shall be filed. To minimize the expense of
changes in advertising copy, the advertisement may be submitted in
draft form for preliminary review subject to the later filing of a
proof or final copy, and the later filing of a proof or final copy
may be waived when the draft copy is presented in a manner reasonably
representing the final appearance of the advertisement. The text of
audio-visual advertising shall indicate any directions for
presentation, including voice qualities and the juxtaposition of the
visual materials with the text. The commissioner shall allow insurers
and agents to file these materials electronically.
(g) The commissioner shall not issue letters of nondisapproval of
advertising. If the person submitting the advertisement requests an
order shortening the 30-day or 90-day waiting period specified in
paragraph (1) of subdivision (a), that order shall be issued when an
appropriate showing of the need therefor is made.
SEC. 15. SEC. 13. Section 10133.10
is added to the Insurance Code, to read:
10133.10. (a) An insurer that markets, advertises, or produces
educational materials for health insurance policies in a language
other than English, which language does not meet the minimum insured
thresholds established under Sections 10133.8 and 10133.9 or the
regulations adopted thereunder, shall translate into that language
the documents listed in clauses (i), (iii), and (v) of subparagraph
(B) of paragraph (3) of subdivision (b) of Section 10133.8 and in
paragraphs (6) and (7) of subdivision (k) of Section 2538.2 of Title
10 of the California Code of Regulations.
(b) Once the insured population of the non-English-language
population meets a threshold listed in subparagraph (A) of paragraph
(3) of subdivision (b) of Section 10133.8, the insurer shall
translate all vital documents as required under Sections 10133.8 and
10133.9 and the regulations adopted thereunder.
(b) A health insurer shall disclose to the commissioner each of
the languages in which the insurer does any of the following:
(1) Markets, advertises, or produces educational materials for
health insurance policies.
(2) Furnishes, provides, or distributes to life licensee agents,
licensed under Section 1622, marketing, advertising, or educational
materials.
(c) If an agent advertises or markets health insurance policies in
a language other than English, the insurer for which that individual
is an agent shall meet the requirements of Sections 10133.8 and
10133.9 and, if applicable, Section 10133.10, and any rules or
regulations promulgated thereunder. An
(d) An agent licensed to sell
health insurance policies pursuant to Section 1622 shall
annually disclose to the commissioner
insurer or insurers for which the agent markets, sells,
advertises, or negotiates health insurance policies each of the
languages in which he or she the agent
markets, sells, advertises, or negotiates health insurance policies.
SEC. 16. SEC. 14. 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.