Amended in Assembly April 1, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 526


Introduced by Assembly Member Melendez

(Coauthors: Assembly Members Bigelow, Beth Gaines,begin insert Garcia, Gray,end insert Grove,begin insert Hagman,end insert Harkey, Maienschein, Morrell,begin insert Wagner,end insert and Wilk)

(begin deleteCoauthor: Senator end deletebegin insertCoauthors: Senators Nielsen and end insertKnight)

February 20, 2013


An act to amendbegin delete Section 1386 of the Health and Safety Code, and to add Sections 830 and 831 toend deletebegin insert Sections 800, 803, and 811 of, and to repeal Section 809 of,end insert the Military and Veterans Code, relating to military service.

LEGISLATIVE COUNSEL’S DIGEST

AB 526, as amended, Melendez. Military service: benefits.

begin delete

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.

end delete
begin delete

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.

end delete
begin delete

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.

end delete
begin insert

Existing law authorizes, to the extent permitted by federal law, members of the United States Military Reserve and National Guard who are called to active duty as a result of the Iraq or Afghanistan conflicts, to defer payments on mortgages, credit cards, retail installment accounts and contracts, real property taxes and assessments, and vehicle leases for the period of active duty, plus 60 calendar days, or 180 days, whichever is the lesser, as specified. Existing law also requires any entity that was providing any type of health care coverage to a member of the United States Military Reserve or National Guard who is called to active duty as a result of the Iraq or Afghanistan conflicts to reinstate the health care coverage without waiting periods or exclusion of coverage for preexisting conditions, and makes 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. Existing law also provides that a spouse or legal dependent, or both, of a member is entitled to the benefits accorded to a member, if the member is eligible for those benefits.

end insert
begin insert

This bill would extend those deferral provisions and reinstatement of health care coverage provisions to a reservist, as defined, who is called to active duty on and after January 1, 2014, and to a spouse or legal dependent, as specified. This bill would also authorize the deferral of payments on any obligations owed to a utility company. This bill would also require a copy of the activation or deployment orders and any other information that substantiates the duration of the service member’s military service to be delivered to an obligor in order for an obligation of a reservist to be deferred, as provided.

end insert

This bill would expand the scope of an existing crime by requiring abegin delete service memberend deletebegin insert reservistend insert to provide information under the penalty of perjury,begin insert and by making violations of the reinstatement of health care coverage for reservists requirement subject to enforcement under the Knox-Keene Health Care Service Plan Act of 1975,end insert 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:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 800 of the end insertbegin insertMilitary and Veterans Codeend insertbegin insert is
2amended to read:end insert

3

800.  

(a) begin insert(1)end insertbegin insertend insert Subject to subdivision (b), in addition to any
4other benefits provided by law and to the extent permitted by
5federal law, any member of the United States Military Reserve or
6the National Guard of this state who is called to active duty after
7the enactment of this chapterbegin insert and before January 1, 2014,end insert as a part
8of the Iraq and Afghanistan conflicts may defer payments on any
9of the following obligations while serving on active duty:

begin delete

10(1)

end delete

11begin insert(A)end insert An obligation secured by a mortgage or deed of trust.

begin delete

12(2)

end delete

13begin insert(B)end insert Credit card as defined in Section 1747.02 of the Civil Code.

begin delete

14(3)

end delete

15begin insert(C)end insert Retail installment contract as defined in Section 1802.6 of
16the Civil Code.

begin delete

17(4)

end delete

18begin insert(D)end insert Retail installment account, installment account, or revolving
19account as defined in Section 1802.7 of the Civil Code.

begin delete

20(5)

end delete

P4    1begin insert(E)end insert Up to two vehicle loans. For purposes of this chapter,
2“vehicle” means a vehicle as defined in Section 670 of the Vehicle
3Code.

begin delete

4(6)

end delete

5begin insert(F)end insert Any payment of property tax or any special assessment of
6in-lieu property tax imposed on real propertybegin delete whichend deletebegin insert thatend insert is assessed
7on residential property owned by the reservist and used as that
8reservist’s primary place of residence on the date the reservist was
9ordered to active duty.

begin insert

10(2) Subject to subdivision (b), in addition to any other benefits
11provided by law and to the extent permitted by federal law, a
12reservist who is called to active duty on and after January 1, 2014,
13may defer payments on any of the following obligations while
14serving on active duty:

end insert
begin insert

15(A) An obligation secured by a mortgage or deed of trust.

