BILL NUMBER: AB 52	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 1, 2011
	AMENDED IN ASSEMBLY  MAY 3, 2011
	AMENDED IN ASSEMBLY  MARCH 25, 2011

INTRODUCED BY   Assembly Members Feuer and Huffman
   (Principal coauthor: Senator Leno)
   (   Coauthors:   Assembly Members  
Allen   and Davis   ) 
   (Coauthor: Senator DeSaulnier)

                        DECEMBER 6, 2010

   An act to amend Section 1386 of, and to add Article 6.1
(commencing with Section 1385.001) to Chapter 2.2 of Division 2 of,
the Health and Safety Code, and to add Article 4.4 (commencing with
Section 10180.1) to Chapter 1 of Part 2 of Division 2 of the
Insurance Code, relating to health care coverage.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 52, as amended, Feuer. Health care coverage: rate approval.
    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. Under
existing law, no change in premium rates or coverage in a health care
service plan or a health insurance policy may become effective
without prior written notification of the change to the
contractholder or policyholder. Existing law prohibits a health care
service plan or health insurer during the term of a group plan
contract or policy from changing the rate of the premium, copayment,
coinsurance, or deductible during specified time periods. Existing
law requires a health care service plan or health insurer that issues
individual or group contracts or policies to file with the
Department of Managed Health Care or the Department of Insurance
specified rate information at least 60 days prior to the effective
date of any rate change.
   This bill would further require a health care service plan or
health insurer that issues individual or group contracts or policies
to file with the Department of Managed Health Care or the Department
of Insurance, on and after January 1, 2012, a complete rate
application for any proposed rate, as defined, or rate change, and
would prohibit the Department of Managed Health Care or the
Department of Insurance from approving any rate or rate change that
is found to be excessive, inadequate, or unfairly discriminatory. The
bill would require the rate application to include certain rate
information. The bill would authorize the Department of Managed
Health Care or the Department of Insurance to approve, deny, or
modify any proposed rate or rate change, and would authorize the
Department of Managed Health Care and the Department of Insurance to
review any rate or rate change that went into effect between January
1, 2011, and January 1, 2012, and to order refunds, subject to these
provisions. The bill would authorize the imposition of fees on health
care service plans and health insurers for purposes of
implementation, for deposit into newly created funds, subject to
appropriation. The bill would impose civil penalties on a health care
service plan or health insurer, and subject a health care service
plan to discipline, for a violation of these provisions, as
specified. The bill would establish proceedings for the review of any
action taken under those provisions related to rate applications and
would require the Department of Managed Health Care and the
Department of Insurance, and plans and insurers, to disclose
specified information on the Internet pertaining to rate applications
and those proceedings. The bill would require the Department of
Managed Health Care or the Department of Insurance, or the court, to
award reasonable  advocacy   advocate's 
fees  and costs  , including  expert 
witness fees,  and other reasonable costs  in those
proceedings under specified circumstances, to be paid by the plan or
insurer.
   Because a willful violation of these provisions by a health care
service plan 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.  The Legislature finds and declares all of the
following:
   (a) California consumers and businesses are facing excessive
health insurance premium increases, placing health insurance out of
the reach of millions of families.
   (b) Consumers are experiencing significant insurance rate
escalations: from 1999 to 2009, health insurance premiums for
families rose 131 percent, while the general rate of inflation
increased just 28 percent during the same period (according to a
report by the Kaiser Family Foundation).
   (c) More than 8.2 million Californians are uninsured, or one in
four Californians under 65 years of age.
   (d) Uninsured individuals delay preventative care, leading to
worse health outcomes and costly visits to overcrowded emergency
rooms.
   (e) The State of California should have the authority to minimize
families' loss of health insurance coverage as a result of steeply
rising premium costs.
   (f) The federal Patient Protection and Affordable Care Act (Public
Law 111-148) allows the federal government to work with states to
examine "unreasonable increases" in the premiums charged for some
individual and small group health plans, and has allotted two hundred
fifty million dollars ($250,000,000) for state insurance departments
to improve their process for reviewing proposed rate increases.
   (g)  According to a Kaiser Family Foundation report on state
insurance department rate regulation, states with robust and
transparent rate review and approval processes have greater power to
protect consumers from large rate increases.
  SEC. 2.  Article 6.1 (commencing with Section 1385.001) is added to
Chapter 2.2 of Division 2 of the Health and Safety Code, to read:

      Article 6.1.  Approval of Rates


   1385.001.  For purposes of this article, the following definitions
shall apply:
   (a) "Applicant" means a health care service plan seeking to change
the rate it charges its subscribers or to set a rate for a new
product.
   (b) "Rate" means the charges assessed for a health care service
plan contract or anything that affects the charges associated with
such a contract, including, but not limited to, premiums, base rates,
underwriting relativities, discounts, copayments, coinsurance,
deductibles, and any other out-of-pocket costs.
   1385.002.  (a) No rate shall be approved or remain in effect that
is found to be excessive, inadequate, unfairly discriminatory, or
otherwise in violation of this article.
   (b) No applicant shall implement a rate for a new product or
change the rate it charges its subscribers, unless it submits an
application to the department and the application is approved by the
department.
   (c) The director may approve, deny, or modify any proposed rate
for a new product or any rate change for an existing product. The
presence of competition in the health care service plan market shall
not be considered in determining whether a rate change is excessive,
inadequate, or unfairly discriminatory. The director shall not
approve any rate that does not comply with the requirements of this
article.
