BILL NUMBER: AB 2259	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Galgiani

                        FEBRUARY 18, 2010

   An act to add Section 1349.3 to the Health and Safety Code, and to
amend Section 740 of, and to add Section 10112.7 to, the Insurance
Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2259, as introduced, Galgiani. Health care coverage: nonprofit
charitable organizations.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene Act), provides for the licensure and regulation of health
care service plans, as defined, by the Department of Managed Health
Care. Existing law also provides for the regulation of health
insurers by the Department of Insurance and requires insurers to
obtain a certificate of authority from the Insurance Commissioner.
Existing law provides an exemption from those licensure and
certification requirements for plans operated by a public entity or
joint labor management trust if, among other requirements, the plan
maintains a fiscally sound operation and makes adequate provision
against the risk of insolvency, as evidenced by financial statements
submitted to the Director of the Department of Managed Health Care,
as specified.
   This bill would exempt a plan operated by a joint venture formed
by 2 or more nonprofit charitable organizations, as defined, from the
licensure and certification requirements if the plan satisfies
certain criteria, including maintaining a fiscally sound operation
and making adequate provision against the risk of insolvency, as
evidenced by financial statements submitted to the Director of the
Department of Managed Health Care, as specified, and submitting a
declaration under penalty of perjury stating the plan's compliance
with those criteria. The bill would also authorize a joint venture
formed between 2 or more nonprofit charitable organizations to
contract with a health care service plan or health insurer for the
purpose of providing health care coverage to the employees and
retirees, and dependents thereof, of the participating nonprofit
charitable organizations.
   By expanding the scope of the crime of perjury, the bill would
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 1349.3 is added to the Health and Safety Code,
to read:
   1349.3.  (a) For purposes of this section, "nonprofit charitable
organization" means a corporation incorporated pursuant to the
Nonprofit Corporation Law (Division 2 (commencing with Section 5000)
of Title 1 of the Corporations Code) that is exempt from taxation
pursuant to Section 501(c) of the Internal Revenue Code and Section
23710d of the Revenue and Taxation Code.
   (b) A health care service plan, including a self-insured
reimbursement plan that pays for or reimburses any part of the cost
of health care services, operated by a joint venture formed by two or
more nonprofit charitable organizations that satisfies all of the
following criteria is exempt from this chapter:
   (1) Provides services or reimbursement only to employees,
retirees, and the dependents of those employees and retirees, of any
participating nonprofit charitable organization, but not to the
general public.
   (2) Provides funding for the program.
   (3) Provides that providers are reimbursed solely on a
fee-for-service basis, so that providers are not at risk in
contracting arrangements.
   (4) Complies with Section 1378 and, to the extent that a plan
contracts directly with providers for health care services, complies
with Section 1379.
   (5) Does not reduce or change current benefits except in
accordance with collective bargaining agreements, or as otherwise
authorized by the governing body in the case of unrepresented
employees, and provides, pays for, or reimburses at least part of the
cost of all basic health care services as defined in subdivision (b)
of Section 1345. Plans covering only a single specialized health
care service, including dental, vision, or mental health services,
shall not be required to cover all basic health care services.
   (6) Refrains from any conduct that constitutes fraud or dishonest
dealing or unfair competition, as defined by Section 17200 of the
Business and Professions Code, and notifies enrollees of their right
to file complaints with the director regarding any violation of this
exemption.
   (7) Maintains a fiscally sound operation and makes adequate
provision against the risk of insolvency so that enrollees are not at
risk, individually or collectively, as evidenced by audited
financial statements submitted to the director as of the end of the
plan's fiscal year, within 180 days after the close of that fiscal
year. The financial statements shall be accompanied by a report,
certificate, or opinion of an independent certified public
accountant. The financial statements shall be prepared in accordance
with generally accepted accounting principles. The audit shall be
conducted in accordance with generally accepted auditing standards.
Upon request, the governing body of the plan shall provide copies
thereof, without charge, to any enrollee or recognized and
participating nonprofit charitable organization.
   (8) Submits with the annual financial statements required under
paragraph (7), a declaration, which shall conform to Section 2015.5
of the Code of Civil Procedure, executed by a plan official
authorized by the governing body of the plan, that the plan complies
with this subdivision.
   (b) The director's responsibilities under this section shall be
limited to enforcing compliance with this section. Nothing in this
section shall impair or impede the director's enforcement authority
or the remedies available under this chapter, including, but not
limited to, the termination of the plan's exemption under this
section.
   (c) Nothing in this section shall be construed to prohibit a
recognized and participating nonprofit charitable organization from
filing a complaint with the director regarding a violation of this
section.