end insert
begin insert

16(B) Credit card as defined in Section 1747.02 of the Civil Code.

end insert
begin insert

17(C) Retail installment contract as defined in Section 1802.6 of
18the Civil Code.

end insert
begin insert

19(D) Retail installment account, installment account, or revolving
20account as defined in Section 1802.7 of the Civil Code.

end insert
begin insert

21(E) Up to two vehicle loans. For purposes of this chapter,
22“vehicle” means a vehicle as defined in Section 670 of the Vehicle
23Code.

end insert
begin insert

24(F) Any payment of property tax or any special assessment of
25in-lieu property tax imposed on real property that is assessed on
26residential property owned by the reservist and used as that
27reservist’s primary place of residence on the date the reservist
28was ordered to active duty.

end insert
begin insert

29(G) Any obligation owed to a utility company.

end insert

30(b) begin insert(1)end insertbegin insertend insert In order for an obligation or liability of a reservist to
31be subject to the provisions of this chapter, the reservist or the
32reservist’s designee shall deliver to thebegin delete lenderend deletebegin insert obligor both of the
33followingend insert
:

begin delete

34(1)

end delete

35begin insert(A)end insert A letter signed by the reservist, under penalty of perjury,
36requesting a deferment of financial obligations.

begin insert

37(B) A copy of the reservist’s activation or deployment order and
38any other information that substantiates the duration of the service
39member’s military service.

end insert

P5    1(2) If required by a financial institution, proof that the reservist’s
2employer does not provide continuing income to the reservist while
3the reservist is on active military duty, including the reservist’s
4military pay, of more than 90 percent of the reservist’s monthly
5salary and wage income earned before the call to active duty.

6(c) Upon request of the reservist or the reservist’s dependent or
7designee and within five working days of that request, if applicable,
8the employer of a reservist shall furnish the letter or other
9comparable evidence showing that the employer’s compensation
10policy does not provide continuing income to the reservist,
11including the reservist’s military pay, of more than 90 percent of
12the reservist’s monthly salary and wage income earned before the
13call to active duty.

14(d) The deferral period on financial obligations shall be the
15lesser of 180 days or the period of active duty plus 60 calendar
16days and shall apply only to those payments due subsequent to the
17notice provided to a lender as provided in subdivision (b).

18(e) If a lender defers payments on a closed end credit obligation
19or an open-end credit obligation with a maturity date, pursuant to
20this chapter, the lender shall extend the term of the obligation by
21the amount of months the obligation was deferred.

22(f) If a lender defers payments on an open-end credit obligation
23pursuant to this chapter, the lender may restrict the availability of
24additional credit with respect to that obligation during the term of
25the deferral.

26begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 803 of the end insertbegin insertMilitary and Veterans Codeend insertbegin insert is
27amended to read:end insert

28

803.  

begin deleteFor end deletebegin insert(a)end insertbegin insertend insertbegin insertBefore January 1, 2014, for end insertpurposes of this
29chapter, “reservist” means a member of the United States Military
30Reserve or National Guard of this state called to active duty as a
31result of the Iraq conflict pursuant to the Authorization for Use of
32Military Force Against Iraq Resolution of 2002 (Public Law
33107-243) or the Afghanistan conflict pursuant to Presidential Order
34No. 13239.

begin insert

35(b) On and after January 1, 2014, for purposes of this chapter:

end insert
begin insert

36(1) “Reservist” means either of the following:

end insert
begin insert

37(A) A member of the militia, as defined in Section 120, called
38or ordered into state military service pursuant to Section 143 or
39Section 146, or in federal or state military service pursuant to Title
4010 or Title 32 of the United States Code.

end insert
begin insert

P6    1(B) A reservist of the United States Military Reserve who has
2been ordered to full-time federal active duty by the President of
3the United States pursuant to Title 10 of the United States Code.

end insert
begin insert

4(2) “Military service” means either of the following:

end insert
begin insert

5(A) Full-time active state service or full-time active federal
6service of a service member who is a member of the militia, as
7described in subparagraph (A) of paragraph (1).

end insert
begin insert

8(B) Full-time active duty of a service member who is a reservist,
9as described in subparagraph (B) of paragraph (1), for a period
10of 30 consecutive days.

end insert
11begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 809 of the end insertbegin insertMilitary and Veterans Codeend insertbegin insert is
12repealed.end insert

begin delete
13

809.  