   1385.003.  (a) This article shall apply to health care service
plan contracts offered in the individual or group market in
California. However, this article shall not apply to a specialized
health care service plan contract; a Medicare supplement contract
subject to Article 3.5 (commencing with Section 1358.1); a health
care service plan contract offered in the Medi-Cal program (Chapter 7
(commencing with Section 14000) of Part 3 of Division 9 of the
Welfare and Institutions Code); a health care service plan contract
offered in the Healthy Families Program (Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code), the Access for
Infants and Mothers Program (Part 6.3 (commencing with Section 12695)
of Division 2 of the Insurance Code), the California Major Risk
Medical Insurance Program (Part 6.5 (commencing with Section 12700)
of Division 2 of the Insurance Code), or the Federal Temporary High
Risk Pool (Part 6.6 (commencing with Section 12739.5) of Division 2
of the Insurance Code); a health care service plan conversion
contract offered pursuant to Section 1373.6; or a health care service
plan contract offered to a federally eligible defined individual
under Article 4.6 (commencing with Section 1366.35) or Article 10.5
(commencing with Section 1399.801).
   (b) The department shall review a rate application pursuant to
regulations it promulgates to determine excessive, inadequate, or
unfairly discriminatory rates. The review shall consider, but not be
limited to, medical expenses and all nonmedical expenses, including,
but not limited to, the rate of return, overhead, and administration,
and surplus, reserves, investment income, and any information
submitted under Section 1385.004 or 1385.005.  The review shall
take into account established actuarial principles. 
   (c) In promulgating regulations to determine whether a rate is
excessive, inadequate, or unfairly discriminatory, the department
shall consider whether the rate is reasonable in comparison to
coverage benefits.
   1385.004.  (a) For individual or small group health care service
plan contracts, all health care service plans shall file with the
department a complete rate application for any proposed rate change
or rate for a new product that would become effective on or after
January 1, 2012. The rate application shall be filed at least 60 days
prior to the proposed effective date of the proposed rate.
   (b) No health care service plan shall implement a rate change
within one year of the date of implementation of the most recently
approved rate change for each product in the individual or small
group market.
   (c) A health care service plan shall disclose to the department
all of the following for each individual or small group rate
application:
   (1) All of the information required pursuant to subdivisions (b)
and (c) of Section 1385.03, except for the information set forth in
paragraph (23) of subdivision (c) of Section 1385.03.
   (2) Highest and lowest rate change initially requested for an
individual or small group.
   (3) Highest and lowest rate of change.
   (4) Five-year rate change history for the population affected by
the proposed rate change.
   (5) The rate of return that would result if the rate application
were approved.
   (6) The average rate change per affected enrollee or group that
would result from approval of the application, as well as the lowest
and highest rate increase that would result for any enrollee.
   (7) The overhead loss ratio, reserves, excess tangible net equity,
surpluses, profitability, reinsurance, dividends, and investment
income that exist and would result if the application is approved;
the financial condition of the health care service plan for at least
the past five years, or total years in existence if less than five
years, including, but not limited to, the financial performance for
at least the past five years of the plan's statewide individual or
small group market business, and the plan's overall statewide
business; and the financial performance for at least the past five
years of the block of business subject to the proposed rate change,
including, but not limited to, past and projected profits, surplus,
reserves, investment income, and reinsurance applicable to the block.
For the purposes of this section, "overhead loss ratio" means the
ratio of revenue dedicated to all nonmedical expenses and
expenditures, including profit, to revenue dedicated to medical
expenses. A medical expense is any payment to a hospital, physician
and surgeon, or other provider for the provision of medical care or
health care services directly to, or for the benefit of, the
enrollee.
   (8) Salary and bonus compensation paid to the 10 highest paid
officers and employees of the applicant for the most recent fiscal
year.
   (9) Dollar amounts of financial or capital disbursements or
transfers to affiliates, and dollar amounts of management agreements
and service contracts.
   (10) A statement setting forth all of the applicant's nonmedical
expenses for the most recent fiscal year, including administration,
dividends, rate of return, advertising, lobbying, and salaries.
   (11) A line-item report of medical expenses, including aggregate
totals paid to hospitals and physicians and surgeons  , including
costs associated with experimental or investigative therapies 
.
   (12) The contracted rates between a health care service plan and a
provider. Pursuant to Section 1385.008, these rates shall not be
disclosed to the public.
   (13) Compliance with medical loss ratio standards in effect under
federal or state law.
   (14) Whether the plan has complied with all federal and state
requirements for pooling risk and requirements for participation in
risk adjustment programs in effect under federal and state law.
   (15) The plan's statement of purpose or mission in its corporate
charter or mission statement.
   (16) Whether the plan employs provider payment strategies to
enhance cost-effective utilization of appropriate services.
   (17) Affordability of the health care service plan product or
products subject to the proposed rate change.
   (18) Public comments received pertaining to the information
required in this section. 
   (19) Any other information deemed necessary by the director.

   (d) A health care service plan shall submit any other information
required pursuant to any regulation adopted by the department to
comply with this article and related regulations.
   (e) The rate application shall be signed by the officers of the
health care service plan who exercise the functions of a chief
executive officer and chief financial officer. Each officer shall
certify that the representations, data, and information provided to
the department to support the application are true.
