BILL NUMBER: AB 2540 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 8, 2010
INTRODUCED BY Assembly Member De La Torre
FEBRUARY 19, 2010
An act to amend Section 1324.30 of the Health and Safety
Code, relating to public health. An act to amend
Section 790.03 of the Insurance Code, relating to health insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2540, as amended, De La Torre. Skilled nursing
facilities: Medi-Cal reimbursement: quality assurance fee.
Health insurance: postclaims underwriting: unfair and deceptive
practices.
Existing law prohibits any person in the state from engaging in
any trade practices that are defined as unfair methods of competition
or unfair or deceptive acts or practices in the business of
insurance.
This bill would add engaging in health insurance postclaims
underwriting, as defined, to the trade practices that are defined as
unfair methods of competition or unfair or deceptive acts or
practices in the business of insurance.
Existing law, the Medi-Cal Long-Term Care Reimbursement Act,
requires the department to implement a facility-specific
reimbursement ratesetting system for certain freestanding skilled
nursing facilities. Under existing law, reimbursement rates for these
facilities are funded by a combination of federal funds and moneys
collected pursuant to the above-described uniform quality assurance
fee. Existing law provides that these rate methodology provisions
shall become inoperative on July 31, 2011, and be repealed on January
1, 2012.
This bill would make a technical, nonsubstantive change to these
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 790.03 of the
Insurance Code is amended to read:
790.03. The following are hereby defined as unfair methods of
competition and unfair and deceptive acts or practices in the
business of insurance.
(a) Making, issuing, circulating, or causing to be made, issued or
circulated, any estimate, illustration, circular , or
statement misrepresenting the terms of any policy issued or to be
issued or the benefits or advantages promised thereby or the
dividends or share of the surplus to be received thereon, or making
any false or misleading statement as to the dividends or share of
surplus previously paid on similar policies, or making any misleading
representation or any misrepresentation as to the financial
condition of any insurer, or as to the legal reserve system upon
which any life insurer operates, or using any name or title of any
policy or class of policies misrepresenting the true nature thereof,
or making any misrepresentation to any policyholder insured in any
company for the purpose of inducing or tending to induce the
policyholder to lapse, forfeit, or surrender his or her insurance.
(b) Making or disseminating or causing to be made or disseminated
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatsoever, any
statement containing any assertion, representation , or
statement with respect to the business of insurance or with respect
to any person in the conduct of his or her insurance business, which
is untrue, deceptive, or misleading, and which is known, or which by
the exercise of reasonable care should be known, to be untrue,
deceptive, or misleading.
(c) Entering into any agreement to commit, or by any concerted
action committing, any act of boycott, coercion , or
intimidation resulting in or tending to result in unreasonable
restraint of, or monopoly in, the business of insurance.
(d) Filing with any supervisory or other public official, or
making, publishing, disseminating, circulating, or delivering to any
person, or placing before the public, or causing directly or
indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public any false
statement of financial condition of an insurer with intent to
deceive.
(e) Making any false entry in any book, report, or statement of
any insurer with intent to deceive any agent or examiner lawfully
appointed to examine into its condition or into any of its affairs,
or any public official to whom the insurer is required by law to
report, or who has authority by law to examine into its condition or
into any of its affairs, or, with like intent, willfully omitting to
make a true entry of any material fact pertaining to the business of
the insurer in any book, report, or statement of the insurer.
(f) Making or permitting any unfair discrimination between
individuals of the same class and equal expectation of life in the
rates charged for any contract of life insurance or of life annuity
or in the dividends or other benefits payable thereon, or in any
other of the terms and conditions of the contract.
This subdivision shall be interpreted, for any contract of
ordinary life insurance or individual life annuity applied for and
issued on or after January 1, 1981, to require differentials based
upon the sex of the individual insured or annuitant in the rates or
dividends or benefits, or any combination thereof. This requirement
is satisfied if those differentials are substantially supported by
valid pertinent data segregated by sex, including, but not
necessarily limited to, mortality data segregated by sex.
However, for any contract of ordinary life insurance or individual
life annuity applied for and issued on or after January 1, 1981, but
before the compliance date, in lieu of those differentials based on
data segregated by sex, rates, or dividends or benefits, or any
combination thereof, for ordinary life insurance or individual life
annuity on a female life may be calculated as follows: (a) according
to an age not less than three years nor more than six years younger
than the actual age of the female insured or female annuitant, in the
case of a contract of ordinary life insurance with a face value
greater than five thousand dollars ($5,000) or a contract of
individual life annuity; and (b) according to an age not more than
six years younger than the actual age of the female insured, in the
case of a contract of ordinary life insurance with a face value of
five thousand dollars ($5,000) or less. "Compliance date" as used in
this paragraph shall mean the date or dates established as the
operative date or dates by future amendments to this code directing
and authorizing life insurers to use a mortality table containing
mortality data segregated by sex for the calculation of adjusted
premiums and present values for nonforfeiture benefits and valuation
reserves as specified in Sections 10163.5
10163.1 and 10489.2 or successor sections.
Notwithstanding the provisions of this subdivision, sex-based
differentials in rates or dividends or benefits, or any combination
thereof, shall not be required for (1) any contract of life insurance
or life annuity issued pursuant to arrangements which
that may be considered terms, conditions, or
privileges of employment as these terms are used in Title VII of the
Civil Rights Act of 1964 (Public Law 88-352), as amended, and (2) tax
sheltered annuities for employees of public schools or of tax exempt
organizations described in Section 501(c)(3) of the Internal Revenue
Code.
(g) Making or disseminating, or causing to be made or
disseminated, before the public in this state, in any newspaper or
other publication, or any other advertising device, or by public
outcry or proclamation, or in any other manner or means whatever,
whether directly or by implication, any statement that a named
insurer, or named insurers, are members of the California Insurance
Guarantee Association, or insured against insolvency as defined in
Section 119.5. This subdivision shall not be interpreted to prohibit
any activity of the California Insurance Guarantee Association or the
commissioner authorized, directly or by implication, by Article 14.2
(commencing with Section 1063).
(h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
(1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies.
(3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
policies.
(4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
(5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
reasonably clear.
(6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
(7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
(8) Attempting to settle claims on the basis of an application
which that was altered without notice
to, or knowledge or consent of, the insured, his or her
representative, agent, or broker.
(9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
(10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
(12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
policy coverage.
(13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
compromise settlement.
(14) Directly advising a claimant not to obtain the services of an
attorney.
(15) Misleading a claimant as to the applicable statute of
limitations.
(16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider.
(i) Canceling or refusing to renew a policy in violation of
Section 676.10.
(j) Engaging in postclaims underwriting as defined by Section
10384.
SECTION 1. Section 1324.30 of the Health and
Safety Code is amended to read:
1324.30. This article shall become inoperative on July 31, 2011,
and, as of January 1, 2012, is repealed, unless a later enacted
statute, that becomes operative on or before January 1, 2012, deletes
or extends the dates upon which it becomes inoperative and is
repealed.