BILL NUMBER: AB 1600 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 31, 2001
AMENDED IN SENATE AUGUST 20, 2001
AMENDED IN SENATE JULY 9, 2001
AMENDED IN SENATE JUNE 27, 2001
AMENDED IN SENATE JUNE 25, 2001
AMENDED IN ASSEMBLY JUNE 4, 2001
AMENDED IN ASSEMBLY MAY 24, 2001
AMENDED IN ASSEMBLY MAY 15, 2001
AMENDED IN ASSEMBLY APRIL 30, 2001
AMENDED IN ASSEMBLY APRIL 23, 2001
INTRODUCED BY Assembly Member Keeley
(Coauthor: Assembly Member Richman)
FEBRUARY 23, 2001
An act to amend Section 1394 of add
Section 1394.4 to the Health and Safety Code, relating to
health care service plans.
LEGISLATIVE COUNSEL'S DIGEST
AB 1600, as amended, Keeley. Health care service plans.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the regulation and licensure of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act's provisions a crime. Existing law provides
that the civil, criminal, and administrative remedies available to
the Director of the Department of Managed Health Care are not
exclusive, and may be sought and employed in any combination deemed
advisable by the director to enforce these provisions.
This bill would allow any interested person to obtain equitable
relief in any court of competent jurisdiction from any person or
entity licensed under these provisions with respect to violations or
threatened violations of these provisions, with certain exceptions.
The bill would provide for the court to invite the parties
to resolve their dispute through an independent external review
process, as specified. The bill would require the department, by
September 1, 2002, to accredit at least 3 independent external review
organizations in this regard. The bill would provide that
a waiver of these provisions is contrary to public policy and is
therefore unenforceable and void. The bill would also
declare that certain of its provisions are declaratory of existing
law. The bill would enact other related provisions.
Because a willful violation of these provisions by
health care service plans would be a crime, this bill would thereby
impose a state-mandated local program.
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 1394 of the Health and Safety Code is amended
to read:
1394. (a) The civil, criminal, and administrative remedies
available to the director pursuant to this article are not exclusive,
and may be sought and employed in any combination deemed advisable
by the director to enforce the provisions of this chapter.
(b) (1)
SECTION 1. Section 1394.4 is added to the Health and Safety Code,
to read:
1394.4. (a) Any interested person may obtain equitable
relief from any licensee as to any violation or threatened violation
of this chapter in any court of competent jurisdiction. This remedy
is not exclusive, but is cumulative to other remedies or penalties
available under all other laws of this state and under federal law.
(2) Within five days after the deadline set for the respondent or
defendant to file its answer to an action brought pursuant to this
subdivision, the court may invite the parties to consider resolving
their dispute through an independent external review process. In
order to utilize that process, the following shall apply:
(A) Both parties agree to submit their dispute to the independent
external review process.
(B) The department shall not review the decision of the
independent external review organization.
(C) The costs of the independent external review shall be borne
equally by the parties. However, if the independent external review
organization apportions fault between the parties, the costs shall be
apportioned between the parties based on the percentage outlined by
the organization.
(D) The recommendation of the independent external review
organization shall be in writing and shall describe the reasons for
the recommendation.
(E) The independent external review organization shall complete
its review and submit its written decision to the parties no later
than 30 days from the time the dispute is submitted to it for
independent external review, unless a later specified time is agreed
to by the parties.
(3) The department, shall, by September 1, 2002, accredit at least
three independent external review organizations. The department
may, at its discretion grant and revoke accreditation, and shall
develop, apply and enforce accreditation standards that ensure the
independence of each organization and the qualifications and
independence of its reviewers. In order to receive accreditation for
the purposes of this subdivision, an organization shall meet all of
the following requirements:
(A) The organization shall be an organization that has as its
primary function the provision of mediation and arbitration services
and that receives a majority of its revenues from these services.
(B) The organization shall submit to the department the following
information upon initial application for accreditation and annually
thereafter upon any change to any of the following information:
(i) The names of all stockholders and owners of more than 5
percent of any stock or options of the organization, if a publicly
held organization.
(ii) The names of all holders of bonds or notes of the
organization in excess of one hundred thousand dollars ($100,000), if
any.
(iii) The names of all corporations and organizations that the
organization controls or is affiliated with, and the nature and
extent of any ownership or control, including the affiliated
organization's type of business.
