Amended in Assembly May 12, 2015

Amended in Assembly April 21, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1163

Introduced by Assembly Member Rodriguez

February 27, 2015

An act to add Section 1399.3 to the Health and Safety Code, and to add Section 769.56 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 1163, as amended, Rodriguez. Health care services plan and health insurers: agents and brokers: notice of contract changes.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance.

This bill would prohibit a material begin delete change made by a health care service plan or a health insurer to the terms and conditions of a contract between the plan end delete begin insert change, as defined, made to the terms and conditions of a contract between a health care services plan end insert or begin insert health end insert insurer and an agent or broker begin insert , end insert from becoming effective until the plan or insurer has delivered to the agent or broker begin delete , end delete written or electronic notice of the change or changes to the contract, within a specified time period. These provisions would not apply if the material change is agreed to by the plan or insurer and the agent or broker, or if the change at issue is required pursuant to state or federal law.

This bill would exempt violations of the provisions relating to health care service plans from the from criminal offense and other disciplinary provisions of the Knox-Keene Health Care Service Plan Act of 1975.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1399.3 is added to the Health and Safety
Code, to read:

1399.3.  

(a) A material change made by a health care service
plan, as defined in subdivision (f) of Section 1345, to the terms
and conditions of a contract between the health care service plan
and an agent or broker shall not become effective until the health
care service plan has delivered to the agent or broker, at least 60
days prior to the effective date of the change, written or electronic
notice indicating the change or changes to the contract. For
purposes of this section, a “material change” is a change begin delete that causes
the contract not to reflect the terms the parties originally intended
to be the basis for their mutual contractual obligations. end delete begin insert made to a
provision of the contract affecting any of the following: end insert

begin insert

(1) Commissions, bonuses, and incentives paid to the agent or
broker.

end insert begin insert

(2) Right of survivorship.

end insert begin insert

(3) Indemnification of the agent or broker by the health care
service plan.

end insert begin insert

(4) Errors and omissions coverage requirements for the agent
or broker.

end insert

(b) Subdivision (a) shall not apply under either of the following
circumstances:

(1) The change to the contract is mutually agreed upon by the
health care service plan and the agent or broker.

(2) The change to the contract is required by state or federal
law.

(c) This section is not subject to Article 7 (commencing with
Section 1386) or Article 8 (commencing with Section 1390).

SEC. 2.  

Section 769.56 is added to the Insurance Code, to read:

769.56.  

(a) A material change made by a health insurer, as
defined in subdivision (b) of Section 106, to the terms and
conditions of a contract between the health insurer and an agent
or broker shall not become effective until the health insurer has
delivered to the agent or broker, at least 60 days prior to the
effective date of the change, written or electronic notice indicating
the change or changes to the contract. For purposes of this section,
a “material change” is a change begin delete that causes the contract not to
reflect the terms the parties originally intended to be the basis for
their mutual contractual obligations. end delete begin insert made to a provision of the
contract affecting any of the following: end insert

begin insert

(1) Commissions, bonuses, and incentives paid to the agent or
broker.

end insert begin insert

(2) Right of survivorship.

end insert begin insert

(3) Indemnification of the agent or broker by the health insurer.

end insert begin insert

(4) Errors and omissions coverage requirements for the agent
or broker.

end insert

(b) Subdivision (a) shall not apply under either of the following
circumstances:

(1) The change to the contract is mutually agreed upon by the
health insurer and the agent or broker.

(2) The change to the contract is required by state or federal
law.