   (f) The health care service plan has the burden to provide the
department with evidence and documents establishing, by preponderance
of the evidence, the application's compliance with the requirements
of this article.
   1385.005.  (a) For large group health care service plan contracts,
all large group health care service plans shall file with the
department a complete rate application for any proposed rate change
or rate for a new product that would become effective on or after
January 1, 2012. The rate application shall be filed at least 60 days
prior to the proposed effective date of the proposed rate.
   (b) No health care service plan shall implement a rate change
within one year of the date of implementation of the most recently
approved rate change for each product in the large group market.
   (c) A health care service plan shall disclose to the department
all of the following for each large group rate application:
   (1) Company name and contact information.
   (2) Number of plan contract forms covered by the application.
   (3) Plan contract form numbers covered by the application.
   (4) Product type, such as a preferred provider organization or
health maintenance organization.
   (5) Segment type.
   (6) Type of plan involved, such as for profit or not for profit.
   (7) Whether the products are opened or closed.
    (8) Enrollment in each plan contract and rating form.
   (9) Enrollee months in each plan contract form.
   (10) Annual rate.
   (11) Total earned premiums in each plan contract form.
   (12) Total incurred claims in each plan contract form.
   (13) Average rate change initially requested.
   (14) Highest and lowest rate change initially requested for a
group.
   (15) Review category: initial application for a new product,
application for an existing product, or resubmission of an
application.
   (16) Average rate of change.
   (17) Highest and lowest rate of change.
   (18) Proposed effective date of the proposed rate change.
   (19) Five-year rate change history for the population affected by
the proposed rate change.
   (20) The rate of return that would result if the rate application
were approved.
   (21) Number of subscribers or enrollees affected by each plan
contract form.
   (22) The average rate change per affected enrollee or group that
would result from approval of the application, as well as the lowest
and highest rate increase that would result for any enrollee.
   (23) The plan's overall annual medical trend factor assumptions in
each rate application for all benefits and by aggregate benefit
category, including hospital inpatient, hospital outpatient,
physician and surgeon services, prescription drugs and other
ancillary services, laboratory, and radiology  , including costs
associated with experimental or investigative therapies  . A
plan may provide aggregated additional data that demonstrates or
reasonably estimates year-to-year cost increases in specific benefit
categories in major geographic regions of the state. For purposes of
this paragraph, "major geographic region" shall be defined by the
department and shall include no more than nine regions. A health plan
that exclusively contracts with no more than two medical groups in
the state to provide or arrange for professional medical services for
the enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.
   (24) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician and surgeon services, prescription
drugs and other ancillary services, laboratory, and radiology. A
health plan that exclusively contracts with no more than two medical
groups in the state to provide or arrange for professional medical
services for the enrollees of the plan shall instead disclose the
amount of its actual trend experience for the prior contract year by
aggregate benefit category, using benefit categories that are, to the
maximum extent possible, the same or similar to those used by other
plans.
   (25) A comparison of claims cost and rate of changes over time.
   (26) Any changes in enrollee costsharing over the prior year
associated with the submitted rate application.
   (27) Any changes in enrollee benefits over the prior year
associated with the submitted rate application.
   (28) Any changes in administrative costs.
   (29) The overhead loss ratio, reserves, excess tangible net
equity, surpluses, profitability, reinsurance, dividends, and
investment income that exist and will result if the application is
approved; the financial condition of the health care service plan for
at least the past five years, or total years in existence if less
than five years, including, but not limited to, the financial
performance for at least the past five years of the plan's statewide
large group market business, and the plan's overall statewide
business; and the financial performance for at least the past five
years of the block of business subject to the proposed rate change,
including, but not limited to, past and projected profits, surplus,
reserves, investment income, and reinsurance applicable to the block.
For the purposes of this section, "overhead loss ratio" means the
ratio of revenue dedicated to all nonmedical expenses and
expenditures, including profit, to revenue dedicated to medical
expenses. A medical expense is any payment to a hospital, physician
and surgeon, or other provider for the provision of medical care or
health care services directly to, or for the benefit of, the
enrollee.
   (30) Salary and bonus compensation paid to the 10 highest paid
officers and employees of the applicant for the most recent fiscal
year.
   (31) Dollar amounts of financial or capital disbursements or
transfers to affiliates and management agreements and service
contracts.
   (32) A statement setting forth all of the applicant's nonmedical
expenses for the most recent fiscal year including administration,
dividends, rate of return, advertising, lobbying, and salaries.
   (33) A line-item report of medical expenses, including aggregate
totals paid to hospitals and physicians and surgeons.
   (34) Compliance with medical loss ratio standards in effect under
federal or state law.
   (35) Whether the plan has complied with all federal and state
requirements for pooling risk and requirements for participation in
risk adjustment programs in effect under federal and state law.
   (36) The plan's statement of purpose or mission in its corporate
charter or mission statement.
   (37) Whether the plan employs provider payment strategies to
enhance cost-effective utilization of appropriate services.
   (38) Affordability of the health care service plan product or
products subject to the proposed rate change.
   (39) Public comments received pertaining to the information
required in this section.
   (40) All of the information required pursuant to subdivision (c)
of Section 1385.04.
   (41) Any other information required under the federal Patient
Protection and Affordable Care Act (Public Law 111-148).
