BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1449 (De Leon)
Hearing Date: 8/24/2009 Amended: 7/23/2009
Consultant: Katie Johnson Policy Vote: Health 9-0
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BILL SUMMARY: AB 1449 would revise and make specific to
individual health care coverage the duty established for agents,
brokers, solicitors, or sales representatives, who assist an
applicant in completing applications for individual health care
coverage to help an applicant provide answers to health
questions accurately and completely.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Managed Care Fund loss unknown, but potentially
hundredsSpecial
of thousands of dollars
Managed Care Administrative unknown, but potentially
hundreds Special
Fines and Penalties Fund gain of thousands of dollars
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law provides for the regulation of health care service
plans by the Department of Managed Health Care (DMHC). The
Managed Care Fund is a special fund that consists of assessments
on health plans that provides funds for DMHC's administrative
duties.
Existing law, SB 1379 (Ducheny), Chapter 607, Statutes of 2008,
established the Managed Care Administrative Fines and Penalties
Fund, which is distributed as follows: the first $1 million is
transferred annually to the Medically Underserved Account for
Physicians within the Health Professions Education Fund for use
of the Steven M. Thompson Physician Corps Loan Repayment
Program; any amount over the first $1 million in the fund,
including accrued interest, is transferred annually to the Major
Risk Medical Insurance Fund for the use of the Major Risk
Medical Insurance Program (MRMIP). SB 1379 required almost all
fines and penalties assessed on health plans by DMHC to be
deposited in the Major Risk Medical Insurance Fund. The transfer
of the deposit of future fines and penalties out of the Managed
Care Fund, as required by this bill, and to the Managed Care
Administrative Fines and Penalties Fund would be consistent with
the precedent set by SB 1379.
Existing law requires an agent, broker, solicitor, solicitor
firm, or sales representative who helps an applicant to complete
an application for a health care service plan to assist the
applicant in providing answers to health questions accurately
and completely.
Page 2
AB 1449 (De Leon)
Existing law subjects a person who willfully makes a false
statement on the attestation for a health care service plan to a
civil penalty of up to $10,000. All penalties are deposited in
the Managed Care Fund.
This bill would make the requirement for an agent, broker,
solicitor, solicitor firm, or sales representative to assist an
applicant in providing accurate and complete answers to health
questions when applying for a health plan specific to individual
health care coverage.
This bill would also provide that civil penalties assessed on a
person who willfully lied about a material fact on an
application for an individual health plan would be paid to the
Managed Care Administrative Fines and Penalties Fund, similar to
other fines and penalties assessed on health care service plans
under the Knox-Keene Act.
Depending on the amount of penalties assessed, there could be a
significant negative effect on the Managed Care Fund. To date,
no penalties have been collected under this statute. For
example, if civil penalties were assessed on 10 individuals at
the maximum amount of $10,000, the Managed Care Fund would lose
$100,000. Under the provisions of this bill, if the Managed Care
Fund were to lose $100,000 of future penalty revenue, the
Managed Care Administrative Fines and Penalties Fund would gain
$100,000.