BILL NUMBER: SB 156 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Wright
FEBRUARY 12, 2009
An act to add Section 1873.5 to the Insurance Code, and to amend
Section 4603.5 of the Labor Code, relating to insurance fraud.
LEGISLATIVE COUNSEL'S DIGEST
SB 156, as introduced, Wright. Workers' compensation: fraud
prevention and detection.
Existing law generally provides for the prevention, detection, and
investigation of insurance fraud. Under existing law, insurers are
required to disclose to an authorized governmental agency information
relative to incidents of workers' compensation fraud, as specified.
Existing law also requires employers to post certain notices relative
to employer coverage for medical treatments related to workers'
compensation claims, as specified.
This bill would authorize the Department of Insurance to convene
meetings with insurers to discuss emerging trends and schemes
involving insurance fraud and would provide that any person sharing
information pursuant to that authorization would be protected from
civil liability, as specified. This bill would also require employers
to send an employee an explanation of benefits notice when the
employer pays for certain medical treatments or services as a result
of the employee's workers' compensation claim, and would authorize
the employer to send a notice about other medical payments, as
specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature hereby finds and declares all of the
following:
(a) The California Department of Insurance regulates more than 123
billion dollars ($123,000,000,000) of insurance business annually.
Workers' compensation business accounts for 11.5 billion dollars
($11,500,000,000) of that business as of 2006.
(b) A report issued by the Department of Insurance Advisory Task
Force in May of 2008 estimated that insurance fraud of regulated
businesses amounts to costs of 15 billion dollars ($15,000,000,000)
per year, costing each resident an average of more than five hundred
dollars ($500) per year.
(c) Perpetrators of fraud often involved more than one insurance
program. An effective antifraud effort requires greater cooperation,
coordination, and communication of impacted insurers, services, and
regulating agencies.
(d) One effective strategy used by the Medicaid and Medi-Cal
programs to combat fraud involves sending an explanation of benefits
notice to the recipients of services who can then confirm if
fraudulent or excessive billing has occurred. California's workers'
compensation program does not provide this notice which many
employers and law enforcement officials believe could help reduce
incidents of fraudulent billing.
(e) It is the intent of the Legislature to enact statutory
provisions to provide law enforcement regulators and the regulated
community additional insurance antifraud tools and protections.
SEC. 2. Section 1873.5 is added to the Insurance Code, to read:
1873.5. The commissioner, or his or her designated deputy
commissioner, may convene meetings with representatives of insurance
companies to discuss emerging trends and schemes involving insurance
fraud. Information shared during the course of those meetings,
including possible evidence of other criminal activity not involving
insurance fraud, shall be protected by the provisions of Section
1873.2.
SEC. 3. Section 4603.5 of the Labor Code is amended to read:
4603.5. (a) The administrative director
shall adopt rules pertaining to the format and content of notices
required by this article; define reasonable geographic areas for the
purposes of Section 4600; specify time limits for all such notices,
and responses thereto; and adopt any other rules necessary to make
effective the requirements of this article.
Employers shall notify all employees of their rights under this
section.
(b) (1) It is the policy of this state that an injured worker
should be sufficiently informed of the medical treatments being paid
for by the employer so that the worker can assist in the detection of
erroneous or fraudulent billing.
(2) The administrative director shall adopt regulations specifying
one or more approved forms of an explanation of benefits notice
which will inform an employee of the amount or amounts billed and the
amount or amounts paid by the employer for one or more treatments,
medicines, supplies, devices, or services provided by the employer
pursuant to this article. The notice shall, at a minimum, include the
date of service, the name of the individual or organization provider
of service, and a simple description of the service. The notice
shall encourage the employee to advise the employer of any
discrepancies between the items billed and the treatments, medicines,
supplies, devices, or services received by the employee.
(3) The administrative director, in consultation with the
Commission on Health and Safety and Workers' Compensation, shall
adopt regulations specifying the method for selecting the medical
payments for which an employer shall be required to provide the
explanation of benefits notice to the employee. In developing the
selection method, the administrative director and the commission may
consider the cost of providing the notice to an individual compared
to the potential benefit of reducing medical payment errors and
fraud.
(4) An employer shall provide to the employee an explanation of
benefits notice in a form approved by the administrative director for
any medical payment for which a notice is required by regulations
adopted by the administrative director. An employer may, in its
discretion, provide explanation of benefits notices in a form
approved by the administrative director for medical payments for
which a notice is not required. If the employee is represented by an
attorney, the employer shall provide a copy of the notice to the
attorney concurrently with providing the notice directly to the
employee. The employee shall be allowed to reply to the employer, and
the employer shall provide the employee's attorney with a copy of
the reply if it does not appear that the employee has provided a copy
to the attorney. The employer shall provide the attorney a summary
of the reply if the reply is received verbally.