BILL NUMBER: AB 526	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Melendez
   (Coauthors: Assembly Members Bigelow, Beth Gaines, Grove, Harkey,
Maienschein, Morrell, and Wilk)
   (Coauthor: Senator Knight)

                        FEBRUARY 20, 2013

   An act to amend Section 1386 of the Health and Safety Code, and to
add Sections 830 and 831 to the Military and Veterans Code, relating
to military service.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 526, as introduced, Melendez. Military service: benefits.
   Existing law provides certain protections for members of the
National Guard ordered into active state service by the Governor or
active federal service by the President of the United States for
emergency purposes, and for reservists called to active duty, as
specified.
   This bill would, in addition, provide protections for these
service members in connection with their military service with
respect to the deferral of specified obligations or liabilities,
including, among others, any payment of property tax or any special
assessment, as provided. This bill would require a service member or
the service member's designee to deliver to a lender a letter signed
under penalty of perjury requesting a deferment of financial
obligation. This bill would provide that a deferral of payments shall
not be a basis for affecting credit, as specified. This bill would
also prohibit penalties from being imposed, interest from being
charged and accumulated, and foreclosure or repossession of property
on which payment has been deferred, as provided.
    This bill would require any entity that was providing any type of
health care coverage to a service member, as provided, to reinstate
the health care coverage without waiting periods or exclusion of
coverage for preexisting conditions and would make a violation of
this requirement subject to enforcement under the Knox-Keene Health
Care Service Plan Act of 1975, a willful violation of which is a
crime. This bill would also make a related, conforming change.
   This bill would expand the scope of an existing crime by requiring
a service member to provide information under the penalty of
perjury, thereby imposing a state-mandated local program. This bill
would additionally impose a state-mandated local program by imposing
new duties upon local tax officials with respect to the deferral of
any payment of property tax or any special assessment.
   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 with regard to certain mandates no
reimbursement is required by this act for a specified reason.
   With regard to any other mandates, this bill would provide that,
if the Commission on State Mandates determines that the bill contains
costs so mandated by the state, reimbursement for those costs shall
be made pursuant to the statutory provisions noted above.
   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 1386 of the Health and Safety Code is amended
to read:
   1386.  (a) The director may, after appropriate notice and
opportunity for a hearing, by order suspend or revoke any license
issued under this chapter to a health care service plan or assess
administrative penalties if the director determines that the licensee
has committed any of the acts or omissions constituting grounds for
disciplinary action.
   (b) The following acts or omissions constitute grounds for
disciplinary action by the director:
   (1) The plan is operating at variance with the basic
organizational documents as filed pursuant to Section 1351 or 1352,
or with its published plan, or in any manner contrary to that
described in, and reasonably inferred from, the plan as contained in
its application for licensure and annual report, or any modification
thereof, unless amendments allowing the variation have been submitted
to, and approved by, the director.
   (2) The plan has issued, or permits others to use, evidence of
coverage or uses a schedule of charges for health care services that
do not comply with those published in the latest evidence of coverage
found unobjectionable by the director.
   (3) The plan does not provide basic health care services to its
enrollees and subscribers as set forth in the evidence of coverage.
This subdivision shall not apply to specialized health care service
plan contracts.
   (4) The plan is no longer able to meet the standards set forth in
Article 5 (commencing with Section 1367).
   (5) The continued operation of the plan will constitute a
substantial risk to its subscribers and enrollees.
   (6) The plan has violated or attempted to violate, or conspired to
violate, directly or indirectly, or assisted in or abetted a
violation or conspiracy to violate any provision of this chapter, any
rule or regulation adopted by the director pursuant to this chapter,
or any order issued by the director pursuant to this chapter.
   (7) The plan has engaged in any conduct that constitutes fraud or
dishonest dealing or unfair competition, as defined by Section 17200
of the Business and Professions Code.
   (8) The plan has permitted, or aided or abetted any violation by
an employee or contractor who is a holder of any certificate,
license, permit, registration, or exemption issued pursuant to the
Business and Professions Code or this code that would constitute
grounds for discipline against the certificate, license, permit,
registration, or exemption.
   (9) The plan has aided or abetted or permitted the commission of
any illegal act.
   (10) The engagement of a person as an officer, director, employee,
associate, or provider of the plan contrary to the provisions of an
order issued by the director pursuant to subdivision (c) of this
section or subdivision (d) of Section 1388.