This chapter shall not apply to any active duty voluntarily
14served after the close of the Iraq or Afghanistan conflicts or to any
15reservist on active duty as part of the Iraq or Afghanistan conflicts
16prior to the effective date of this measure.

end delete
17begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 811 of the end insertbegin insertMilitary and Veterans Codeend insertbegin insert is
18amended to read:end insert

19

811.  

(a) The spouse or legal dependent, or both, of abegin delete member
20of the United States Military Reserve or National Guard of this
21stateend delete
begin insert reservistend insert who is called to active duty, shall be entitled to the
22benefits accorded to abegin delete memberend deletebegin insert reservistend insert under this chapter,
23provided that thebegin delete memberend deletebegin insert reservistend insert is eligible for the benefits.

24(b) This chapter applies only to an obligation specified in this
25chapter that was incurred prior to the date that a begin delete member of the
26United States Military Reserve or National Guard of this stateend delete

27begin insert reservistend insert was called to active dutybegin delete as part of the Iraq and
28Afghanistan conflictsend delete
.

begin delete
29

SECTION 1.  

Section 1386 of the Health and Safety Code is
30amended to read:

31

1386.  

(a) The director may, after appropriate notice and
32opportunity for a hearing, by order suspend or revoke any license
33issued under this chapter to a health care service plan or assess
34administrative penalties if the director determines that the licensee
35has committed any of the acts or omissions constituting grounds
36for disciplinary action.

37(b) The following acts or omissions constitute grounds for
38disciplinary action by the director:

39(1) The plan is operating at variance with the basic
40organizational documents as filed pursuant to Section 1351 or
P7    11352, or with its published plan, or in any manner contrary to that
2described in, and reasonably inferred from, the plan as contained
3in its application for licensure and annual report, or any
4modification thereof, unless amendments allowing the variation
5have been submitted to, and approved by, the director.

6(2) The plan has issued, or permits others to use, evidence of
7coverage or uses a schedule of charges for health care services that
8do not comply with those published in the latest evidence of
9coverage found unobjectionable by the director.

10(3) The plan does not provide basic health care services to its
11enrollees and subscribers as set forth in the evidence of coverage.
12This subdivision shall not apply to specialized health care service
13plan contracts.

14(4) The plan is no longer able to meet the standards set forth in
15Article 5 (commencing with Section 1367).

16(5) The continued operation of the plan will constitute a
17substantial risk to its subscribers and enrollees.

18(6) The plan has violated or attempted to violate, or conspired
19to violate, directly or indirectly, or assisted in or abetted a violation
20or conspiracy to violate any provision of this chapter, any rule or
21regulation adopted by the director pursuant to this chapter, or any
22order issued by the director pursuant to this chapter.

23(7) The plan has engaged in any conduct that constitutes fraud
24or dishonest dealing or unfair competition, as defined by Section
2517200 of the Business and Professions Code.

26(8) The plan has permitted, or aided or abetted any violation by
27an employee or contractor who is a holder of any certificate,
28license, permit, registration, or exemption issued pursuant to the
29Business and Professions Code or this code that would constitute
30grounds for discipline against the certificate, license, permit,
31registration, or exemption.

32(9) The plan has aided or abetted or permitted the commission
33of any illegal act.

34(10) The engagement of a person as an officer, director,
35employee, associate, or provider of the plan contrary to the
36provisions of an order issued by the director pursuant to subdivision
37(c) of this section or subdivision (d) of Section 1388.

38(11) The engagement of a person as a solicitor or supervisor of
39solicitation contrary to the provisions of an order issued by the
40director pursuant to Section 1388.

P8    1(12) The plan, its management company, or any other affiliate
2of the plan, or any controlling person, officer, director, or other
3person occupying a principal management or supervisory position
4in the plan, management company, or affiliate, has been convicted
5of or pleaded nolo contendere to a crime, or committed any act
6involving dishonesty, fraud, or deceit, which crime or act is
7substantially related to the qualifications, functions, or duties of a
8person engaged in business in accordance with this chapter. The
9director may revoke or deny a license hereunder irrespective of a
10subsequent order under the provisions of Section 1203.4 of the
11Penal Code.

12(13) The plan violates Section 510, 2056, or 2056.1 of the
13Business and Professions Code or Section 1375.7.

14(14) The plan has been subject to a final disciplinary action
15taken by this state, another state, an agency of the federal
16government, or another country for any act or omission that would
17constitute a violation of this chapter.

18(15) The plan violates the Confidentiality of Medical
19Information Act (Part 2.6 (commencing with Section 56) of
20Division 1 of the Civil Code).

