BILL NUMBER: ABX1 4 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Wilk
(Coauthor: Assembly Member Conway)
MAY 16, 2013
An act to amend Sections 1389.1, 1389.2, 1389.4, 1389.5, and
1389.8 of, to add Section 1366.30 to, and to add Chapter 9
(commencing with Section 127670) to Part 2 of Division 107 of, the
Health and Safety Code, and to amend Sections 10113.95, 10119.1,
10119.3, 10270.98, 10273.4, 10273.6, and 10291.5 of, to add Section
10128.60 to, and to repeal Section 10270.99 of, the Insurance Code,
relating to health care.
LEGISLATIVE COUNSEL'S DIGEST
AB 4, as introduced, Wilk. Health care.
(1) Existing law provides for the regulation of health insurers by
the Insurance Commissioner. Existing law prohibits group health
insurance policies and individual health insurance policies from
canceling or refusing to renew plans and policies, except under
specified circumstances, including, but not limited to, nonpayment of
the required premiums if the appropriate party has been notified and
given at least a 30-day grace period or other period of time as
required by the federal Public Health Service Act. The health insurer
is required to continue to provide coverage during the grace period.
This bill would require that individuals receiving coverage
through the California Health Benefit Exchange and who are receiving
a tax credit pursuant to the federal Patient Protection and
Affordable Care Act (PPACA) would be subject to the required grace
period and provisions of coverage during the grace period, if any, as
provided by PPACA.
(2) Existing law authorizes group health insurance policies to
provide, among other things, that the benefits payable are subject to
reduction if the insured has any other coverage, other than
individual policies or contracts, providing hospital, surgical, or
medical benefits, resulting in the insured being eligible for more
than 100% of the covered expenses. Except as permitted and except in
the case of group practice prepayment plan contracts that do not
provide for coordination of benefits, to the extent they provide for
a reduction of benefits on account of other coverage with respect to
emergency services that are not obtained from providers that contract
with the plan, a group or individual health insurance policy or
service contract issued by nonprofit hospital service plans,
operating as provided, is not allowed to limit payment of benefits by
reason of the existence of other insurance or service coverage.
This bill would delete the provisions prohibiting a group or
individual health insurance policy or service contract issued by
nonprofit hospital service plans, operating as provided, from
limiting payment of benefits by reason of the existence of other
insurance or service coverage. The bill would add individual health
insurance policies to those policies authorized to reduce benefits
where the insured has other coverage providing hospital, surgical, or
medical benefits, resulting in the insured being eligible for more
than 100% of the covered expenses. The bill would also make
conforming changes.
(3) Existing law, the California Continuation Benefits Replacement
Act (Cal-COBRA), provides for a continuation of health care coverage
without evidence of insurability for up to 36 months after the date
a qualified beneficiary's benefits would end due to a qualifying
event, including the exhaustion of benefits under federal COBRA.
Existing law also provides for certain underwriting practices
regarding health care service plans and health insurance policies,
including, but not limited to, an agent, broker, solicitor, solicitor
firm, or representative who assists an applicant in submitting an
application to a health care service plan or health insurer being
required to attest in writing to the completeness and accuracy of the
application to the best of his or her knowledge and that he or she
explained to the applicant and was understood regarding the risk of
providing inaccurate information.
This bill would make Cal-COBRA and certain underwriting
requirements inoperative on January 1, 2014, and, if certain
provisions of the federal Patient Protection and Affordable Care Act
are repealed or amended, those provisions would become operative as
of the date of the repeal or amendment.
(4) The federal Patient Protection and Affordable Care Act
(PPACA) enacts various health care coverage market reforms that take
effect January 1, 2014. Among other things, PPACA authorizes the
federal Secretary of Health and Human Services to award states with
demonstration grants to develop and test alternatives to current tort
litigation for resolving disputes over injuries allegedly caused by
health care providers and organizations. States interested in
receiving a grant are required to develop an alternative to current
tort litigation and submit an application to the secretary.
This bill would require the Secretary of California Health and
Human Services to submit an application on behalf of the state to the
federal Department of Health and Human Services to receive a grant
for state demonstration programs to evaluate alternatives to current
medical tort litigation, as authorized by PPACA. The bill would
require the secretary to write the application to design a program to
create health courts based upon a no-fault process to improve the
injury resolution of liability. The bill would specify what items a
patient would need to prove under the health court demonstration
program.
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 1366.30 is added to the Health and Safety Code,
immediately following Section 1366.29, to read:
1366.30. (a) This article shall become inoperative on January 1,
2014.
(b) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this article
shall become operative as of the date of the repeal or amendment.
(c) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 2. Section 1389.1 of the Health and Safety Code is amended to
read:
1389.1. (a) The director shall not approve any plan contract
unless the director finds that the application conforms to both of
the following requirements:
(1) All applications for coverage which
that include health-related questions shall contain clear and
unambiguous questions designed to ascertain the health condition or
history of the applicant.
