Amended in Senate April 20, 2015

Senate Bill No. 585

Introduced by Senator Leyva

February 26, 2015

An act to add Article 7.5 (commencing with Section 13550) to Chapter 2 of Division 3 of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

SB 585, as amended, Leyva. Insurance payments: interception.

Existing law creates the Department of Child Support Services and provides for the interception of funds from state tax refunds, lottery winnings, unemployment compensation benefits, and benefits under the Public Employees’ Retirement System that otherwise would be paid to a person owing past due child support. Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and prescribes the department’s powers and duties.

This bill would begin insert , beginning July 1, 2016, end insert create the Insurance Payment Intercept Program within the Department of Insurance. The bill would require the Department of begin delete Insurance to consult with the Department of Child Support Services to develop a program requiring an insurer or a self-insurer, each as defined, to notify the Department of Child Support Services of a claim owed to a person owing a duty of child, spouse, or family support, defined as an “obligor.” The bill would also require the Department of Insurance to establish a procedure identifying the types of claims that the commissioner determines to be properly subject to withholding to satisfy a child support obligation, and prescribing the duties of an insurer’s or self-insurer’s reporting obligations necessary to implement the bill’s provisions. end delete begin insert Child Support Services to facilitate a data match system using automated data exchanges through which an insurer or self-insurer would be required to report, no later than 30 days prior to a claim payout, the name, address, and, if known, date of birth and social security number or other taxpayer identification number for each claimant to match a claimant who owes past due support end insert begin insert , as specified. end insert

begin insert

This bill would authorize the commissioner, in his or her discretion, to impose a fine, not to exceed $1,000, upon an insurer or self-insurer who violates the bill’s requirement to provide claim data. The bill would additionally authorize the commissioner to issue an order requiring the violator to comply with that requirement.

end insert begin insert

Existing constitutional provisions require that a statute that limits the right of access to meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by that limitation and the need for protecting that interest.

end insert begin insert

This bill would make a legislative finding and declaration relating to the necessity of treating insurance claims data and any past due support information obtained by the Department of Child Protective Services as confidential in order to protect the privacy of individual claimants and persons owed past due support.

end insert

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

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

SECTION 1.  

Article 7.5 (commencing with Section 13550) is
added to Chapter 2 of Division 3 of the Insurance Code, to read:

 

Article 7.5.  Insurance Payment begin delete Interception end delete begin insert Intercept Program end insert

 

13550.  

In furtherance of the enforcement of child support
obligations in the state, and to enhance efforts to notify the
Department of Child Support Services when an obligor is owed
an insurance claim payment, this article establishes and authorizes
the Insurance Payment Intercept Program.

begin delete

13552.  

The department shall consult with the Department of
Child Support Services to develop a program requiring an insurer
or a self-insurer to notify the Department of Child Support Services
of a claim owed to an obligor. The department shall establish a
procedure identifying the types of claims that the commissioner,
in his or her discretion, determines to be properly subject to
withholding to satisfy a child support obligation. That procedure
shall prescribe an insurer’s or self-insurer’s reporting obligations
necessary to implement this article. The department shall
incorporate into its written guidance each of the procedures set
forth in this section.

end delete begin insert

begin insert 13552. end insert   

(a) The Department of Child Support Services shall
facilitate a child support data match system using automated data
exchanges to the maximum extent feasible, through which an
insurer or self-insurer shall report, no later than 30 days prior to
a claim payout, the name, address, and, if known, date of birth
and social security number or other taxpayer identification number
for each claimant.

(b) An insurer or self-insurer may provide the claim data
required pursuant to subdivision (a) by any of the following
methods:

(1) Submitting the required claim data maintained by the insurer
or self-insurer directly to the Department of Child Support Services
in hard copy or in an electronic medium.

(2) Authorizing an insurance claim data collection organization,
to which the insurer or self-insurer subscribes and submits the
required claim data, to conduct a data match of all claimants who
owe past due support and to submit the required data for each
claimant to the Department of Child Support Services.

(3) Receiving or accessing a data file from an insurance claim
data collection organization and conducting a data match of all
claimants who owe past due support and submitting the required
data for each claimant to the Department of Child Support
Services.

(c) An insurance claim data collection organization acting on
behalf of the Department of Child Support Services shall submit
the required data for each claimant to the Department of Child
Support Services.

end insert

13554.  

For purposes of this article, the following terms have
the following meanings:

begin insert

(a) (1) “Claim” means any of the following:

end insert begin insert

(A) Coverage for an open, unresolved, bodily injury claim that
is payable by an insurer or self-insurer to an individual, or to a
third party for the benefit of the individual, who is a resident of
the state for the following types of insurance:

end insert begin insert

(i) “Automobile liability coverage” has the meaning set forth
in Section 660.

end insert begin insert

(ii) “Homeowners’ liability coverage” means coverage under
a policy of residential property insurance for the legal liability of
a natural person or persons for loss of, damage to, or injury to,
persons or property, but not including policies primarily insuring
risks arising from the conduct of a commercial or industrial
enterprise. “Residential property insurance” has the meaning set
forth in Section 10087.

end insert begin insert

(iii) “Commercial liability insurance coverage” means coverage
under a policy of commercial insurance for the legal liability of
any person for loss of, damage to, or injury to persons or property,
arising from the conduct of a commercial or industrial enterprise.
“Commercial insurance” has the meaning set forth in Section
675.5.

