Amended in Senate July 14, 2015

Amended in Assembly May 12, 2015

Amended in Assembly April 21, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 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 carebegin delete services planend deletebegin insert service plansend insert and health insurers:begin insert solicitors,end insert 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 change, as defined, made to the terms and conditions of a contract between a health carebegin delete servicesend deletebegin insert serviceend insert planbegin insert and a solicitor,end insert orbegin insert aend insert health insurer and an agent or broker, from becoming effective until the plan or insurer has delivered to thebegin delete agentend deletebegin insert solicitor, agent,end insert or broker 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 thebegin delete agentend deletebegin insert solicitor, agent,end insert or broker, or if the change at issue is required pursuant to state or federal law.

begin delete

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.

end delete
begin insert

This bill would impose a state-mandated local program by creating a new crime with respect to health care service plans.

end insert
begin insert

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.

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

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

P2    1

SECTION 1.  

Section 1399.3 is added to the Health and Safety
2Code
, to read:

3

1399.3.  

(a) A material change made by a health care service
4plan, as defined in subdivision (f) of Section 1345, to the terms
5and conditions of a contract between the health care service plan
6andbegin delete an agent or brokerend deletebegin insert a solicitorend insert shall not become effective until
7the health care service plan has delivered to thebegin delete agent or broker,end delete
8begin insert solicitor,end insert at leastbegin delete 60end deletebegin insert 45end insert days prior to the effective date of the
9change, written or electronic notice indicating the change or
10changes to the contract. For purposes of this section, a “material
11change” is a change made to a provision of the contract affecting
12any of the following:

13(1) Commissions, bonuses, and incentives paid to thebegin delete agent or
14broker.end delete
begin insert solicitor.end insert

15(2) Right of survivorship.

16(3) Indemnification of thebegin delete agent or brokerend deletebegin insert solicitorend insert by the health
17care service plan.

18(4) Errors and omissionsbegin insert inend insert coverage requirements for the begin delete agent
19or broker.end delete
begin insert solicitor.end insert

20(b) Subdivision (a) shall not apply under either of the following
21circumstances:

P3    1(1) The change to the contract is mutually agreed upon by the
2health care service plan and thebegin delete agent or broker.end deletebegin insert solicitor.end insert

3(2) The change to the contract is required by state or federal
4law.

begin delete

5(c) This section is not subject to Article 7 (commencing with
6Section 1386) or Article 8 (commencing with Section 1390).

end delete
7

SEC. 2.  

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

8

769.56.  

(a) A material change made by a health insurer, as
9defined in subdivision (b) of Section 106, to the terms and
10conditions of a contract between the health insurer and an agent
11or broker shall not become effective until the health insurer has
12delivered to the agent or broker, at leastbegin delete 60end deletebegin insert 45end insert days prior to the
13effective date of the change, written or electronic notice indicating
14the change or changes to the contract. For purposes of this section,
15a “material change” is a change made to a provision of the contract
16affecting any of the following:

17(1) Commissions, bonuses, and incentives paid to the agent or
18broker.

19(2) Right of survivorship.

20(3) Indemnification of the agent or broker by the health insurer.

21(4) Errors and omissions coverage requirements for the agent
22or broker.

23(b) Subdivision (a) shall not apply under either of the following
24circumstances:

25(1) The change to the contract is mutually agreed upon by the
26health insurer and the agent or broker.

27(2) The change to the contract is required by state or federal
28law.

29begin insert

begin insertSEC. 3.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
30Section 6 of Article XIII B of the California Constitution because
31the only costs that may be incurred by a local agency or school
32district will be incurred because this act creates a new crime or
33infraction, eliminates a crime or infraction, or changes the penalty
34for a crime or infraction, within the meaning of Section 17556 of
35the Government Code, or changes the definition of a crime within
36the meaning of Section 6 of Article XIII B of the California
37Constitution.

end insert


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