   (42) The contracted rates between a health care service plan and a
provider. Pursuant to Section 1385.008, these rates shall not be
disclosed to the public.
   (43) The contracted rates between a health care service plan and a
large group subscriber. Pursuant to Section 1385.008, these rates
shall not be disclosed to the public. 
   (44) Any other information deemed necessary by the director.

   (d) A health care service plan shall also submit any other
information required pursuant to any regulation adopted by the
department to comply with this article and related regulations.
   (e) The rate application shall be signed by the officers of the
health care service plan who exercise the functions of a chief
executive officer and chief financial officer. Each officer shall
certify that the representations, data, and information provided to
the department to support the application are true.
   (f) The health care service plan has the burden to provide the
department with evidence and documents establishing, by a
preponderance of the evidence, the application's compliance with the
requirements of this article.
   1385.006.  Notwithstanding any provision in a contract between a
health care service plan and a provider, the department may request
from a health care service plan, and the health care service plan
shall provide, any information required under this article or the
federal Patient Protection and Affordable Care Act (Public Law
111-148).
   1385.007.  A rate by a health care service plan that became
effective during the period January 1, 2011, to December 31, 2011,
inclusive, shall be subject to review by the department for
compliance with this article. The department shall order the refund
of payments made pursuant to any such rate, to the extent the
department finds the rate to be excessive, inadequate, or unfairly
discriminatory.
   1385.008.  (a) Notwithstanding Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code, all
information submitted under this article shall be made publicly
available by the department, except as provided in subdivision (b).
Subdivision (d) of Section 6254 of the Government Code shall not
apply to a public record under this article.
   (b) (1) The contracted rates between a health care service plan
and a provider shall be deemed confidential information that shall
not be made public by the department and are exempt from disclosure
under the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
   (2) The contracted rates between a health care service plan and a
large group subscriber shall be deemed confidential information that
shall not be made public by the department and are exempt from
disclosure under the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).
   (c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.
   (d) The information shall be made public and posted to the
department's Internet Web site for not less than 60 days after the
date of public notice.
   (1) The department and the health care service plan shall make the
information submitted under this article readily available to the
public on their Internet Web sites, in plain language, and in a
manner and format specified by the department, except as provided in
subdivision (b).
   (2) The entirety of the rate application shall be made available
upon request to the department, except as provided in subdivision
(b).
   (e) The department shall accept and post to its Internet Web site
any public comment on a proposed rate submitted to the department
during the 60-day period described in subdivision (a) of Section
1385.004 or subdivision (a) of Section 1385.005.
   1385.009.  (a) The department shall notify the public of any rate
application by a health care service plan.
   (b) If the application process in Section 1385.004 or 1385.005 has
been followed, the department shall issue a decision within 60 days
after the date of the public notice provided under subdivision (a),
unless the department and the applicant agree to waive the 60-day
period or the department notices a public hearing on the application.
If the department holds a hearing on the application, the department
shall issue a decision and findings within 100 days after the
hearing. The department shall hold a hearing on any of the following
grounds:
   (1)    A consumer   An
enrollee  , or his or her representative, requests a hearing
within 45 days of the date of the public notice, and the department
grants the request for a hearing. If the department denies the
request for a hearing, it shall issue written findings in support of
that decision.
   (2) The department determines for any reason to hold a hearing on
the application.
   (3) The proposed change would exceed 10 percent of the amount of
the current rate under the health care service plan contract, or
would exceed 15 percent for any individual enrollee subject to the
rate increase, in which case the department shall hold a hearing upon
a timely request for a hearing.
   (c) The public notice required by this section shall be posted on
the department's Internet Web site and distributed to the major
statewide media and to any member of the public who requests
placement on a mailing list or electronic mail list to receive the
notice.
   1385.010.  All hearings under this article shall be conducted
pursuant to the provisions of Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code,
with the following exceptions:
   (a) For purposes of Sections 11512 and 11517 of the Government
Code, the hearing shall be conducted by an administrative law judge
appointed pursuant to Section 11502 of the Government Code or by the
director.
   (b) The hearing shall be commenced by filing a notice, in lieu of
Sections 11503 and 11504 of the Government Code.
   (c) The director shall adopt, amend, or reject a decision only
under Section 11518.5 of the Government Code and subdivisions (b) and
(c) of Section 11517 of the Government Code and solely on the basis
of the record as provided in Section 11425.50 of the Government Code.

   (d) The right to discovery shall be liberally construed and
discovery disputes shall be determined by the administrative law
judge as provided in Section 11507.7 of the Government Code.
   (e)  Judicial review shall be conducted in accordance with
the requirements, standards, and procedures set forth in Section
1858.6 of the Insurance Code.  For purposes of judicial
review, a decision by the department to hold a hearing on the
application is not a final order or decision; however, a decision not
to hold a hearing on an application is a final order or decision for
purposes of judicial review.  Any final finding, determination,
rule, ruling, or order made by the director under this article shall
be subject to review by the courts of the state, and proceedings on
review shall be in accordance with the provisions of the Code of
Civil   Procedure. In these proceedings on review, the court
is authorized and directed to exercise its independent judgment on
the evidence and unless the weight of the evidence supports the
findings, determination, rule, ruling, or order of the director, the
same shall be annulled. Any petition for review of any such finding,
determination, rule, ruling, or order shall be filed within 60 days
of the public notice of the order or decision.  
