BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 119|
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CONSENT
Bill No: SB 119
Author: Wyland (R)
Amended: 5/12/09
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 5/5/09
AYES: Corbett, Harman, Florez, Leno, Walters
SUBJECT : Professional liability insurance: renewal:
liability
SOURCE : California Association of Professional
Liability Insurers
DIGEST : This bill revises the sunset date on law that
provides immunity from liability for insurers who issue
professional liability insurance to health care providers
for any statement made in a notice of nonrenewal. The law,
which sunsets on January 1, 2011, provides that such
immunity does not extend to statements shown to have been
made in bad faith. This bill extends the sunset date to
January 1, 2013, with a specified exception.
ANALYSIS : Existing law requires a professional liability
insurer who intends not to renew a policy, or to condition
a policy renewal as specified, to give written notice of
the nonrenewal and the reasons for the nonrenewal at least
60 days, but not more than 120 days, in advance of the end
of the policy period. (Insurance Code Section 678.1.)
CONTINUED
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Existing law, until January 1, 2011, provides that there is
no liability on the part of, and no cause of action of any
nature shall arise against, an insurer who issues
professional liability insurance policies to health care
providers for any statement made in any of the following:
1.A written notice of nonrenewal, or any other oral or
written communication specifying the reasons for
nonrenewal of a policy issued to a health care provider;
2.Any communication providing information pertaining to the
nonrenewal; or
3.Evidence submitted at any court proceeding or informal
inquiry in which the nonrenewal is an issue. (Insurance
Code Section 678.3.)
Existing law, until January 1, 2011, provides that the
above immunity from liability extends to statements made by
a professional liability insurer's authorized
representatives, agents, or employees or any licensed
authorized insurance agent or broker and does not extend to
statements shown to have been made in good faith. (Id.)
This bill provides that the above-described provisions
sunset on January 1, 2013, unless a later enacted statute
that is enacted before January 1, 2013 deletes or extends
that date.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/12/09)
California Association of Professional Liability Insurers
(source)
Civil Justice Association of California
Mutual Insurance Company
NORCAL
The Doctors Company
ARGUMENTS IN SUPPORT : The author's office writes,
"Section 678.3 was enacted because professional liability
insurers - who are required by law to give reasons for
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cancellation or nonrenewal of a policy - were being sued
for defamation for those statements. While auto insurers
had an immunity for statements made in the nonrenewal
notice, professional liability carriers did not. AB 1123
(Wyland) addressed this discrepancy."
The sponsor of the bill, the California Association of
Professional Liability Insurers, asserts that the immunity
provided by AB 1123 to insurers who issue professional
liability policies to health care providers "promotes more
candor in communications made to the insured and should
continue to be preserved."
RJG:cm 5/12/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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