(2) The application questions related to an applicant's health
shall be based on medical information that is reasonable and
necessary for medical underwriting purposes. The application shall
include a prominently displayed notice that shall read:
"California law prohibits an HIV test from being required or used
by health care service plans as a condition of obtaining coverage."
(b) Nothing in this section shall authorize the director to
establish or require a single or standard application form for
application questions.
(c) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(d) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 3. Section 1389.2 of the Health and Safety Code is amended to
read:
1389.2. (a) At the request of the director,
a health care service plan shall provide a written statement of the
actuarial basis for any medical underwriting decision on any
application form, or contract issued or delivered to, or denied a
resident of this state.
(b) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(c) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 4. Section 1389.4 of the Health and Safety Code is amended to
read:
1389.4. (a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.
(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting
criteria comply with Sections 1365.5 and 1389.1 and all other
applicable provisions of state and federal law.
(c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan solicitors
or solicitor firms, provided that those materials include the
information required to be submitted by this section.
(d) Commencing January 1, 2011, the director shall post on the
department's Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific information
about rating and underwriting criteria and practices in the
individual market and information about the California Major Risk
Medical Insurance Program (Part 6.5 (commencing with Section 12700)
of Division 2 of the Insurance Code) and the federal temporary high
risk pool established pursuant to Part 6.6 (commencing with Section
12739.5) of Division 2 of the Insurance Code. The director shall
develop the information for the Internet Web site in consultation
with the Department of Insurance to enhance the consistency of
information provided to consumers. Information about individual
health coverage shall also include the following notification:
"Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
(e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.
(f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.
(g) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(h) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 5. Section 1389.5 of the Health and Safety Code is amended to
read:
1389.5. (a) This section shall apply to a health care service
plan that provides coverage under an individual plan contract that is
issued, amended, delivered, or renewed on or after January 1, 2007.
(b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.
"Without medical underwriting" means that the health care service
plan shall not decline to offer coverage to, or deny enrollment of,
the individual or impose any preexisting condition exclusion on the
individual who transfers to another individual plan contract pursuant
to this section.
(c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make the
ranking available upon request. The plan shall update the ranking
whenever a new benefit design for individual purchasers is approved.
(d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this
section, at a minimum, when the plan changes the enrollee's premium
rate. Posting this information on the plan's Internet Web site shall
not constitute notice for purposes of this subdivision. The notice
shall adequately inform enrollees of the transfer rights provided
under this section, including information on the process to obtain
details about the individual plan contracts available to that
enrollee and advising that the enrollee may be unable to return to
his or her current individual plan contract if the enrollee transfers
to another individual plan contract.
(e) The requirements of this section shall not apply to the
following:
(1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an individual
health benefit plan contract offered pursuant to Section 1366.35.
(2) An individual offered conversion coverage pursuant to Section
1373.6.
(3) Individual coverage under a specialized health care service
plan contract.
(4) An individual enrolled in the Medi-Cal program pursuant to
Chapter 7 (commencing with Section 14000) of Division 9 of Part 3 of
the Welfare and Institutions Code.
(5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code.
(6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division 2 of
the Insurance Code.
(f) It is the intent of the Legislature that individuals shall
have more choice in their health coverage when health care service
plans guarantee the right of an individual to transfer to another
product based on the plan's own ranking system. The Legislature does
not intend for the department to review or verify the plan's ranking
for actuarial or other purposes.
(g) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(h) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 6. Section 1389.8 of the Health and Safety Code is amended to
read:
1389.8. (a) Notwithstanding any other provision of law, an agent,
broker, solicitor, solicitor firm, or representative who assists an
applicant in submitting an application to a health care service plan
has the duty to assist the applicant in providing answers to health
questions accurately and completely.
(b) An agent, broker, solicitor, solicitor firm, or representative
who assists an applicant in submitting an application to a health
care service plan shall attest on the written application to both of
the following:
(1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
(2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
(c) If, in an attestation required by subdivision (b), a declarant
willfully states as true any material fact he or she knows to be
false, that person shall, in addition to any applicable penalties or
remedies available under current law, be subject to a civil penalty
of up to ten thousand dollars ($10,000). Any public prosecutor may
bring a civil action to impose that civil penalty. These penalties
shall be paid to the Managed Care Fund.
(d) A health care service plan application shall include a
statement advising declarants of the civil penalty authorized under
this section.
(e) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(f) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 7. Chapter 9 (commencing with Section 127670) is added to
Part 2 of Division 107 of the Health and Safety Code, to read:
CHAPTER 9. HEALTH COURT DEMONSTRATION PROGRAM
127670. The Secretary of California Health and Human Services
shall submit an application on behalf of the state to the United
States Department of Health and Human Services to receive a grant for
the State Demonstration Programs to Evaluate Alternatives to Current
Medical Tort Litigation, as authorized by Section 10607 of the
federal Patient Protection and Affordable Care Act (PPACA).
127672. (a) The secretary shall write the application described
in Section 127670 to design a program to create health courts based
upon a no-fault process to improve the resolution of liability for
medical injury.