   1385.011.  (a) A person may initiate or intervene in any
proceeding permitted or established pursuant to this article,
challenge any action of the department under this article, and
enforce any provision of this article on behalf of himself or herself
or members of the public. 
    1385.011.    (a) An enrollee may initiate or
intervene in any proceeding pursuant to this article. Compensation
shall be provided for reasonable advocate's fees, reasonable expert
witness fees, and other reasonable costs to enrollees for
participation or intervention in any proceeding of the department
under this article, subject to subdivision (b). For purposes of this
section, "enrollee" includes any of the following:  
   (1) A representative of one or more enrollees, subscribers, or
members of any health care services plan that is subject to the
jurisdiction of the department.  
   (2) A representative of a group or organization authorized
pursuant to its articles of incorporation or bylaws to represent the
interests of consumer enrollees, subscribers, or members. 
   (b) (1) The department or a court shall  award reasonable
advocacy fees and costs, including witness fees, in a proceeding
described in subdivision (a) to a person who demonstrates both of the
following:  
   (A) The person represents the interests of consumers. 
    (B)     The person
 award  , in a proceeding described in subdivision (a),
the fees and costs set forth in that subdivision to an enrollee who
 has made a substantial contribution to the adoption of any
order, regulation, or
decision by the department or a court.
   (2) The award made under this section shall be paid by the rate
applicant.
   1385.012.  (a) A violation of this article is subject to the
penalties set forth in Sections 1386 and 1390.
   (b) If the director finds that a health care service plan has
violated this article, the director may order that plan to pay a
civil penalty, in addition to any other penalties that may be
prescribed by law, which may be recovered in a civil action, in an
amount not exceeding fifty thousand dollars ($50,000), but if the
violation is willful, the health care service plan shall be liable
for an amount not exceeding one hundred thousand dollars ($100,000).
In determining the amount of a civil penalty to be paid under this
subdivision, the director shall consider the gravity of the
violation, the history of previous violations by the plan, and any
other factors the director deems relevant.
   (c) Moneys collected under this section shall be deposited in the
fund specified in Section 1385.013.
   1385.013.  (a) The department may charge a health care service
plan a fee for the actual and reasonable costs related to filing and
reviewing an application under this article.
   (b) The fees shall be deposited into the Department of Managed
Health Care Health Rate Approval Fund, which is hereby created in the
State Treasury. Moneys in the fund shall be available to the
department, upon appropriation by the Legislature, for the sole
purpose of implementing this article.
   1385.014.  (a) On or before July 1, 2012, the director may issue
guidance to health care service plans regarding compliance with this
article. This guidance shall not be subject to the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).
   (b) The department shall consult with the Department of Insurance
in issuing guidance under subdivision (a), in adopting necessary
regulations, in posting information on its Internet Web site under
this article, and in taking any other action for the purpose of
implementing this article.
   (c) The department, working in coordination with the Department of
Insurance, shall have all necessary and proper powers to implement
this article and shall adopt regulations to implement this article no
later than January 1, 2013.
   1385.015.  (a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, the department may review
any rate to ensure compliance with this article.
   (b) The department shall report to the Legislature at least
semiannually on all rate applications approved, modified, or denied
under this article. The report required pursuant to this subdivision
shall be submitted pursuant to the procedures specified under Section
9795 of the Government Code.
   (c) The department shall post on its Internet Web site any changes
submitted by a plan to a rate application, including any
documentation submitted by the plan supporting those changes.
   (d) The department shall post on its Internet Web site whether it
approved, denied, or modified a proposed rate change pursuant to this
article.
   (e) If the department finds that a proposed rate is excessive,
inadequate, or unfairly discriminatory, or that a rate application
contains inaccurate information, the department shall post its
finding on its Internet Web site.
   (f) Nothing in this article shall be construed to impair or impede
the department's authority to administer or enforce any other
provision of this chapter.
  SEC. 3.  Section 1386 of the Health and Safety Code is amended to
read:
   1386.  (a) The director may, after appropriate notice and
opportunity for a hearing, by order suspend or revoke any license
issued under this chapter to a health care service plan or assess
administrative penalties if the director determines that the licensee
has committed any of the acts or omissions constituting grounds for
disciplinary action.
   (b) The following acts or omissions constitute grounds for
disciplinary action by the director:
   (1) The plan is operating at variance with the basic
organizational documents as filed pursuant to Section 1351 or 1352,
or with its published plan, or in any manner contrary to that
described in, and reasonably inferred from, the plan as contained in
its application for licensure and annual report, or any modification
thereof, unless amendments allowing the variation have been submitted
to, and approved by, the director.
   (2) The plan has issued, or permits others to use, evidence of
coverage or uses a schedule of charges for health care services that
do not comply with those published in the latest evidence of coverage
found unobjectionable by the director.
   (3) The plan does not provide basic health care services to its
enrollees and subscribers as set forth in the evidence of coverage.
This subdivision shall not apply to specialized health care service
plan contracts.
   (4) The plan is no longer able to meet the standards set forth in
Article 5 (commencing with Section 1367).
   (5) The continued operation of the plan will constitute a
substantial risk to its subscribers and enrollees.
   (6) The plan has violated or attempted to violate, or conspired to
violate, directly or indirectly, or assisted in or abetted a
violation or conspiracy to violate any provision of this chapter, any
rule or regulation adopted by the director pursuant to this chapter,
or any order issued by the director pursuant to this chapter.