21(16) The plan violates Section 806 or 831 of the Military and
22Veterans Code.

23(17) The plan violates Section 1262.8.

24(c) (1) The director may prohibit any person from serving as
25an officer, director, employee, associate, or provider of any plan
26or solicitor firm, or of any management company of any plan, or
27as a solicitor, if either of the following applies:

28(A) The prohibition is in the public interest and the person has
29 committed, caused, participated in, or had knowledge of a violation
30of this chapter by a plan, management company, or solicitor firm.

31(B) The person was an officer, director, employee, associate,
32or provider of a plan or of a management company or solicitor
33firm of any plan whose license has been suspended or revoked
34pursuant to this section and the person had knowledge of, or
35participated in, any of the prohibited acts for which the license
36was suspended or revoked.

37(2) A proceeding for the issuance of an order under this
38subdivision may be included with a proceeding against a plan
39under this section or may constitute a separate proceeding, subject
40in either case to subdivision (d).

P9    1(d) A proceeding under this section shall be subject to
2appropriate notice to, and the opportunity for a hearing with regard
3to, the person affected in accordance with subdivision (a) of Section
41397.

5

SEC. 2.  

Section 830 is added to the Military and Veterans
6Code
, to read:

7

830.  

(a) Subject to subdivision (b), in addition to any other
8benefits provided by law and to the extent permitted by federal
9law, any service member who is on military service may defer
10payments during the period specified in subdivision (d) on any of
11the following obligations:

12(1) An obligation secured by a mortgage or deed of trust.

13(2) A credit card as defined in Section 1747.02 of the Civil
14Code.

15(3) A retail installment contract as defined in Section 1802.6 of
16the Civil Code.

17(4) A retail installment account, installment account, or
18revolving account as defined in Section 1802.7 of the Civil Code.

19(5) Up to two vehicle loans.

20(6) Any payment of property tax or any special assessment of
21in-lieu property tax imposed on real property that is assessed on
22residential property owned by the service member and used as that
23service member’s primary place of residence on the date the service
24member was ordered to military service.

25(7) Any obligation owed to a utility company.

26(b) In order for an obligation or liability of a service member
27to be subject to this section, the service member or the service
28member’s designee shall deliver to the lender:

29(1) A letter signed by the service member, under penalty of
30perjury, requesting a deferment of financial obligations.

31(2) If required by a financial institution, proof that the service
32member’s employer does not provide continuing income to the
33service member while the service member is on military service,
34including the service member’s military pay, of more than 90
35percent of the service member’s monthly salary and wage income
36earned before the call to military service.

37(c) Upon request of the service member or the service members’s
38dependent or designee and within five working days of that request,
39if applicable, the employer of a service member shall furnish the
40letter or other comparable evidence showing that the employer’s
P10   1compensation policy does not provide continuing income to the
2service member, including the service member’s military pay, of
3more than 90 percent of the service member’s monthly salary and
4wage income earned before the call to military service.

5(d) The deferral period on financial obligations shall be both of
6the following:

7(1) Ninety days prior to the date the service member was ordered
8to military service.

9(2) The lesser of 180 days or the period of military service plus
1060 calendar days and shall apply only to those payments due
11subsequent to the notice provided to a lender as provided in
12subdivision (b).

13(e) If a lender defers payments on a closed-end credit obligation
14or an open-end credit obligation with a maturity date pursuant to
15this section, the lender shall extend the term of the obligation by
16the number of months the obligation was deferred.

17(f) If a lender defers payments on an open-end credit obligation
18pursuant to this section, the lender may restrict the availability of
19additional credit with respect to that obligation during the term of
20the deferral.

21(g) (1) Notwithstanding subdivisions (e) and (f), any mortgage
22payments delayed pursuant to this section are due and payable
23upon the earlier of the following:

24(A) The sale of the property or other event specified in the
25documents creating the obligation permitting the lender to
26accelerate the loan, other than a deferral of payments authorized
27by this section.

28(B) Further encumbrance of the property.

29(C) The maturity of the obligation as defined under the terms
30of the documents creating the obligation or, if applicable, as
31extended pursuant to subdivision (e).

32(2) Nothing in this subdivision relieves a service member with
33a mortgage subject to an impound account for the payment of
34property taxes, special assessments, mortgage insurance, and hazard
35insurance from making monthly payments of an amount that is at
36least sufficient to pay these amounts, unless the borrower and
37lender agree to a lesser amount.

38(3) Nothing in this section shall preclude a service member from
39making payments toward the mortgage payments deferred prior
40to the occurrence of any of the events in subdivision (a).

