BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 2138 (Blumenfield) - Health insurance fraud: annual fee.
          
          Amended: June 18, 2012          Policy Vote: Insurance 8-0
          Urgency: No                     Mandate: No
          Hearing Date: August 6, 2012                           
          Consultant: Brendan McCarthy    
          
          This bill does not meet the criteria for referral to the 
          Suspense File.
          
          
          Bill Summary: AB 2138 authorizes the Insurance Commissioner to 
          increase the annual fee paid by health insurers from $0.10 to 
          $0.20 per insured. The bill increases the share of revenues 
          distributed to local district attorneys from 50 percent of 
          revenues to 70 percent of revenues.

          Fiscal Impact: 
              One-time costs of about $40,000 (Insurance Fund) to revise 
              existing regulations.

              Ongoing increased revenues to the Department of Insurance 
              of about $405,000 per year (Insurance Fund) for 
              investigations of insurance fraud.

              Ongoing increased revenues to local district attorneys of 
              about $3.6 million per year for investigations of insurance 
              fraud.

          Background: Under current law, the Department of Insurance 
          regulates health insurers in the state. The Department is 
          authorized to levy a fee of up to $0.10 per insured on insurance 
          companies to fund insurance fraud investigations. Of the fees 
          levied by the Department, 50 percent of the revenues are kept by 
          the Department for its fraud investigations and 50 percent are 
          distributed to local district attorneys to support their 
          investigations and prosecutions of insurance fraud cases.

          According to the Department, from 2007 to 2010, it received 
          about 6,000 complaints of suspected fraudulent insurance claims. 
          Those complaints led to 656 investigations by local district 
          attorneys, 184 convictions, and $233 million in fraudulent 








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          claims resolved.

          Proposed Law: AB 2138 authorizes the Insurance Commissioner to 
          increase the annual fee paid by health insurers from $0.10 to 
          $0.20 per insured. The bill increases the share of revenues 
          distributed to local district attorneys from 50 percent of 
          revenues to 70 percent of revenues.

          Related Legislation: AB 1431 (Accountability and Administrative 
          Review Committee) deletes an obsolete reporting requirement in a 
          section of the Insurance Code that this bill amends. The author 
          of this bill has indicated he will work with that committee to 
          resolve any chaptering issues.