   (7) The plan has engaged in any conduct that constitutes fraud or
dishonest dealing or unfair competition, as defined by Section 17200
of the Business and Professions Code.
   (8) The plan has permitted, or aided or abetted any violation by
an employee or contractor who is a holder of any certificate,
license, permit, registration, or exemption issued pursuant to the
Business and Professions Code or this code that would constitute
grounds for discipline against the certificate, license, permit,
registration, or exemption.
   (9) The plan has aided or abetted or permitted the commission of
any illegal act.
   (10) The engagement of a person as an officer, director, employee,
associate, or provider of the plan contrary to the provisions of an
order issued by the director pursuant to subdivision (c) of this
section or subdivision (d) of Section 1388.
   (11) The engagement of a person as a solicitor or supervisor of
solicitation contrary to the provisions of an order issued by the
director pursuant to Section 1388.
   (12) The plan, its management company, or any other affiliate of
the plan, or any controlling person, officer, director, or other
person occupying a principal management or supervisory position in
the plan, management company, or affiliate, has been convicted of or
pleaded nolo contendere to a crime, or committed any act involving
dishonesty, fraud, or deceit, which crime or act is substantially
related to the qualifications, functions, or duties of a person
engaged in business in accordance with this chapter. The director may
revoke or deny a license hereunder irrespective of a subsequent
order under the provisions of Section 1203.4 of the Penal Code.
   (13) The plan violates Section 510, 2056, or 2056.1 of the
Business and Professions Code or Section 1375.7.
   (14) The plan has been subject to a final disciplinary action
taken by this state, another state, an agency of the federal
government, or another country for any act or omission that would
constitute a violation of this chapter.
   (15) The plan violates the Confidentiality of Medical Information
Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil
Code).
   (16) The plan violates Section 806 of the Military and Veterans
Code.
   (17) The plan violates Section 1262.8.
   (18) The plan has failed to comply with the requirements of
Article 6.1 (commencing with Section 1385.001).
   (c) (1) The director may prohibit any person from serving as an
officer, director, employee, associate, or provider of any plan or
solicitor firm, or of any management company of any plan, or as a
solicitor, if either of the following applies:
   (A) The prohibition is in the public interest and the person has
committed, caused, participated in, or had knowledge of a violation
of this chapter by a plan, management company, or solicitor firm.
   (B) The person was an officer, director, employee, associate, or
provider of a plan or of a management company or solicitor firm of
any plan whose license has been suspended or revoked pursuant to this
section and the person had knowledge of, or participated in, any of
the prohibited acts for which the license was suspended or revoked.
   (2) A proceeding for the issuance of an order under this
subdivision may be included with a proceeding against a plan under
this section or may constitute a separate proceeding, subject in
either case to subdivision (d).
   (d) A proceeding under this section shall be subject to
appropriate notice to, and the opportunity for a hearing with regard
to, the person affected in accordance with subdivision (a) of Section
1397.
  SEC. 4.  Article 4.4 (commencing with Section 10180.1) is added to
Chapter 1 of Part 2 of Division 2 of the Insurance Code, to read:

      Article 4.4.  Approval of Rates


   10180.1.  For purposes of this article, the following definitions
shall apply:
   (a) "Applicant" means a health insurer seeking to change the rate
it charges its policyholders or to set a rate for a new product.
   (b) "Rate" means the charges assessed for a health insurance
policy or anything that affects the charges associated with such a
policy, including, but not limited to, premiums, base rates,
underwriting relativities, discounts, copayments, coinsurance,
deductibles, and any other out-of-pocket costs.
   10180.2.  (a) No rate shall be approved or remain in effect that
is found to be excessive, inadequate, unfairly discriminatory, or
otherwise in violation of this article.
   (b) No applicant shall implement a rate for a new product or
change the rate it charges its policyholders, unless it submits an
application to the department and the application is approved by the
department.
   (c) The commissioner may approve, deny, or modify any proposed
rate for a new product or any rate change for an existing product.
The presence of competition in the insurance market shall not be
considered in determining whether a rate change is excessive,
inadequate, or unfairly discriminatory. The commissioner shall not
approve any rate that does not comply with the requirements of this
article.
   10180.3.  (a) This article shall apply to health insurance
policies offered in the individual or group market in California.
However, this article shall not apply to a specialized health
insurance policy; a Medicare supplement policy subject to Article 6
(commencing with Section 10192.05); a health insurance policy offered
in the Medi-Cal program (Chapter 7 (commencing with Section 14000)
of Part 3 of Division 9 of the Welfare and Institutions Code); a
health insurance policy offered in the Healthy Families Program (Part
6.2 (commencing with Section 12693)), the Access for Infants and
Mothers Program (Part 6.3 (commencing with Section 12695)), the
California Major Risk Medical Insurance Program (Part 6.5 (commencing
with Section 12700)), or the Federal Temporary High Risk Pool (Part
6.6 (commencing with Section 12739.5)); a health insurance conversion
policy offered pursuant to Section 12682.1; or a health insurance
policy offered to a federally eligible defined individual under
Chapter 9.5 (commencing with Section 10900).
