Amended in Assembly July 2, 2015

Amended in Senate May 5, 2015

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, 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 begin delete report, no later than 30 days prior to a claim payout, end delete begin insert report, prior to the payment of a claim, end insert 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 begin delete authorize the commissioner, in his or her discretion, end delete begin insert require the commissioner, if he or she has good cause to believe that an insurer or self-insurer has not complied with the bill’s requirements, to give written notice of the alleged noncompliance specifying a reasonable time, not less than 30 days, during which the insurer or self-insurer is required to correct the noncompliance. The bill would require the commissioner end insert to impose a fine, not to exceed $1,000, begin delete upon end delete begin insert for each violation if end insert an insurer or self-insurer begin delete who violates the bill’s requirement to provide claim data. The bill would additionally authorize the commissioner end delete begin insert fails to correct the noncompliance within the specified timeframe, and end insert to issue an order requiring the violator to comply with that requirement. begin insert The bill would authorize an insurer or self-insurer who disagrees with the commissioner’s determination of noncompliance to request an administrative hearing within 30 days of receipt of the notice of noncompliance. end insert

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.

This bill would make legislative findings to that effect.

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 Intercept Program

 

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 insert This article is not
intended to delay payment of a claim. end insert

13552.  

(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, begin delete no later than 30 days prior to a
claim payout, end delete begin insert prior to payment of a claim, end insert 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 begin delete the Department of Child Support Services
in hard copy or end delete begin insert a child support data match program end insert 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 begin delete the Department of Child Support Services. end delete begin insert a child
support data match program. end insert

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

begin delete

(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 delete begin insert

(c) With respect to claims involving periodic payments, the
insurer or self-insurer shall only report prior to issuing the initial
payment of benefits and each 12 months thereafter.

end insert begin insert

(d) An insurer or self-insurer that provides claim data in
accordance with subdivision (b) is in compliance with subdivision
(a).

end insert begin insert

(e) When a child support data match program identifies a match,
it shall notify the Department of Child Support Services and the
Department of Child Support Services shall send a notice, if
appropriate, to the insurer or self-insurer.

end insert begin insert

(f) Upon receipt by the insurer or self-insurer of notice from
the Department of Child Support Services on a reported insurance
claim payable to an obligor with a child support delinquency, the
insurer or self-insurer shall comply with the requirements of the
notice.

end insert begin insert

(g) (1) If the insurer or self-insurer is in receipt of a notice
from the Department of Child Support Services on a reported
insurance claim payable to an obligor who has a child support
delinquency after a payment on a periodic payment is issued, the
insurer or self-insurer shall comply with the notice with respect
to subsequent payments.

end insert begin insert

(2) Except as required by paragraph (1), this section does not
require an insurer or self-insurer to comply with a notice from the
Department of Child Support Services on a reported insurance
claim payable to an obligor with a child support delinquency, if
the notice is received after an insurer or self-insurer has issued
payment on a claim.

end insert begin insert

(h) A support obligation shall be inferior to any lien or written
notice of assignment of interest of a health care provider or a
repair facility, attorney’s fees, or another assignment of interest
for services and expenses related to a claim.

end insert begin insert

(i) No requirement of this section shall delay payment of a claim.

end insert

13554.  

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

begin insert

(a) A “child support data match program” means an automated
data match or interactive lookup program that matches the names
of claimants with the names of child support obligors who owe
past due child support.

end insert begin delete

(a)

end delete

begin insert (b) end insert  (1) “Claim” means any of the following:

(A) Coverage for begin delete an open, unresolved, end delete begin insert a pending end insert 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, begin delete who is a resident
of the state end delete for the following types of insurance:

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

(ii) “Homeowners’ liability coverage” means coverage under a
policy of residential property insurance for begin delete the legal liability of a
natural person or persons for loss of, damage to, or injury to,
persons or property, end delete begin insert bodily injury, end insert 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.

(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.

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

begin delete

(v) “Workers’ compensation coverage” means the coverage
described

end delete

begin insert (b) end insert begin insert   end insert begin insert Workers’ compensation coverage described end insert in Sections
begin insert 3208.3, end insert 4653, 4654, 4655, 4658, 4800, 4800.5, 4804.1, 4806, 4816,
begin delete and 4850 end delete begin insert 4850, and 5000 end insert of the Labor Code.

begin delete

(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 delete begin insert

(C) (i) Payment to the beneficiary of a life insurance policy or
annuity contract, including a payment in the form of a structured
settlement.

end insert begin insert

(ii) Payment of benefits resulting from cashing out or
accelerating benefits of a life insurance policy or annuity contract.

end insert begin insert

(iii) Payment of a loan taken against a life insurance policy or
annuity contract.

end insert begin insert

(D) “Disability income insurance” means the coverage
described in paragraph (5) of subdivision (b) of Section 106.

