BILL NUMBER: AB 2549 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 3, 2008
INTRODUCED BY Assembly Member Hayashi
FEBRUARY 22, 2008
An act to add Section 1399.819 1389.35
to the Health and Safety Code, and to add Section
10901.85 10384.5 to the Insurance Code, relating
to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 2549, as amended, Hayashi. Health care coverage:
notification. rescission.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance.
Existing law prohibits a plan or insurer from rescinding, canceling,
or limiting a contract or policy due to the plan or policy's failure
to complete medical underwriting and resolve all reasonable questions
arising from written information on or with an application before
issuing a contract or policy. Existing law requires that an
individual contract or policy be renewed except for nonpayment of the
required premiums or fraud or intentional misrepresentation of
material fact under the terms of the coverage by the individual.
This bill would require health care service plans and health
insurers to, within 6 months of issuing an individual health care
service plan contract or individual health insurance policy,
investigate the information submitted on or with the application for
the contract or policy and notify the subscriber, enrollee, and
insured whether the contract or policy will be cancelled or rescinded
due to any inaccuracy in that information. The bill would prohibit
the plan or insurer from cancelling or rescinding the contract or
policy due to any inaccuracy in that information after the 6-month
period. The bill would authorize a subscriber, enrollee, or insured
to request a specified review by the director or the commissioner if
he or she believes a contract or policy was cancelled in violation of
that provision. The bill would require the director to notify a plan
if a proper complaint exists and would require the plan to reinstate
the enrollee, subscriber, or insured within 15 days of receiving
that notice, pending a hearing, as specified.
This bill would prohibit a health care service plan or health
insurer from rescinding an individual health care service plan
contract or individual health insurance policy for any reason after 6
months following the issuance of the contract or policy. The bill
would authorize a subscriber, enrollee, policyholder, or insured who
believes his or her individual contract or policy was wrongfully
rescinded to request review of that rescission.
Because a willful violation of the bill's provisions relative to
health care service plans would be a crime, 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 1389.35 is added to the
Health and Safety Code , to read:
1389.35. (a) Notwithstanding any other provision of law, after
six months following the issuance of an individual health care
service plan contract, a plan shall not rescind the contract for any
reason.
(b) A subscriber or enrollee who believes that his or her
individual health care service plan contract was wrongfully rescinded
may request a review of the rescission by submitting a complaint to
the director.
SEC. 2. Section 10384.5 is added to the
Insurance Code , to read:
10384.5. (a) Notwithstanding any other provision of law, after
six months following the issuance of an individual health insurance
policy, a health insurer shall not rescind the policy for any reason.
(b) A policyholder or insured who believes that his or her
individual health insurance policy was wrongfully rescinded may
request a review of the rescission by submitting a complaint to the
commissioner.
SECTION 1. Section 1399.819 is added to the
Health and Safety Code, to read:
1399.819. (a) Notwithstanding Section 1389.3, within six months
of issuing an individual health care service plan contract, the plan
shall investigate the information submitted on or with the
application form for the contract and notify the corresponding
subscriber and enrollees whether that information was deemed to be
accurate and whether the contract will be cancelled or rescinded
because of any inaccuracy in that information.
(b) Notwithstanding Sections 1357.54, 1389.3, and 1399.810, after
six months following the issuance of an individual health care
service plan contract, a plan shall not cancel or rescind the
contract due to any inaccuracy in the information submitted on or
with the application form for the contract.
(c) A subscriber or enrollee who believes that his or her contract
was cancelled or rescinded in violation of this section may request
a review by the director. If the director determines that a proper
complaint exists under this section, the director shall notify the
plan and the enrollee or subscriber. Within 15 days after receipt of
that notice, the plan shall reinstate the enrollee or subscriber
pending a hearing before the director. If, after the hearing, the
director determines that the cancellation or rescission was proper,
the director shall authorize the plan to cancel the enrollee or
subscriber's contract.
(d) The director shall review requests submitted pursuant to
subdivision (c) within a period of time appropriate to the overall
well-being and health of affected subscribers and enrollees.
(e) This section shall only apply to individual health care
service plan contracts issued on or after January 1, 2009.
SEC. 2. Section 10901.85 is added to the
Insurance Code, to read:
10901.85. (a) Notwithstanding Section 10384, within six months of
issuing an individual health benefit plan, the carrier shall
investigate the information submitted on or with the application form
for the plan and notify the corresponding insured whether that
information was deemed to be accurate and whether the plan will be
cancelled or rescinded because of any inaccuracy in that information.
(b) Notwithstanding Sections 10273.6, 10384, and 10901.8, after
six months following the issuance of an individual health benefit
plan, a carrier shall not cancel or rescind the plan due to any
inaccuracy in the information submitted on or with the application
form for the plan.
(c) An insured who believes that his or her plan was cancelled or
rescinded in violation of this section may request a review by the
commissioner. If the commissioner determines that a proper complaint
exists under the provisions of this section, the commissioner shall
notify the carrier and the insured. Within 15 days after receipt of
that notice, the carrier shall reinstate the insured pending a
hearing before the commissioner. If, after the hearing, the
commissioner determines that the cancellation or rescission was
proper, the commissioner shall authorize the carrier to cancel the
insured's policy.
(d) The commissioner shall review requests submitted pursuant to
subdivision (c) within a period of time appropriate to the overall
well-being and health of affected insureds.
(e) This section shall only apply to individual health benefit
plans issued on or after January 1, 2009.
SEC. 3. 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.