(b) In accordance with PPACA, the application shall demonstrate
how the proposed alternative does all of the following:
(1) Makes the medical liability system more reliable by increasing
the availability of prompt and fair resolution of disputes.
(2) Encourages the efficient resolution of disputes.
(3) Encourages the disclosure of health care errors.
(4) Enhances patient safety by detecting, analyzing, and helping
to reduce medical errors and adverse events.
(5) Improves access to liability insurance.
(6) Fully informs patients about the differences in the
alternative and current tort litigation.
(7) Provides patients the ability to opt out of or voluntarily
withdraw from participating in the alternative at any time and to
pursue other options, including litigation, outside the alternative.
(8) Does not conflict with state law at the time of the
application in a way that prohibits the adoption of the alternative
to current tort litigation.
(9) Does not limit or curtail a patient's existing legal rights,
ability to file a claim in or access the legal system, or otherwise
abrogate a patient's ability to file a medical malpractice claim.
(10) Does not conflict with the Medical Injury Compensation Reform
Act (MICRA), including, but not limited to, Section 6146 of the
Business and Professions Code, Sections 3333.1 and 3333.2 of the
Civil Code, and Section 667.7 of the Code of Civil Procedure.
(11) Does not require any party to participate in the program.
127674. (a) Under the health court demonstration program, a
patient shall be required to prove only the following:
(1) He or she suffered an injury.
(2) The injury was caused by medical care.
(3) The injury meets specified severity criteria.
(b) A patient shall not be required to show a third party acted in
a negligent fashion.
SEC. 8. Section 10113.95 of the Insurance Code is amended to read:
10113.95. (a) A health insurer that issues, renews, or amends
individual health insurance policies shall be subject to this
section.
(b) An insurer subject to this section shall have written
policies, procedures, or underwriting guidelines establishing the
criteria and process whereby the insurer makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall ensure that the plan rating and underwriting
criteria comply with Sections 10140 and 10291.5 and all other
applicable provisions.
(c) On or before June 1, 2006, and annually thereafter, every
insurer shall file with the commissioner a general description of the
criteria, policies, procedures, or guidelines that the insurer uses
for rating and underwriting decisions related to individual health
insurance policies, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the health insurance products for which individuals
applying for coverage would be eligible. An insurer may comply with
this section by submitting to the department underwriting materials
or resource guides provided to agents and brokers, provided that
those materials include the information required to be submitted by
this section.
(d) Commencing January 1, 2011, the commissioner shall post on the
department's Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific information
about rating and underwriting criteria and practices in the
individual market and information about the California Major Risk
Medical Insurance Program (Part 6.5 (commencing with Section 12700))
and the federal temporary high risk pool established pursuant to Part
6.6 (commencing with Section 12739.5). The commissioner shall
develop the information for the Internet Web site in consultation
with the Department of Managed Health Care to enhance the consistency
of information provided to consumers. Information about individual
health insurance shall also include the following notification:
"Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
(e) Nothing in this section shall authorize public disclosure of
company-specific rating and underwriting criteria and practices
submitted to the commissioner.
(f) This section shall not apply to a closed block of business, as
defined in Section 10176.10.
(g) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(h) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 9. Section 10119.1 of the Insurance Code is amended to read:
10119.1. (a) This section shall apply to a health insurer that
covers hospital, medical, or surgical expenses under an individual
health benefit plan, as defined in subdivision (a) of Section
10198.6, that is issued, amended, renewed, or delivered on or after
January 1, 2007.
(b) At least once each year, a health insurer shall permit an
individual who has been covered for at least 18 months under an
individual health benefit plan to transfer, without medical
underwriting, to any other individual health benefit plan offered by
that same health insurer that provides equal or lesser benefits as
determined by the insurer.
"Without medical underwriting" means that the health insurer shall
not decline to offer coverage to, or deny enrollment of, the
individual or impose any preexisting condition exclusion on the
individual who transfers to another individual health benefit plan
pursuant to this section.
(c) The insurer shall establish, for the purposes of subdivision
(b), a ranking of the individual health benefit plans it offers to
individual purchasers and post the ranking on its Internet Web site
or make the ranking available upon request. The insurer shall update
the ranking whenever a new benefit design for individual purchasers
is approved.
(d) The insurer shall notify in writing all insureds of the right
to transfer to another individual health benefit plan pursuant to
this section, at a minimum, when the insurer changes the insured's
premium rate. Posting this information on the insurer's Internet Web
site shall not constitute notice for purposes of this subdivision.
The notice shall adequately inform insureds of the transfer rights
provided under this section including information on the process to
obtain details about the individual health benefit plans available to
that insured and advising that the insured may be unable to return
to his or her current individual health benefit plan if the insured
transfers to another individual health benefit plan.
(e) The requirements of this section shall not apply to the
following:
(1) A federally eligible defined individual, as defined in
subdivision (e) of Section 10900, who purchases individual coverage
pursuant to Section 10785.