   (b) The department shall review a rate application pursuant to
regulations it promulgates to determine excessive, inadequate, or
unfairly discriminatory rates. The review shall consider, but not be
limited to, medical expenses and all nonmedical expenses, including,
but not limited to, the rate of return, overhead, and administration,
and surplus, reserves, investment income, and any information
submitted under Section 10180.4 or 10180.5.  The review shall
take into account established actuarial principles. 
   (c) In promulgating regulations to determine whether a rate is
excessive, inadequate, or unfairly discriminatory, the department
shall consider whether the rate is reasonable in comparison to
coverage benefits.
   10180.4.  (a) For individual or small group health insurance
policies, all health insurers shall file with the department a
complete rate application for any proposed rate change or rate for a
new product that would become effective on or after January 1, 2012.
The rate application shall be filed at least 60 days prior to the
proposed effective date of the proposed rate.
   (b) No health insurer shall implement a rate change within one
year of the date of implementation of the most recently approved rate
change for each product in the individual or small group market.
   (c) An insurer shall disclose to the department all of the
following for each individual or small group rate application:
   (1) All of the information required pursuant to subdivisions (b)
and (c) of Section 10181.3, except for the information set forth in
paragraph (23) of subdivision (b) of Section 10181.3.
   (2) Highest and lowest rate change initially requested for an
individual or small group.
   (3) Highest and lowest rate of change.
   (4) Five-year rate change history for the population affected by
the proposed rate change.
   (5) The rate of return that would result if the rate application
were approved.
   (6) The average rate change per affected insured or group that
would result from approval of the application, as well as the lowest
and highest rate increase that would result for any insured.
   (7) The overhead loss ratio, reserves, excess tangible net equity,
surpluses, profitability, reinsurance, dividends, and investment
income that exist and would result if the application is approved;
the financial condition of the health insurer for at least the past
five years, or total years in existence if less than five years,
including, but not limited to, the financial performance for at least
the past five years of the insurer's statewide individual or small
group market business, and the insurer's overall statewide business;
and the financial performance for at least the past five years of the
block of business subject to the proposed rate change, including,
but not limited to, past and projected profits, surplus, reserves,
investment income, and reinsurance applicable to the block. For the
purposes of this section, "overhead loss ratio" means the ratio of
revenue dedicated to all nonmedical expenses and expenditures,
including profit, to revenue dedicated to medical expenses. A medical
expense is any payment to a hospital, physician and surgeon, or
other provider for the provision of medical care or health care
services directly to, or for the benefit of, the insured.
   (8) Salary and bonus compensation paid to the 10 highest paid
officers and employees of the applicant for the most recent fiscal
year.
   (9) Dollar amounts of financial or capital disbursements or
transfers to affiliates, and dollar amounts of management agreements
and service contracts.
   (10) A statement setting forth all of the applicant's nonmedical
expenses for the most recent fiscal year, including administration,
dividends, rate of return, advertising, lobbying, and salaries.
   (11) A line-item report of medical expenses, including aggregate
totals paid to hospitals and physicians and surgeons  , including
costs associated with experimental or investigative therapies 
.
   (12) The contracted rates between a health insurer and a provider.
Pursuant to Section 10181.8, these rates shall not be disclosed to
the public.
   (13) Compliance with medical loss ratio standards in effect under
federal or state law.
   (14) Whether the insurer has complied with all federal and state
requirements for pooling risk and requirements for participation in
risk adjustment programs in effect under federal and state law.
   (15) The insurer's statement of purpose or mission in its
corporate charter or mission statement.
   (16) Whether the insurer employs provider payment strategies to
enhance cost-effective utilization of appropriate services.
   (17) Affordability of the insurance product or products subject to
the proposed rate change.
   (18) Public comments received pertaining to the information
required in this section. 
   (19) Any other information deemed necessary by the commissioner.

   (d) An insurer shall submit any other information required
pursuant to any regulation adopted by the department to comply with
this article and related regulations.
   (e) The rate application shall be signed by the officers of the
health insurer who exercise the functions of a chief executive
officer and chief financial officer. Each officer shall certify that
the representations, data, and information provided to the department
to support the application are true.
   (f) The insurer has the burden to provide the department with
evidence and documents establishing, by preponderance of the
evidence, the application's compliance with the requirements of this
article.
   10180.5.  (a) For large group health insurance policies, all large
group health insurers shall file with the department a complete rate
application for any proposed rate change or rate for a new product
that would become effective on or after January 1, 2012. The rate
application shall be filed at least 60 days prior to the proposed
effective date of the proposed rate.
   (b) No health insurer shall implement a rate change within one
year of the date of implementation of the most recently approved rate
change for each product in the large group market.
   (c) An insurer shall disclose to the department all of the
following for each large group rate application:
   (1) Company name and contact information.
   (2) Number of policy forms covered by the application.
   (3) Policy form numbers covered by the application.
   (4) Product type, such as indemnity or preferred provider
organization.
   (5) Segment type.
   (6) Type of insurer involved, such as for profit or not for
profit.
   (7) Whether the products are opened or closed.
   (8) Enrollment in each policy and rating form.
   (9) Insured months in each policy form.
   (10) Annual rate.
   (11) Total earned premiums in each policy form.
   (12) Total incurred claims in each policy form.
   (13) Average rate change initially requested.
   (14) Highest and lowest rate change initially requested for a
group.
   (15) Review category: initial application for a new product,
application for an existing product, or resubmission of an
application.
   (16) Average rate of change.
