Amended in Senate May 5, 2015

Amended in Senate April 20, 2015

Senate BillNo. 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, beginning July 1, 2016, create the Insurance Payment Intercept Program within the Department of Insurance. The bill would require the Department of 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, as specified.

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.

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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.

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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.

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

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This bill would make legislative findings to that effect.

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

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

P2    1

SECTION 1.  

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

3 

4Article 7.5.  Insurance Payment Intercept Program
5

 

6

13550.  

In furtherance of the enforcement of child support
7obligations in the state, and to enhance efforts to notify the
8Department of Child Support Services when an obligor is owed
9an insurance claim payment, this article establishes and authorizes
10the Insurance Payment Intercept Program.

11

13552.  

(a) The Department of Child Support Services shall
12facilitate a child support data match system using automated data
13exchanges to the maximum extent feasible, through which an
14insurer or self-insurer shall report, no later than 30 days prior to a
15claim payout, the name, address, and, if known, date of birth and
16social security number or other taxpayer identification number for
17each claimant.

P3    1(b) An insurer or self-insurer may provide the claim data
2required pursuant to subdivision (a) by any of the following
3methods:

4(1) Submitting the required claim data maintained by the insurer
5or self-insurer directly to the Department of Child Support Services
6in hard copy or in an electronic medium.

7(2) Authorizing an insurance claim data collection organization,
8to which the insurer or self-insurer subscribes and submits the
9required claim data, to conduct a data match of all claimants who
10owe past due support and to submit the required data for each
11claimant to the Department of Child Support Services.

12(3) Receiving or accessing a data file from an insurance claim
13data collection organization and conducting a data match of all
14claimants who owe past due support and submitting the required
15data for each claimant to the Department of Child Support Services.

16(c) An insurance claim data collection organization acting on
17behalf of the Department of Child Support Services shall submit
18the required data for each claimant to the Department of Child
19Support Services.

20

13554.  

For purposes of this article, the following terms have
21the following meanings:

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

23(A) Coverage for an open, unresolved, bodily injury claim that
24is payable by an insurer or self-insurer to an individual, or to a
25third party for the benefit of the individual, who is a resident of
26the state for the following types of insurance:

27(i) “Automobile liability coverage” has the meaning set forth
28in Section 660.

29(ii) “Homeowners’ liability coverage” means coverage under a
30policy of residential property insurance for the legal liability of a
31natural person or persons for loss of, damage to, or injury to,
32persons or property, but not including policies primarily insuring
33risks arising from the conduct of a commercial or industrial
34enterprise. “Residential property insurance” has the meaning set
35forth in Section 10087.

36(iii) “Commercial liability insurance coverage” means coverage
37under a policy of commercial insurance for the legal liability of
38any person for loss of, damage to, or injury to persons or property,
39arising from the conduct of a commercial or industrial enterprise.
40“Commercial insurance” has the meaning set forth in Section 675.5.

P4    1(iv) “Liability insurance” has the meaning set forth in Section
2108.

3(v) “Workers’ compensation coverage” means the coverage
4described in Sections 4653, 4654, 4655, 4658, 4800, 4800.5,
54804.1, 4806, 4816, and 4850 of the Labor Code.

6(B) Claims for a beneficiary who is making a claim on a life
7policy or annuity that was delivered to an individual or a group
8policyholder.

9(2) A “claim” does not include a liability policy that does not
10pay for bodily injury, a claim for property damage or loss of use
11of property, or a claim made against an accident or health insurance
12policy, whether the policy is an expense incurred policy or an
13indemnity policy.

14(b) “Insurer” means an organization organized for the purpose
15of assuming the risk of loss under a contract of insurance or
16reinsurance, and also includes any of the following organizations:

17(1) An admitted insurer.

18(2) A nonadmitted domestic insurer.

19(3) A nonadmitted foreign insurer.

20(4) A nonadmitted alien insurer.

21(c) “Obligor” means a person owing a duty of support.

22(d) “Self-insurer” means any entity that is self-insured for its
23legal responsibility without the benefit of primary insurance,
24through the use of a self-insured retention. This includes, but is
25not limited to, any entity that directs handling of its claims through
26a third party or as a result of a policy-buy-back, cost-sharing
27agreement, or coverage-in-place agreement.

28(e) “Support” means a support obligation owing on behalf of a
29child, spouse, or family, or an amount owing pursuant to Section
3017402 of the Family Code, and includes past due support or
31arrearage when it exists. “Support,” when used with reference to
32a minor child or a child described in Section 3901 of the Family
33Code, includes maintenance and education.

34

13556.  

(a) An insurerbegin delete or self-insurer, and its directors, agents,
35employees, and insureds, and any insurance claim data collection
36organization, and its agents and employees authorized by an insurer
37to act on the insurer’s behalf, that provide or attempt to provide
38data pursuant to this article are not subject to civil liability under
39law to any person or entity for alleged or actual damages that occur
40as a result of providing or attempting to provide data pursuant to
P5    1this article.end delete
begin insert acting in good faith that complies with this article shall
2be immune from civil liability to an individual or agency.end insert

3(b) Data obtained pursuant to this article may be used only for
4the purpose of identifying child support obligors. If the Department
5of Child Support Services does not match data obtained pursuant
6to this article with a child support obligor, the department shall
7not maintain that data and shall immediately destroy that data.

8(c) An insurance claim data collection organization, child
9support data match program, insurer or self-insurer that provides,
10attempts to provide, or in any way accesses data pursuant to this
11article shall comply with all applicable state and federal laws for
12the protection of the privacy and the security of that data, including,
13but not limited to, the Insurance Information and Privacy Protection
14 Act (Chapter 1 (commencing with Section 791.01) of Part 2 of
15Division 1), the Information Practices Act of 1977 (Chapter 1
16(commencing with Section 1798.80) of Part 4 of Division 3 of
17Title 1.81 of the Civil Code), and the federal Health Insurance
18Portability and Accountability Act of 1996 (Public Law 104-191).

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19

13558.  

Until January 1, 2019, the department may issue
20guidance to an insurer or self-insurer regarding compliance with
21this article. This guidance shall be exempt from the rulemaking
22provisions of the Administrative Procedure Act (Chapter 3.5
23(commencing with Section 11340) of Part 1 of Division 3 of Title
242 of the Government Code). Any guidance issued pursuant to this
25section shall remain effective only until the earlier of January 1,
262019, or the effective date of regulations implementing this article
27that are adopted by the department pursuant to the Administrative
28Procedure Act. The department shall consult with the Department
29of Child Support Services when issuing guidance pursuant to this
30section.

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31

13560.  

If an insurer or self-insurer violates Section 13552, the
32commissioner may, in his or her discretion, impose a fine not to
33exceed one thousand dollars ($1,000) for each violation, and may
34issue an order requiring the violator to comply with Section 13552.

35

13561.  

This article shall become operative July 1, 2016.

36

SEC. 2.  

The Legislature finds and declares that Section 1 of
37this act, which adds Section 13556 to the Insurance Code,begin insert imposes
38a limitation on the publicend insert
begin insert’s right of access to the meetingsend insert of public
39bodies or the writings of public officials and agencies within the
40meaning of Section 3 of Article I of the California Constitution.
P6    1Pursuant to that constitutional provision, the Legislature makes
2the following findings to demonstrate the interest protected by this
3limitation and the need for protecting that interest: In order to
4protect the privacy of insurance claimants and persons owed
5past-due support, it is necessary that data obtained by the
6Department of Child Protective Services from insurers,
7self-insurers, and insurance claim data collection organizations
8pursuant to this act be confidential.



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