(2) An individual offered conversion coverage pursuant to Sections
12672 and 12682.1.
(3) An individual enrolled in the Medi-Cal program pursuant to
Chapter 7 (commencing with Section 14000) of Part 3 of Division 9 of
the Welfare and Institutions Code.
(4) An individual enrolled in the Access for Infants and Mothers
Program, pursuant to Part 6.3 (commencing with Section 12695).
(5) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693).
(f) It is the intent of the Legislature that individuals shall
have more choice in their health care coverage when health insurers
guarantee the right of an individual to transfer to another product
based on the insurer's own ranking system. The Legislature does not
intend for the department to review or verify the insurer's ranking
for actuarial or other purposes.
(g) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(h) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 10. Section 10119.3 of the Insurance Code is amended to read:
10119.3. (a) Notwithstanding any other provision of law, an agent
or broker who assists an applicant in submitting an application to a
health insurer has the duty to assist the applicant in providing
answers to health questions accurately and completely.
(b) An agent or broker who assists an applicant in submitting an
application to a health insurer shall attest on the written
application to both of the following:
(1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
(2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
(c) If, in an attestation required by subdivision (b), a declarant
willfully states as true any material fact he or she knows to be
false, that person shall, in addition to any applicable penalties or
remedies available under current law, be subject to a civil penalty
of up to ten thousand dollars ($10,000). Any public prosecutor may
bring a civil action to impose that civil penalty. These penalties
shall be paid to the Insurance Fund.
(d) A health insurance application shall include a statement
advising declarants of the civil penalty authorized under this
section.
(e) (1) This section shall become inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative as of the date of the repeal or amendment.
(f) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 11. Section 10128.60 is added to the Insurance Code,
immediately following Section 10128.59, to read:
10128.60. (a) This article shall become inoperative on
January 1, 2014.
(b) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), this article
shall become operative as of the date of the repeal or amendment.
(c) For the purposes of this section, "PPACA" means 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), and any rules, regulations, or guidance
issued pursuant to that law.
SEC. 12. Section 10270.98 of the Insurance Code is amended to
read:
10270.98. Group and individual disability policies may
provide, among other things, that the benefits payable thereunder
are subject to reduction if the individual insured has any other
coverage (other than individual policies or contracts)
providing hospital, surgical , or medical
benefits, whether on an indemnity basis or a provision of service
basis, resulting in such the insured
being eligible for more than 100 percent of the covered expenses.
Except as permitted by this section and by Section 10323, 10369.5,
10369.6, or 11515.5, and except in the case of group practice
prepayment plan contracts which do not provide for coordination of
benefits, to the extent they provide for a reduction of benefits on
account of other coverage with respect to emergency services that are
not obtained from providers that contract with the plan, no group or
individual disability insurance policy or service contract issued by
nonprofit hospital service plans operating under Chapter 11A
(commencing with Section 11491) of Part 2 of Division 2 shall limit
payment of benefits by reason of the existence of other insurance or
service coverage.
The policy provisions authorized by this section shall contain a
provision that payments of funds may be made directly between
insurers and other providers of benefits. Such
Those policy provisions shall also contain a provision
that if benefits are provided in the form of services rather than
cash payments the reasonable cash value of each service rendered
shall be deemed to be both an allowable expense and a benefit paid.
The reasonable cash value of any contractual benefit provided to the
insured in the form of service rather than cash payment by or through
any hospital service organization or medical service organization or
group-practice prepayment plan shall be deemed an expense incurred
by the insured for such that service,
whether or not actually incurred, and the liability of the insurer
shall be the same as if the insured had not been entitled to
any such that service benefit, unless
the policy contains a provision authorized by Section 10323, 10369.5
or 10369.6 in the case of an individual disability policy, or by this
section, in the case of a group disability policy
benefit .
This section shall not be construed to require that benefits
payable under group and individual disability policies be
subject to reduction by the benefit amounts payable under Chapter 3
(commencing with Section 2800) of Part 2 of Division 1 of the
Unemployment Insurance Code.
The provisions of this section, and all regulations adopted
pursuant thereto pertaining to coordination of benefits with other
group and individual disability benefits, shall apply to
all employers, labor-management trustee plans, union welfare plans
(including those established in conformity with 29 U.S.C. Sec. 186),
employer organization plans or plans,
employee benefit organization plans, or health care
service plan contracts, pursuant to regulations adopted by the
Director of the Department of Managed Health Care which
that shall be uniform with those issued under
this section for those plans that elect to coordinate benefits, group
practice, individual practice, any other prepayment coverage for
medical or dental care or treatment, and administrators, within the
meaning of Section 1759 not otherwise subject to the provisions of
this section whenever such that plan,
contract , or practice provides or administers hospital,
surgical, medical , or dental benefits to employees or
agents who are also covered under one or more additional group
disability policies which that are
subject to this section or health care service plans.
SEC. 13. Section 10270.99 of the Insurance Code is repealed.