   (11) The engagement of a person as a solicitor or supervisor of
solicitation contrary to the provisions of an order issued by the
director pursuant to Section 1388.
   (12) The plan, its management company, or any other affiliate of
the plan, or any controlling person, officer, director, or other
person occupying a principal management or supervisory position in
the plan, management company, or affiliate, has been convicted of or
pleaded nolo contendere to a crime, or committed any act involving
dishonesty, fraud, or deceit, which crime or act is substantially
related to the qualifications, functions, or duties of a person
engaged in business in accordance with this chapter. The director may
revoke or deny a license hereunder irrespective of a subsequent
order under the provisions of Section 1203.4 of the Penal Code.
   (13) The plan violates Section 510, 2056, or 2056.1 of the
Business and Professions Code or Section 1375.7.
   (14) The plan has been subject to a final disciplinary action
taken by this state, another state, an agency of the federal
government, or another country for any act or omission that would
constitute a violation of this chapter.
   (15) The plan violates the Confidentiality of Medical Information
Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil
Code).
   (16) The plan violates Section 806  or 831  of the
Military and Veterans Code.
   (17) The plan violates Section 1262.8.
   (c) (1) The director may prohibit any person from serving as an
officer, director, employee, associate, or provider of any plan or
solicitor firm, or of any management company of any plan, or as a
solicitor, if either of the following applies:
   (A) The prohibition is in the public interest and the person has
committed, caused, participated in, or had knowledge of a violation
of this chapter by a plan, management company, or solicitor firm.
   (B) The person was an officer, director, employee, associate, or
provider of a plan or of a management company or solicitor firm of
any plan whose license has been suspended or revoked pursuant to this
section and the person had knowledge of, or participated in, any of
the prohibited acts for which the license was suspended or revoked.
   (2) A proceeding for the issuance of an order under this
subdivision may be included with a proceeding against a plan under
this section or may constitute a separate proceeding, subject in
either case to subdivision (d).
   (d) A proceeding under this section shall be subject to
appropriate notice to, and the opportunity for a hearing with regard
to, the person affected in accordance with subdivision (a) of Section
1397.
  SEC. 2.  Section 830 is added to the Military and Veterans Code, to
read:
   830.  (a) Subject to subdivision (b), in addition to any other
benefits provided by law and to the extent permitted by federal law,
any service member who is on military service may defer payments
during the period specified in subdivision (d) on any of the
following obligations:
   (1) An obligation secured by a mortgage or deed of trust.
   (2) A credit card as defined in Section 1747.02 of the Civil Code.

   (3) A retail installment contract as defined in Section 1802.6 of
the Civil Code.
   (4) A retail installment account, installment account, or
revolving account as defined in Section 1802.7 of the Civil Code.
   (5) Up to two vehicle loans.
   (6) Any payment of property tax or any special assessment of
in-lieu property tax imposed on real property that is assessed on
residential property owned by the service member and used as that
service member's primary place of residence on the date the service
member was ordered to military service.
   (7) Any obligation owed to a utility company.
   (b) In order for an obligation or liability of a service member to
be subject to this section, the service member or the service member'
s designee shall deliver to the lender:
   (1) A letter signed by the service member, under penalty of
perjury, requesting a deferment of financial obligations.
   (2) If required by a financial institution, proof that the service
member's employer does not provide continuing income to the service
member while the service member is on military service, including the
service member's military pay, of more than 90 percent of the
service member's monthly salary and wage income earned before the
call to military service.
   (c) Upon request of the service member or the service members's
dependent or designee and within five working days of that request,
if applicable, the employer of a service member shall furnish the
letter or other comparable evidence showing that the employer's
compensation policy does not provide continuing income to the service
member, including the service member's military pay, of more than 90
percent of the service member's monthly salary and wage income
earned before the call to military service.
   (d) The deferral period on financial obligations shall be both of
the following:
   (1) Ninety days prior to the date the service member was ordered
to military service.
   (2) The lesser of 180 days or the period of military service plus
60 calendar days and shall apply only to those payments due
subsequent to the notice provided to a lender as provided in
subdivision (b).
   (e) If a lender defers payments on a closed-end credit obligation
or an open-end credit obligation with a maturity date pursuant to
this section, the lender shall extend the term of the obligation by
the number of months the obligation was deferred.
   (f) If a lender defers payments on an open-end credit obligation
pursuant to this section, the lender may restrict the availability of
additional credit with respect to that obligation during the term of
the deferral.