end insert begin insert

(2) A “claim” includes a nonrecurring payment of five hundred
dollars ($500) or more or cumulative periodic payments of one
thousand two hundred dollars ($1,200) or more over a 12-month
period prior to deductions allowed by this section.

end insert begin delete

(2)

end delete

begin insert (3) end insert  A “claim” does not include begin delete a liability policy that does not
pay for bodily injury, end delete a claim for property damage or loss of use
of property, or a claim made against begin delete an accident or end delete begin insert a end insert health
insurance policy, begin insert as defined in Section 106, or an accident policy, end insert
whether the policy is an expense incurred policy or an indemnity
policy.

begin insert

(c) An “insurance claim data collection organization” means
an insurance industry service provider that maintains a central
database of insurance claims information to assist subscribing
insurers in claims processing and in detecting and preventing
fraud.

end insert begin delete

(b)

end delete

begin insert (d) end insert  “Insurer” means an organization organized for the purpose
of assuming the risk of loss under a contract of insurance or
reinsurance, begin delete and end delete begin insert or an entity administering claims on behalf of the
organization. end insert begin insert “Insurer end insert begin insert ” end insert also includes any of the following
organizations:

(1) An admitted insurer.

begin delete

(2) A nonadmitted domestic insurer.

end delete begin delete

(3)

end delete

begin insert (2) end insert  A nonadmitted foreign begin delete insurer. end delete begin insert insurer, if the coverage was
placed in accordance with Section 1760 or 1763. end insert

begin delete

(4)

end delete

begin insert (3) end insert  A nonadmitted alien begin delete insurer. end delete begin insert insurer, if the coverage was
placed in accordance with Section 1760 or 1763. end insert

begin insert

(4) The California Insurance Guarantee Association.

end insert begin insert

(5) The Uninsured Employers Fund.

end insert begin insert

(6) The Subsequent Injuries Benefits Trust Fund.

end insert begin insert

(7) The State Compensation Insurance Fund.

end insert begin delete

(c)

end delete

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

begin delete

(d)

end delete

begin insert (f) end insert  “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.

begin delete

(e)

end delete

begin insert (g) end insert  “Support” means a support obligation owing on behalf of a
begin delete child, spouse, or family, or an amount owing end delete begin insert child end insert pursuant to
Section begin delete 17402 end delete begin insert 4001 or 17400 end insert of the Family Code, and includes
begin delete past due support or arrearage end delete begin insert “child support delinquency,” as
defined in Section 17500 of the Family Code, end insert when it exists.
begin delete “Support,” when used with reference to a minor child or a child
described in Section 3901 of the Family Code, includes
maintenance and education. end delete

13556.  

(a) An begin delete insurer end delete begin insert insurer, self-insurer, child support data
match program, insurance claim data collection organization, or
insured end insert acting in good faith that complies with this article shall be
immune from civil liability to an individual or agency.

(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 begin delete department end delete
begin insert Department of Child Support Services end insert 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).

13560.  

begin insert (a) end insert begin insert   end insert If begin insert the commissioner has good cause to believe that end insert
an insurer or self-insurer begin delete violates Section 13552, end delete begin insert has not complied
with this article, end insert the commissioner begin delete may, in his or her discretion, end delete
begin insert shall give written notice of the alleged noncompliance specifying
a reasonable timeframe, not less than 30 days, during which the
insurer or self-insurer shall correct the noncompliance. If the
insurer or self-insurer fails to correct the noncompliance within
the specified timeframe, the commissioner shall end insert impose a fine not
to exceed one thousand dollars ($1,000) for each violation, and
begin delete may end delete begin insert shall end insert issue an order requiring the violator to comply with
begin delete Section 13552. end delete begin insert this article. end insert

begin insert

(b) If the insurer or self-insurer disagrees with the
commissioner’s determination of noncompliance, the insurer or
self-insurer may request a hearing within 30 days of receipt of the
commissioner’s notice of noncompliance. If a hearing is held
pursuant to this section, the proceedings shall be conducted in
accordance with Chapter 5 (commencing with Section 11500) of
Part 1 of Division 3 of Title 2 of the Government Code.

end insert begin insert

(c) This section does not require an insurer or self-insurer to
comply with a notice from the Department of Child Support
Services on a reported insurance claim payable to an obligor who
has a child support delinquency, if the insurer or self-insurer
receives the notice after having issued payment on the claim. If
the payment issued is a periodic payment, the insurer or
self-insurer shall comply with the notice with respect to subsequent
payments.

end insert

13561.  

This article shall become operative July 1, 2016.

SEC. 2.  

The Legislature finds and declares that Section 1 of
this act, which adds Section 13556 to the Insurance Code, imposes
a limitation on the public’s right of access to the meetings 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 begin delete Protective end delete begin insert Support end insert Services from insurers,
self-insurers, and insurance claim data collection organizations
pursuant to this act be confidential.