10270.99. The term "individual policies or contracts," as used in
the first paragraph of Section 10270.98, does not include selected
group disability policies or contracts, unless those policies or
contracts are noncancelable or guaranteed renewable and solely
provide hospital confinement indemnity or specified disease coverage.
SEC. 14. Section 10273.4 of the Insurance Code is amended to read:
10273.4. All disability insurers writing, issuing, or
administering group health benefit plans shall make all of these
health benefit plans renewable with respect to the policyholder,
contractholder, or employer except in case of the following:
(a) (1) Nonpayment of the required premiums by the policyholder,
contractholder, or employer if the policyholder, contractholder, or
employer has been duly notified and billed for the premium and at
least a 30-day grace period has elapsed since the date of
notification or, if longer, the period of time required for notice
and any other requirements pursuant to Section 2703, 2712, or 2742 of
the federal Public Health Service Act (42 U.S.C. Secs. 300gg-2,
300gg-12, and 300gg-42) and any subsequent rules or regulations has
elapsed.
(2) Pursuant to paragraph (1), the disability insurer shall
continue to provide coverage as required by the policyholder's,
certificate holder's, or other insured's policy during the period
described in paragraph (1).
(3) Notwithstanding paragraphs (1) and (2), the required grace
period and provisions of coverage during a grace period, if any, for
individuals receiving coverage through the Exchange, and who are
receiving a tax credit pursuant to PPACA, shall be subject to and
shall be governed by the requirements of PPACA, and any related rules
and regulations.
(b) The insurer demonstrates fraud or an intentional
misrepresentation of material fact under the terms of the policy by
the policyholder, contractholder, or employer.
(c) Violation of a material contract provision relating to
employer or other group contribution or group participation rates by
the contractholder or employer.
(d) The insurer ceases to provide or arrange for the provision of
health care services for new group health benefit plans in this
state, provided that the following conditions are satisfied:
(1) Notice of the decision to cease writing, issuing, or
administering new or existing group health benefit plans in this
state is provided to the commissioner and to either the policyholder,
contractholder, or employer at least 180 days prior to
discontinuation of that coverage.
(2) Group health benefit plans shall not be canceled for 180 days
after the date of the notice required under paragraph (1) and for
that business of a plan that remains in force, any disability insurer
that ceases to write, issue, or administer new group health benefit
plans shall continue to be governed by this section with respect to
business conducted under this section.
(3) Except as provided under subdivision (h) of Section 10705, or
unless the commissioner had made a determination pursuant to Section
10712, a disability insurer that ceases to write, issue, or
administer new group health benefit plans in this state after the
effective date of this section shall be prohibited from writing,
issuing, or administering new group health benefit plans to employers
in this state for a period of five years from the date of notice to
the commissioner.
(e) The disability insurer withdraws a group health benefit plan
from the market; provided, that the plan notifies all affected
contractholders, policyholders, or employers and the commissioner at
least 90 days prior to the discontinuation of the health benefit
plans, and that the insurer makes available to the contractholder,
policyholder, or employer all health benefit plans that it makes
available to new employer business without regard to the claims
experience of health-related factors of insureds or individuals who
may become eligible for the coverage.
(f) If the coverage is offered through a network plan, there is no
longer any covered individual in connection with the plan who lives,
resides, or works in the service area of the disability insurer.
(g) If coverage is made available in the individual market through
a bona fide association, the membership of the individual in the
association on the basis of which the coverage is provided, ceases,
but only if that coverage is terminated under this subdivision
uniformly without regard to any health status-related factor of
covered individuals.
(h) For the purposes of this section, "health benefit plan" shall
have the same meaning as in subdivision (a) of Section 10198.6 and
Section 10198.61.
(i) For the purposes of this section, "eligible employee" shall
have the same meaning as in Section 10700, except that it applies to
all health benefit plans issued to employer groups of two or more
employees.
(j) For the purposes of this section, the following definitions
shall apply:
(1) "PPACA" means 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), and
any rules, regulations, or guidance issued pursuant to that law.
(2) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
SEC. 15. Section 10273.6 of the Insurance Code is amended to read:
10273.6. All individual health benefit plans, except for
short-term limited duration insurance, shall be renewable with
respect to all eligible individuals or dependents at the option of
the individual except as follows:
(a) (1) For nonpayment of the required premiums by the individual
if the individual has been duly notified and billed for the premium
and at least a 30-day grace period has elapsed since the date of
notification or, if longer, the period of time required for notice
and any other requirements pursuant to Section 2703, 2712, or 2742 of
the federal Public Health Service Act (42 U.S.C. Secs. 300gg-2,
300gg-12, and 300gg-42) and any subsequent rules or regulations has
elapsed.
(2) Pursuant to paragraph (1), the disability insurer shall
continue to provide coverage as required by the policyholder's,
certificate holder's, or other insured's policy during the period
described in paragraph (1).
(3) Notwithstanding paragraphs (1) and (2), the required grace
period and provisions of coverage during a grace period, if any, for
individuals receiving coverage through the Exchange, and who are
receiving a tax credit pursuant to PPACA, shall be subject to and
shall be governed by the requirements of PPACA, and any related rules
and regulations.