(iv) The names and biographical sketches of all directors,
officers, executives, and reviewers of the organization, as well as a
statement regarding any relationships its directors, officers,
executives, and mediators may have with any health care service plan,
disability insurer, managed care organization, provider group, or
board or committee.
(v) A description of the system the organization uses to identify
and recruit reviewers, the number of reviewers credentialed and the
types of cases the reviewers are credentialed to handle.
(vi) A description of the areas of expertise available from
reviewers retained by the organization.
(vii) A description of how the organization ensures compliance
with the conflict-of-interest provisions of this subdivision.
(4) If the court invites the parties to consider an independent
external review process, the parties shall notify the court within 30
days if they have selected a mutually acceptable independent
external review organization and appropriate reviewers. If the
parties have not made their selection within 30 days, the action
shall proceed. The court shall not draw any implication, favorable
or otherwise, from the refusal by a party to accept the invitation by
the court to consider utilizing an independent external review
process.
(5) Nothing in this subdivision shall preclude the parties, by
mutual consent, from using the independent external review process at
any other time.
(6) (A) Notwithstanding any provision of law to the contrary, all
time limits with respect to an action shall be tolled while the
matter is pending in the independent external review process.
(B) Ninety days after the commencement of the review and every 90
days thereafter, the action shall be reactivated unless the parties
to the action do either of the following:
(i) Arrive at a settlement and implement it in accordance with the
provisions of current law.
(ii) Agree by written stipulation to extend the independent
external review process for another 90-day period.
(C) Section 703.5 and Chapter 2 (commencing with Section 1115) of
Division 9 of the Evidence Code apply to any review conducted
pursuant to the subdivision.
(7)
(b) If the contract between a licensee and provider expires
during the pendency of an action brought pursuant to this
subdivision section , the court shall issue an
order extending the contract for a 180-day period, in order to
provide continuing care to enrollees or subscribers . The
current contract rates and terms shall stay in effect during the
180-day period, subject to appropriate adjustment by the court to
ensure enrollee or subscriber access to health care. This
period may be extended by mutual agreement of the parties. This
subdivision does not affect the right of a licensee to terminate a
contractual relationship with an individual provider consistent with
the principles of Potvin v. Metropolitan Life Insurance Co. (2000) 22
Cal.4th 1060, whenever applicable.
(8)
(c) It shall not be a defense in an action brought pursuant
to this subdivision section that a
provision of this chapter that is at issue has been contractually
waived. Provisions of contracts of health care service
plans licensees or their contracting
intermediaries that require beneficiaries or providers to waive any
provision of this chapter are prohibited and unenforceable.
(9)
(d) It shall be unlawful for a licensee to terminate,
retaliate against, or otherwise penalize plan enrollees ,
subscribers, or providers for exercising their rights under
this subdivision section .
(10) This subdivision does not apply to disputes that are subject
(e) This section does not apply to an enrollee or subscriber's
individual grievance or complaint with a licensee that is subject
to Section 1368, 1368.01, 1368.02, 1368.03, 1368.04, 1368.1,
1370.4, 1374.30, 1374.31, 1374.32, 1374.33, 1374.34, 1374.35, or
1374.36. Nothing in this subdivision shall limit an action to
obtain equitable relief from a licensee for any violation or
threatened violation of the sections specified in this subdivision if
the action does not seek relief for an enrollee's or subscriber's
individual grievance or complaint.
(11)
(f) A health care service plan
licensee shall not seek indemnity, whether contractual or
equitable, from a provider, employer, or employer group purchasing
organization for any liability imposed pursuant to this
subdivision section .
(12)
(g) Any waiver of this subdivision
section is contrary to public policy and therefore shall be
unenforceable and void.
(13) All provisions of this subdivision, other than those set
forth in paragraphs (3) to (7), inclusive, confirm, and are
declarative of, rather than constituting a change in, existing law.
(h) The enactment of this section shall not be construed to
suggest that the law in existence prior to enactment of this section
prohibits or permits the filing of an action for equitable relief by
a private party for a violation of this chapter, and shall not in any
way be deemed to affect any litigation to enforce this chapter that
is pending on January 1, 2002.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB 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 XIIIB of the California Constitution.