end insert begin insert

(iv) “Liability insurance” has the meaning set forth in Section
108.

end insert begin insert

(v) “Workers’ compensation coverage” means the coverage
described in Sections 4653, 4654, 4655, 4658, 4800, 4800.5,
4804.1, 4806, 4816, and 4850 of the Labor Code.

end insert begin insert

(B) Claims for a beneficiary who is making a claim on a life
policy or annuity that was delivered to an individual or a group
policyholder.

end insert begin insert

(2) A “claim” does not include a liability policy that does not
pay for bodily injury, a claim for property damage or loss of use
of property, or a claim made against an accident or health
insurance policy, whether the policy is an expense incurred policy
or an indemnity policy.

end insert begin delete

(a)

end delete

begin insert (b) end insert  “Insurer” means an organization organized for the purpose
of assuming the risk of loss under a contract of insurance or
reinsurance, and also includes any of the following organizations:

(1) An admitted insurer.

(2) A nonadmitted domestic insurer.

(3) A nonadmitted foreign insurer.

(4) A nonadmitted alien insurer.

begin delete

(b)

end delete

begin insert (c) end insert  “Obligor” means a person owing a duty of support.

begin delete

(c) “Self-insurer” means an individual public or private entity
that does not meet the definition of insurer in subdivision (a), but
that is authorized by this code or any other law to undertake to
indemnify itself against loss, damage, or liability arising from a
contingent or unknown event.

end delete begin insert

(d) “Self-insurer” means any entity that is self-insured for its
legal responsibility without the benefit of primary insurance,
through the use of a self-insured retention. This includes, but is
not limited to, any entity that directs handling of its claims through
a third party or as a result of a policy-buy-back, cost-sharing
agreement, or coverage-in-place agreement.

end insert begin delete

(d)

end delete

begin insert (e) end insert  “Support” means a support obligation owing on behalf of a
child, spouse, or family, or an amount owing pursuant to Section
17402 of the Family Code, and includes past due support or
arrearage when it exists. “Support,” when used with reference to
a minor child or a child described in Section 3901 of the Family
Code, includes maintenance and education.

begin delete

13556.  

An insurer or self-insurer that reports information
pursuant to this article, or who acts in good faith to comply with
the rules or regulations implementing this article, is not liable for
those acts under any law to any person.

end delete begin insert

begin insert 13556. end insert   

(a) An insurer or self-insurer, and its directors, agents,
employees, and insureds, and any insurance claim data collection
organization, and its agents and employees authorized by an
insurer to act on the insurer’s behalf, that provide or attempt to
provide data pursuant to this article are not subject to civil liability
under law to any person or entity for alleged or actual damages
that occur as a result of providing or attempting to provide data
pursuant to this article.

(b) Data obtained pursuant to this article may be used only for
the purpose of identifying child support obligors. If the Department
of Child Support Services does not match data obtained pursuant
to this article with a child support obligor, the department shall
not maintain that data and shall immediately destroy that data.

(c) An insurance claim data collection organization, child
support data match program, insurer or self-insurer that provides,
attempts to provide, or in any way accesses data pursuant to this
article shall comply with all applicable state and federal laws for
the protection of the privacy and the security of that data,
including, but not limited to, the Insurance Information and Privacy
Protection Act (Chapter 1 (commencing with Section 791.01) of
Part 2 of Division 1), the Information Practices Act of 1977
(Chapter 1 (commencing with Section 1798.80) of Part 4 of
Division 3 of Title 1.81 of the Civil Code), and the federal Health
Insurance Portability and Accountability Act of 1996 (Public Law
104-191).

end insert

13558.  

Until January 1, 2019, the department may issue
guidance to an insurer or self-insurer regarding compliance with
this article. This guidance shall be exempt from the rulemaking
provisions of the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code). Any guidance issued pursuant to this
section shall remain effective only until the earlier of January 1,
2019, or the effective date of regulations implementing this article
that are adopted by the department pursuant to the Administrative
Procedure Act. The department shall consult with the Department
of Child Support Services when issuing guidance pursuant to this
section.

begin delete

13560.  

An insurer or self-insurer who violates this article shall
be deemed to have failed to carry out its contract in good faith
within the meaning of subdivision (b) of Section 704.

end delete begin insert

begin insert 13560. end insert   

If an insurer or self-insurer violates Section 13552, the
commissioner may, in his or her discretion, impose a fine not to
exceed one thousand dollars ($1,000) for each violation, and may
issue an order requiring the violator to comply with Section 13552.

end insert begin insert

begin insert 13561. end insert   

This article shall become operative July 1, 2016.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert The Legislature finds and declares that Section 1 of
this act, which adds Section 13556 to the Insurance Code, of public
bodies or the writings of public officials and agencies within the
meaning of Section 3 of Article I of the California Constitution.
Pursuant to that constitutional provision, the Legislature makes
the following findings to demonstrate the interest protected by this
limitation and the need for protecting that interest: In order to
protect the privacy of insurance claimants and persons owed
past-due support, it is necessary that data obtained by the
Department of Child Protective Services from insurers,
self-insurers, and insurance claim data collection organizations
pursuant to this act be confidential. end insert