(b) The insurer demonstrates fraud or intentional
misrepresentation of material fact under the terms of the policy by
the individual.
(c) Movement of the individual contractholder outside the service
area but only if coverage is terminated uniformly without regard to
any health status-related factor of covered individuals.
(d) If the disability insurer ceases to provide or arrange for the
provision of health care services for new individual health benefit
plans in this state; provided, however, that the following conditions
are satisfied:
(1) Notice of the decision to cease new or existing individual
health benefit plans in this state is provided to the commissioner
and to the individual policy or contractholder at least 180 days
prior to discontinuation of that coverage.
(2) Individual health benefit plans shall not be canceled for 180
days after the date of the notice required under paragraph (1) and
for that business of a disability insurer that remains in force, any
disability insurer that ceases to offer for sale new individual
health benefit plans shall continue to be governed by this section
with respect to business conducted under this section.
(3) A disability insurer that ceases to write new individual
health benefit plans in this state after the effective date of this
section shall be prohibited from offering for sale individual health
benefit plans in this state for a period of five years from the date
of notice to the commissioner.
(e) If the disability insurer withdraws an individual health
benefit plan from the market; provided, that the disability insurer
notifies all affected individuals and the commissioner at least 90
days prior to the discontinuation of these plans, and that the
disability insurer makes available to the individual all health
benefit plans that it makes available to new individual businesses
without regard to a health status-related factor of enrolled
individuals or individuals who may become eligible for the coverage.
(f) If coverage is made available in the individual market through
a bona fide association, the membership of the individual in the
association on the basis of which the coverage is provided, ceases,
but only if that coverage is terminated under this subdivision
uniformly without regard to any health status-related factor of
covered individuals.
(g) For the purposes of this section, the following definitions
shall apply:
(1) "PPACA" means 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), and
any rules, regulations, or guidance issued pursuant to that law.
(2) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
SEC. 16. Section 10291.5 of the Insurance Code is amended to read:
10291.5. (a) The purpose of this section is to achieve both of
the following:
(1) Prevent, in respect to disability insurance, fraud, unfair
trade practices, and insurance economically unsound to the insured.
(2) Assure that the language of all insurance policies can be
readily understood and interpreted.
(b) The commissioner shall not approve any disability policy for
insurance or delivery in this state in any of the following
circumstances:
(1) If the commissioner finds that it contains any provision, or
has any label, description of its contents, title, heading, backing,
or other indication of its provisions which
that is unintelligible, uncertain, ambiguous, or abstruse, or
likely to mislead a person to whom the policy is offered, delivered
or issued.
(2) If it contains any provision for payment at a rate, or in an
amount (other than the product of rate times the periods for which
payments are promised) for loss caused by particular event or events
(as distinguished from character of physical injury or illness of the
insured) more than triple the lowest rate, or amount, promised in
the policy for the same loss caused by any other event or events
(loss caused by sickness, loss caused by accident, and different
degrees of disability each being considered, for the purpose of this
paragraph, a different loss); or if it contains any provision for
payment for any confining loss of time at a rate more than six times
the least rate payable for any partial loss of time or more than
twice the least rate payable for any nonconfining total loss of time;
or if it contains any provision for payment for any nonconfining
total loss of time at a rate more than three times the least rate
payable for any partial loss of time.
(3) If it contains any provision for payment for disability caused
by particular event or events (as distinguished from character of
physical injury or illness of the insured) payable for a term more
than twice the least term of payment provided by the policy for the
same degree of disability caused by any other event or events; or if
it contains any benefit for total nonconfining disability payable for
lifetime or for more than 12 months and any benefit for partial
disability, unless the benefit for partial disability is payable for
at least three months; or if it contains any benefit for total
confining disability payable for lifetime or for more than 12 months,
unless it also contains benefit for total nonconfining disability
caused by the same event or events payable for at least three months,
and, if it also contains any benefit for partial disability, unless
the benefit for partial disability is payable for at least three
months. The provisions of this paragraph shall apply separately to
accident benefits and to sickness benefits.
(4) If it contains a provision or provisions
which that would have the effect, upon any
termination of the policy, of reducing or ending the liability as the
insurer would have, but for the termination, for loss of time
resulting from accident occurring while the policy is in force or for
loss of time commencing while the policy is in force and resulting
from sickness contracted while the policy is in force or for other
losses resulting from accident occurring or sickness contracted while
the policy is in force, and also contains provision or provisions
reserving to the insurer the right to cancel or refuse to renew the
policy, unless it also contains other provision or provisions the
effect of which is that termination of the policy as the result of
the exercise by the insurer of any such that
right shall not reduce or end the liability in respect to the
hereinafter specified losses as the insurer would have had under the
policy, including its other limitations, conditions, reductions, and
restrictions, had the policy not been so terminated.