   (g) (1) Notwithstanding subdivisions (e) and (f), any mortgage
payments delayed pursuant to this section are due and payable upon
the earlier of the following:
   (A) The sale of the property or other event specified in the
documents creating the obligation permitting the lender to accelerate
the loan, other than a deferral of payments authorized by this
section.
   (B) Further encumbrance of the property.
   (C) The maturity of the obligation as defined under the terms of
the documents creating the obligation or, if applicable, as extended
pursuant to subdivision (e).
   (2) Nothing in this subdivision relieves a service member with a
mortgage subject to an impound account for the payment of property
taxes, special assessments, mortgage insurance, and hazard insurance
from making monthly payments of an amount that is at least sufficient
to pay these amounts, unless the borrower and lender agree to a
lesser amount.
   (3) Nothing in this section shall preclude a service member from
making payments toward the mortgage payments deferred prior to the
occurrence of any of the events in subdivision (a).
   (h) During the period specified in subdivision (d), the service
member may defer the payment of principal and interest on the
specified obligations. No penalties shall be imposed on the
nonpayment of principal or interest during this period. No interest
shall be charged or accumulated on the principal or interest on which
the payment was delayed. No foreclosure or repossession of property
on which payment has been deferred shall take place during this
period.
   (i) Subject to subdivisions (e) and (f), a stay, postponement, or
suspension under this section of the payment of any tax, fine,
penalty, insurance premium, or other civil obligation or liability of
a service member who is on military service shall not provide the
basis for affecting credit ratings, denial or revocation of credit,
or a change by the lender in the terms of an existing credit
arrangement.
   (j) (1) The holder of a loan or retail installment sales contract
with respect to which the debtor has purchased prepaid credit
disability insurance shall give notice to the debtor not less than 30
days before the expiration date of the insurance that the debtor
will not be protected during the period between that expiration date
and the deferred maturity date of the loan or contract unless the
insurance is extended. The debtor may, at his or her option, direct
the holder to add the amount of the additional premium to the unpaid
balance of the loan or contract.
   (2)  The holder of an open-ended loan or retail installment
account with respect to which the debtor has purchased credit
disability insurance with premiums payable monthly together with the
installment payments on the loan or the account shall give notice to
the debtor that the debtor will not be protected by the insurance
during the period specified in subdivision (d) unless the debtor
elects to continue payment of premiums during that period. The debtor
may, at his or her option, direct the holder to add the amount of
those premiums to the unpaid balance of the account.
   (k) During the period specified in subdivision (d), the service
member may defer payments for leased vehicles without breach of the
lease or the foreclosure or repossession of the vehicle. If a lender
defers payments pursuant to this subdivision, the lender shall extend
the term of the lease by the number of months the lease was
deferred.
   (l) In those instances where a financial obligation covered by
this section is sold, any requirement to defer payments as specified
in this section transfers to the purchaser of the obligation.
   (m) For purposes of this section, both of the following
definitions shall apply:
   (1) "Mortgage" means an obligation secured by a mortgage or deed
of trust, and is limited to an obligation secured by a mortgage or
deed of trust for residential property owned by the service member
and used as that service member's primary place of residence on the
date the service member was ordered to military service.
   (2) "Vehicle" means a vehicle as defined in Section 670 of the
Vehicle Code.
  SEC. 3.  Section 831 is added to the Military and Veterans Code, to
read:
   831.  (a) Any entity that was providing any type of health care
coverage, including, but not limited to, health care service plans,
specialized health care service plans, and health insurance to a
service member at the time the service member was ordered to military
service, shall reinstate the health care coverage without waiting
periods or exclusion of coverage for preexisting conditions.
   (b) Pursuant to Section 1386 of the Health and Safety Code, the
Director of the Department of Managed Health Care has the authority
to enforce this section concerning any person or entity subject to
regulation under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code, and may impose any
applicable penalties provided for under that chapter.
   (c) Pursuant to subdivision (a) of Section 12921 of the Insurance
Code, the Insurance Commissioner has the authority to enforce this
section concerning any person or entity subject to regulation under
the Insurance Code, and may impose any applicable penalties provided
for under the Insurance Code.
   (d) The enforcement and penalty provisions of the act that added
this subdivision shall apply only to service members ordered to
military service on or after January 1, 2014.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution for
certain costs that may be incurred by a local agency or school
district because, in that regard, 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.
   However, if the Commission on State Mandates determines that this
act contains other costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division 4 of
Title 2 of the Government Code.