Amended in Senate August 31, 2015

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 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 service plans and health insurers: begin delete solicitors, agents and brokers: end delete begin insert solicitors and life agents: end insert 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 care service plan and a solicitor, or a health insurer and begin delete an agent or broker, end delete begin insert a life agent, end insert from becoming effective until the plan or insurer has delivered to the begin delete solicitor, agent, or broker end delete begin insert solicitors or life agent end insert 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 begin delete solicitor, agent, or broker, end delete begin insert solicitor or agent end insert or if the change at issue is required pursuant to state or federal law.

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

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 no reimbursement is required by this act for a specified reason.

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 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 a solicitor shall not become effective until the health care
service plan has delivered to the solicitor, at least 45 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 made to a provision
of the contract affecting any of the following:

(1) Commissions, bonuses, and incentives paid to the solicitor.

(2) Right of survivorship.

(3) Indemnification of the solicitor by the health care service
plan.

(4) Errors and omissions begin delete in end delete coverage requirements for the
solicitor.

(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 solicitor.

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

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 begin delete an agent
or broker end delete begin insert a life agent end insert shall not become effective until the health
insurer has delivered to the begin delete agent or broker, end delete begin insert life agent, end insert at least 45
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 made to
a provision of the contract affecting any of the following:

(1) Commissions, bonuses, and incentives paid to the begin delete agent or
broker. end delete begin insert life agent. end insert

(2) Right of survivorship.

(3) Indemnification of the begin delete agent or broker end delete begin insert life agent end insert by the health
insurer.

(4) Errors and omissions coverage requirements for the begin delete agent
or broker. end delete begin insert life agent. 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 begin delete agent or broker. end delete begin insert life agent. end insert

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

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because 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.