The specified losses referred to in the preceding paragraph are:
(i) Loss of time which that
commences while the policy is in force and results from sickness
contracted while the policy is in force.
(ii) Loss of time which that
commences within 20 days following and results from accident
occurring while the policy is in force.
(iii) Losses which that result from
accident occurring or sickness contracted while the policy is in
force and arise out of the care or treatment of illness or injury and
which that occur within 90 days from
the termination of the policy or during a period of continuous
compensable loss or losses which that
period commences prior to the end of such
that 90 days.
(iv) Losses other than those specified in clause (i), (ii), or
(iii) of this paragraph which that
result from accident occurring or sickness contracted while the
policy is in force and which that
losses occur within 90 days following the accident or the contraction
of the sickness.
(5) If by any caption, label, title, or description of contents
the policy states, implies, or infers without reasonable
qualification that it provides loss of time indemnity for lifetime,
or for any period of more than two years, if the loss of time
indemnity is made payable only when house confined or only under
special contingencies not applicable to other total loss of time
indemnity.
(6) If it contains any benefit for total confining disability
payable only upon condition that the confinement be of an abnormally
restricted nature unless the caption of the part containing
any such that benefit is accurately descriptive
of the nature of the confinement required and unless, if the policy
has a description of contents, label, or title, at least one of them
contain reference to the nature of the confinement required.
(7) (A) If, irrespective of the premium charged therefor, any
benefit of the policy is, or the benefits of the policy as a whole
are, not sufficient to be of real economic value to the insured.
(B) In determining whether benefits are of real economic value to
the insured, the commissioner shall not differentiate between
insureds of the same or similar economic or occupational classes and
shall give due consideration to all of the following:
(i) The right of insurers to exercise sound underwriting judgment
in the selection and amounts of risks.
(ii) Amount of benefit, length of time of benefit, nature or
extent of benefit, or any combination of those factors.
(iii) The relative value in purchasing power of the benefit or
benefits.
(iv) Differences in insurance issued on an industrial or other
special basis.
(C) To be of real economic value, it shall not be necessary that
any benefit or benefits cover the full amount of any loss
which that might be suffered by reason of the
occurrence of any hazard or event insured against.
(8) If it substitutes a specified indemnity upon the occurrence of
accidental death for any benefit of the policy, other than a
specified indemnity for dismemberment, which would accrue prior to
the time of that death or if it contains any provision which
that has the effect, other than at the election
of the insured exercisable within not less than 20 days in the case
of benefits specifically limited to the loss by removal of one or
more fingers or one or more toes or within not less than 90 days in
all other cases, of doing any of the following:
(A) Of substituting, upon the occurrence of the loss of both
hands, both feet, one hand and one foot, the sight of both eyes or
the sight of one eye and the loss of one hand or one foot, some
specified indemnity for any or all benefits under the policy unless
the indemnity so specified is equal to or greater than the total of
the benefit or benefits for which such the
specified indemnity is substituted and which,
that, assuming in all cases that the insured
would continue to live, could possibly accrue within four years from
the date of such the dismemberment
under all other provisions of the policy applicable to the particular
event or events (as distinguished from character of physical injury
or illness) causing the dismemberment.
(B) Of substituting, upon the occurrence of any other
dismemberment some specified indemnity for any or all benefits under
the policy unless the indemnity so specified is equal to or greater
than one-fourth of the total of the benefit or benefits for which the
specified indemnity is substituted and which,
that assuming in all cases that the insured would continue
to live, could possibly accrue within four years from the date of
the dismemberment under all other provisions of the policy applicable
to the particular event or events (as distinguished from character
of physical injury or illness) causing the dismemberment.
(C) Of substituting a specified indemnity upon the occurrence of
any dismemberment for any benefit of the policy which
that would accrue prior to the time of
dismemberment.
As used in this section, loss of a hand shall be severance at or
above the wrist joint, loss of a foot shall be severance at or above
the ankle joint, loss of an eye shall be the irrecoverable loss of
the entire sight thereof, loss of a finger shall mean at least one
entire phalanx thereof and loss of a toe the entire toe.
(9) If it contains provision, other than as provided in Section
10369.3, reducing any original benefit more than 50 percent on
account of age of the insured.
(10) If the insuring clause or clauses contain no reference to the
exceptions, limitations, and reductions (if any) or no specific
reference to, or brief statement of, each abnormally restrictive
exception, limitation, or reduction.
(11) If it contains benefit or benefits for loss or losses from
specified diseases only unless:
(A) All of the diseases so specified in each provision granting
the benefits fall within some general classification based upon the
following:
(i) The part or system of the human body principally subject to
all such those diseases.
(ii) The similarity in nature or cause of such
those diseases.
(iii) In case of diseases of an unusually serious nature and
protracted course of treatment, the common characteristics of all
such those diseases with respect to
severity of affliction and cost of treatment.
(B) The policy is entitled and each provision granting the
benefits is separately captioned in clearly understandable words so
as to accurately describe the classification of diseases covered and
expressly point out, when that is the case, that not all diseases of
the classification are covered.