P11   1(h) During the period specified in subdivision (d), the service
2member may defer the payment of principal and interest on the
3specified obligations. No penalties shall be imposed on the
4nonpayment of principal or interest during this period. No interest
5shall be charged or accumulated on the principal or interest on
6which the payment was delayed. No foreclosure or repossession
7of property on which payment has been deferred shall take place
8during this period.

9(i) Subject to subdivisions (e) and (f), a stay, postponement, or
10suspension under this section of the payment of any tax, fine,
11penalty, insurance premium, or other civil obligation or liability
12of a service member who is on military service shall not provide
13the basis for affecting credit ratings, denial or revocation of credit,
14or a change by the lender in the terms of an existing credit
15arrangement.

16(j) (1) The holder of a loan or retail installment sales contract
17with respect to which the debtor has purchased prepaid credit
18disability insurance shall give notice to the debtor not less than 30
19days before the expiration date of the insurance that the debtor
20will not be protected during the period between that expiration
21date and the deferred maturity date of the loan or contract unless
22the insurance is extended. The debtor may, at his or her option,
23direct the holder to add the amount of the additional premium to
24the unpaid balance of the loan or contract.

25(2)  The holder of an open-ended loan or retail installment
26account with respect to which the debtor has purchased credit
27disability insurance with premiums payable monthly together with
28the installment payments on the loan or the account shall give
29notice to the debtor that the debtor will not be protected by the
30insurance during the period specified in subdivision (d) unless the
31debtor elects to continue payment of premiums during that period.
32The debtor may, at his or her option, direct the holder to add the
33amount of those premiums to the unpaid balance of the account.

34(k) During the period specified in subdivision (d), the service
35member may defer payments for leased vehicles without breach
36of the lease or the foreclosure or repossession of the vehicle. If a
37lender defers payments pursuant to this subdivision, the lender
38shall extend the term of the lease by the number of months the
39lease was deferred.

P12   1(l) In those instances where a financial obligation covered by
2this section is sold, any requirement to defer payments as specified
3in this section transfers to the purchaser of the obligation.

4(m) For purposes of this section, both of the following
5definitions shall apply:

6(1) “Mortgage” means an obligation secured by a mortgage or
7deed of trust, and is limited to an obligation secured by a mortgage
8or deed of trust for residential property owned by the service
9member and used as that service member’s primary place of
10residence on the date the service member was ordered to military
11service.

12(2) “Vehicle” means a vehicle as defined in Section 670 of the
13Vehicle Code.

14

SEC. 3.  

Section 831 is added to the Military and Veterans
15Code
, to read:

16

831.  

(a) Any entity that was providing any type of health care
17coverage, including, but not limited to, health care service plans,
18specialized health care service plans, and health insurance to a
19service member at the time the service member was ordered to
20military service, shall reinstate the health care coverage without
21waiting periods or exclusion of coverage for preexisting conditions.

22(b) Pursuant to Section 1386 of the Health and Safety Code, the
23Director of the Department of Managed Health Care has the
24authority to enforce this section concerning any person or entity
25subject to regulation under Chapter 2.2 (commencing with Section
261340) of Division 2 of the Health and Safety Code, and may impose
27any applicable penalties provided for under that chapter.

28(c) Pursuant to subdivision (a) of Section 12921 of the Insurance
29Code, the Insurance Commissioner has the authority to enforce
30this section concerning any person or entity subject to regulation
31under the Insurance Code, and may impose any applicable penalties
32provided for under the Insurance Code.

33(d) The enforcement and penalty provisions of the act that added
34this subdivision shall apply only to service members ordered to
35military service on or after January 1, 2014.

end delete
36

begin deleteSEC. 4.end delete
37begin insertSEC. 5.end insert  

No reimbursement is required by this act pursuant to
38Section 6 of Article XIII B of the California Constitution for certain
39costs that may be incurred by a local agency or school district
40because, in that regard, this act creates a new crime or infraction,
P13   1eliminates a crime or infraction, or changes the penalty for a crime
2or infraction, within the meaning of Section 17556 of the
3Government Code, or changes the definition of a crime within the
4meaning of Section 6 of Article XIII B of the California
5Constitution.

6However, if the Commission on State Mandates determines that
7this act contains other costs mandated by the state, reimbursement
8to local agencies and school districts for those costs shall be made
9pursuant to Part 7 (commencing with Section 17500) of Division
104 of Title 2 of the Government Code.



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