BILL ANALYSIS
AB 591
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Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 591 (De La Torre) - As Amended: April 15, 2009
SUBJECT : Insurance referral fees and health plans filings.
SUMMARY : Increases the maximum fine from $1,000 to $5,000 for
soliciting, receiving, or paying a referral fee for referring
individuals to receive goods or services when the person knows
that reimbursement will be made by an automobile insurer, and
requires that specified lists be filed with state agencies in
connection with health care service plans and health insurers.
Specifically, this bill :
1)Increases from $1,000 to $5,000 the maximum fine for violating
the law against soliciting, receiving, offering, or paying a
referral fee for referral of an individual for the furnishing
of services or goods which the person knows or should know
that reimbursement is or may be made by an automobile insurer.
2)Requires health care service plans and health insurers to
annually file with the Director of the Department of Managed
Health Care and the Insurance Commissioner, respectively, a
list of their plan contracts and health insurance policies, by
identifying the form number and marketing name.
EXISTING LAW :
1)Makes it unlawful for any person to solicit, receive, offer,
or pay any referral fee for the referral of an individual for
the furnishing of services or goods for which the person knows
or should know that reimbursement is or may be made by an
automobile insurer.
2)Specifies that a violation of this law is a misdemeanor
punishable by a fine of up to $1,000 for each violation.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Scope of bill analysis. This analysis reviews the contents of
the bill that affects the jurisdiction of the Assembly
AB 591
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Insurance Committee, namely, the provision of the bill that
affects automobile insurance (Section 2 of the bill). The
other provisions of the bill relating to health insurance will
be reviewed by the Assembly Health Committtee - if this bill
is approved by this Committee.
2)Purpose. The author states that this bill will ensure that
consumers' interests are placed first and protected from being
misled to a specific insurer because the person making the
referral receives compensation. Also, by increasing the
penalty to not exceed $5,000 it will deter individuals from
referring for kickbacks and, instead, place the consumers'
interest first.
3)Background. The author states that only a few arrests and
convictions have taken place under the existing maximum fine
level, and that there is a declining number of arrests and
convictions in recent years. Specifically, the author reports
that in 2004 and 2005, there were a combined 17 arrests and 11
convictions, but in 2007 and 2008 there were a combined 7
arrests and 6 convictions.
4)Level of Fine. The bill increases the maximum fine from
$1,000 to $5,000 per violation for making unlawful referrals
in connection with automobile insurance. The $1,000 maximum
fine was established in 1990 (AB 2909, Chapter 255, Statutes
of 1990). According to the Bureau of Labor Statistics, U.S.
Department of Labor, the value of $1,000 in 1990 is equal to
$1,627 in 2009.
Does the fine need to be raised to reflect the change in the
cost of living or because it is too small to be a deterrent in
the eyes of prosecutors?
REGISTERED SUPPORT / OPPOSITION :
Support
None received.
Opposition
None received.
AB 591
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Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086