   (d) A joint venture formed between two or more nonprofit
charitable organizations may contract with a health care service plan
for the purpose of providing health care coverage to the employees
and retirees, and dependents thereof, of the participating nonprofit
charitable organizations. Notwithstanding subdivision (b), all
requirements of this chapter shall apply to a contract entered into
pursuant to this subdivision.
  SEC. 2.  Section 740 of the Insurance Code is amended to read:
   740.  (a) Notwithstanding any other provision of law, and except
as provided herein, any person or other entity that provides coverage
in this state for medical, surgical, chiropractic, physical therapy,
speech pathology, audiology, professional mental health, dental,
hospital, or optometric expenses, whether the coverage is by direct
payment, reimbursement, or otherwise, shall be presumed to be subject
to the jurisdiction of the department unless the person or other
entity shows that while providing the services it is subject to the
jurisdiction of another agency of this or another state or the
federal government.
   (b) A person or entity may show that it is subject to the
jurisdiction of another agency of this or another state or the
federal government by providing to the commissioner the appropriate
certificate or license issued by the other governmental agency that
permits or qualifies it to provide those services for which it is
licensed or certificated.
   (c) Any person or entity that is unable to show that it is subject
to the jurisdiction of another agency of this or another state or
the federal government, shall submit to an examination by the
commissioner to determine the organization and solvency of the person
or the entity, and to determine whether the person or entity is in
compliance with the applicable provisions of this code, and shall be
required to obtain a certificate of authority to do business in
California and be required to meet all appropriate reserve, surplus,
capital, and other necessary requirements imposed by this code for
all insurers.
   (d) Any person or entity unable to show that it is subject to the
jurisdiction of another agency of this or another state or the
federal government shall be subject to all appropriate provisions of
this code regarding the conduct of its business.
   (e) The department shall prepare and maintain for public
inspection a list of those persons or entities described in
subdivision (a) that are not subject to the jurisdiction of another
agency of this or another state or the federal government and that
the department knows to be operating in this state. There shall be no
liability of any kind on the part of the state, the department, and
its employees for the accuracy of the list or for any comments made
with respect to it.
   (f) Any administrator licensed by the department who advertises or
administers coverage in this state described in subdivision (a),
that is provided by any person or entity described in subdivision
(c), and where the coverage does not meet all pertinent requirements
specified in this code and that is not provided or completely
underwritten, insured or otherwise fully covered by an admitted life
or disability insurer, hospital service plan or health care service
plan, shall advise and disclose to any purchaser, prospective
purchaser, covered person or entity, and any production agency
licensed by the department involved in the transaction, all financial
and operational information relative to the content and scope of the
plan and, specifically, as to the lack of insurance or other
coverage.
   Any production agency obtaining knowledge of any coverage relative
to the content and scope of a hospital service plan or health care
service plan, as required under this subdivision, shall advise and
disclose to any purchaser, prospective purchaser, covered person or
entity, the knowledge regarding the content and scope of the plan
and, specifically, as to the lack of insurance by an admitted carrier
or other qualified plan.
   (g) A health care service plan, as defined in Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code, shall not be subject to this section.
   (h) The department shall notify, in writing, the Director of the
Department of Managed Health Care whenever it determines that a
multiple employer trust qualifies as a health care service plan
subject to Chapter 2.2 (commencing with Section 1340) of Division 2
of the Health and Safety Code.
   (i) Any health care service plan, including a self-insured
reimbursement plan that pays for or reimburses any part of the cost
of health care services, operated by any city, county, city and
county, public entity, or political subdivision, or a public joint
labor management trust as described in subdivision (c) of Section
1349.2 of the Health and Safety Code, that is exempt pursuant to
Section 1349.2 of the Health and Safety Code from the Knox-Keene
Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code), is also
exempt from this code. 
   (j) Any health care service plan, including a self-insured
reimbursement plan that pays for or reimburses any part of the cost
of health care services, operated by a joint venture formed by two or
more nonprofit charitable organizations as described in subdivision
(b) of Section 1349.3 of the Health and Safety Code, that is exempt
pursuant to Section 1349.3 of the Health and Safety Code from the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code), is also exempt from this code. 
  SEC. 3.  Section 10112.7 is added to the Insurance Code, to read:
   10112.7.  (a) For purposes of this section, "nonprofit charitable
organization" means a corporation incorporated pursuant to the
Nonprofit Corporation Law (Division 2 (commencing with Section 5000)
of Title 1 of the Corporations Code) that is exempt from taxation
pursuant to Section 501(c) of the Internal Revenue Code and Section
23710d of the Revenue and Taxation Code.
   (b) A joint venture formed between two or more nonprofit
charitable organizations may contract with a health insurer for the
purpose of providing health care coverage to the employees and
retirees, and dependents thereof, of the participating nonprofit
charitable organizations. All requirements of this code shall apply
to a contract entered into pursuant to this subdivision.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B 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 XIII B of the California
Constitution.