(12) If it does not contain provision for a grace period of at
least the number of days specified below for the payment of each
premium falling due after the first premium, during which grace
period the policy shall continue in force provided, that the grace
period to be included in the policy shall be not less than seven days
for policies providing for weekly payment of premium, not less than
10 days for policies providing for monthly payment of premium and not
less than 31 days for all other policies.
(13) If it fails to conform in any respect with any law of this
state.
(c) The commissioner shall not approve any disability policy
covering hospital, medical, or surgical expenses unless the
commissioner finds that the application conforms to both of the
following requirements:
(1) All applications for disability insurance covering hospital,
medical, or surgical expenses, except that which is guaranteed issue,
which that include questions relating
to medical conditions, shall contain clear and unambiguous questions
designed to ascertain the health condition or history of the
applicant.
(2) The application questions designed to ascertain the health
condition or history of the applicant shall be based on medical
information that is reasonable and necessary for medical underwriting
purposes. The application shall include a prominently displayed
notice that states:
"California law prohibits an HIV test from being required or used
by health insurance companies as a condition of obtaining health
insurance coverage."
(d) Nothing in this section authorizes the commissioner to
establish or require a single or standard application form for
application questions.
(e) The commissioner may, from time to time as conditions warrant,
after notice and hearing, promulgate such
reasonable rules and regulations, and amendments and additions
thereto, as are necessary or convenient, to establish, in advance of
the submission of policies, the standard or standards conforming to
subdivision (b), by which he or she shall disapprove or withdraw
approval of any disability policy.
In promulgating any such a rule or
regulation regulation, the commissioner
shall give consideration to the criteria herein established and to
the desirability of approving for use in policies in this state
uniform provisions, nationwide or otherwise, and is hereby granted
the authority to consult with insurance authorities of any other
state and their representatives individually or by way of convention
or committee, to seek agreement upon those provisions.
Any such
That rule or regulation shall be promulgated in
accordance with the procedure provided in Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code.
(f) The commissioner may withdraw approval of filing of any policy
or other document or matter required to be approved by the
commissioner, or filed with him or her, by this chapter when the
commissioner would be authorized to disapprove or refuse filing of
the same if originally submitted at the time of the action of
withdrawal.
Any such
That withdrawal shall be in writing and shall specify
reasons. An insurer adversely affected by any such
that withdrawal may, within a period of 30 days following
mailing or delivery of the writing containing the withdrawal, by
written request secure a hearing to determine whether the withdrawal
should be annulled, modified, or confirmed. Unless, at any time, it
is mutually agreed to the contrary, a hearing shall be granted and
commenced within 30 days following filing of the request and shall
proceed with reasonable dispatch to determination. Unless the
commissioner in writing in the withdrawal, or subsequent thereto,
grants an extension, any such that
withdrawal shall, in the absence of any such
that request, be effective, prospectively and not
retroactively, on the 91st day following the mailing or delivery of
the withdrawal, and, if request for the hearing is filed, on the 91st
day following mailing or delivery of written notice of the
commissioner's determination.
(g) No proceeding under this section is subject to Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code.
(h) Except as provided in subdivision (k), any action taken by the
commissioner under this section is subject to review by the courts
of this state and proceedings on review shall be in accordance with
the Code of Civil Procedure.
Notwithstanding any other provision of law to the contrary,
petition for any such that review may
be filed at any time before the effective date of the action taken by
the commissioner. No action of the commissioner shall become
effective before the expiration of 20 days after written notice and a
copy thereof are mailed or delivered to the person adversely
affected, and any action so submitted for review shall not become
effective for a further period of 15 days after the filing of the
petition in court. The court may stay the effectiveness thereof for a
longer period.
(i) This section shall be liberally construed to effectuate the
purpose and intentions herein stated; but shall not be construed to
grant the commissioner power to fix or regulate rates for disability
insurance or prescribe a standard form of disability policy, except
that the commissioner shall prescribe a standard supplementary
disclosure form for presentation with all disability insurance
policies, pursuant to Section 10603.
(j) This section shall be effective on and after July 1, 1950, as
to all policies thereafter submitted and on and after January 1,
1951, the commissioner may withdraw approval pursuant to subdivision
(d) of any policy thereafter issued or delivered in this state
irrespective of when its form may have been submitted or approved,
and prior to those dates the provisions of law in effect on January
1, 1949, shall apply to those policies.
(k) Any such A policy issued by an
insurer to an insured on a form approved by the commissioner, and in
accordance with the conditions, if any, contained in the approval, at
a time when that approval is outstanding shall, as between the
insurer and the insured, or any person claiming under the policy, be
conclusively presumed to comply with, and conform to, this section.
(l) (1) Subdivisions (c) and (d) shall become inoperative on
January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-4), subdivisions (c)
and (d) shall become operative as of the date of the repeal or
amendment.
(3) For the purposes of this subdivision, "PPACA" means 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), and any rules,
regulations, or guidance issued pursuant to that law.