   (17) Highest and lowest rate of change.
   (18) Proposed effective date of the proposed rate change.
   (19) Five-year rate change history for the population affected by
the proposed rate change.
   (20) The rate of return that would result if the rate application
were approved.
   (21) Number of policyholders or insureds affected by each policy
form.
   (22) The average rate change per affected insured or group that
would result from approval of the application, as well as the lowest
and highest rate increase that would result for any insured.
   (23) The insurer's overall annual medical trend factor assumptions
in each rate filing for all benefits and by aggregate benefit
category, including hospital inpatient, hospital outpatient,
physician and surgeon services, prescription drugs and other
ancillary services, laboratory, and radiology  , including costs
associated with experimental or investigative therapies  . An
insurer may provide aggregated additional data that demonstrates or
reasonably estimates year-to-year cost increases in specific benefit
categories in major geographic regions of the state. For purposes of
this paragraph, "major geographic region" shall be defined by the
department and shall include no more than nine regions.
   (24) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician and surgeon services, prescription drugs and
other ancillary services, laboratory, and radiology.
   (25) A comparison of claims cost and rate of changes over time.
   (26) Any changes in insured costsharing over the prior year
associated with the submitted rate application.
   (27) Any changes in insured benefits over the prior year
associated with the submitted rate application.
   (28) Any changes in administrative costs.
   (29) The overhead loss ratio, reserves, excess tangible net
equity, surpluses, profitability, reinsurance, dividends, and
investment income that exist and will result if the application is
approved; the financial condition of the insurer for at least the
past five years, or total years in existence if less than five years,
including, but not limited to, the financial performance for at
least the past five years of the insurer's statewide large group
market business, and the insurer's overall statewide business; and
the financial performance for at least the past five years of the
block of business subject to the proposed rate change, including, but
not limited to, past and projected profits, surplus, reserves,
investment income, and reinsurance applicable to the block. For the
purposes of this section, "overhead loss ratio" means the ratio of
revenue dedicated to all nonmedical expenses and expenditures,
including profit, to revenue dedicated to medical expenses. A medical
expense is any payment to a hospital, physician and surgeon, or
other provider for the provision of medical care or health care
services directly to, or for the benefit of, the insured.
   (30) Salary and bonus compensation paid to the 10 highest paid
officers and employees of the applicant for the most recent fiscal
year.
   (31) Dollar amounts of financial or capital disbursements or
transfers to affiliates and management agreements and service
contracts.
   (32) A statement setting forth all of the applicant's nonmedical
expenses for the most recent fiscal year including administration,
dividends, rate of return, advertising, lobbying, and salaries.
   (33) A line-item report of medical expenses, including aggregate
totals paid to hospitals and physicians and surgeons.
   (34) Compliance with medical loss ratio standards in effect under
federal or state law.
   (35) Whether the insurer has complied with all federal and state
requirements for pooling risk and requirements for participation in
risk adjustment programs in effect under federal and state law.
   (36) The insurer's statement of purpose or mission in its
corporate charter or mission statement.
   (37) Whether the insurer employs provider payment strategies to
enhance cost-effective utilization of appropriate services.
   (38) Affordability of the insurance product or products subject to
the proposed rate change.
   (39) Public comments received pertaining to the information
required in this section.
   (40) All of the information required pursuant to subdivision (c)
of Section 10181.4.
   (41) Any other information required under the federal Patient
Protection and Affordable Care Act (Public Law 111-148).
   (42) The contracted rates between a health insurer and a provider.
Pursuant to Section 10180.8, these rates shall not be disclosed to
the public.
   (43) The contracted rates between a health insurer and a large
group policyholder. Pursuant to Section 10180.8, these rates shall
not be disclosed to the public. 
   (44) Any other information deemed necessary by the commissioner.

   (d) An insurer shall also submit any other information required
pursuant to any regulation adopted by the department to comply with
this article and related regulations.
   (e) The rate application shall be signed by the officers of the
health insurer who exercise the functions of a chief executive
officer and chief financial officer. Each officer shall certify that
the representations, data, and information provided to the department
to support the application are true.
   (f) The health insurer has the burden to provide the department
with evidence and documents establishing, by a preponderance of the
evidence, the application's compliance with the requirements of this
article.
   10180.6.  Notwithstanding any provision in a contract between a
health insurer and a provider, the department may request from a
health insurer, and the health insurer shall provide, any information
required under this article or the federal Patient Protection and
Affordable Care Act (Public Law 111-148).
   10180.7.  A rate change by a health insurer that became effective
during the period January 1, 2011, to December 31, 2011, inclusive,
shall be subject to review by the department for compliance with this
article. The department shall order the refund of payments made
pursuant to any such rate, to the extent the department finds the
rate to be excessive, inadequate, or unfairly discriminatory.
   10180.8.  (a) Notwithstanding Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code, all
information submitted under this article shall be made publicly
available by the department, except as provided in subdivision (b).
Subdivision (d) of Section 6254 of the Government Code shall not
apply to a public record under this article.
   (b) (1) The contracted rates between a health insurer and a
provider shall be deemed confidential information that shall not be
made public by the department and are exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
   (2) The contracted rates between a health insurer and a large
group subscriber shall be deemed confidential information that shall
not be made public by the department and are exempt from disclosure
under the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
   (c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.
   (d) The information shall be made public and posted to the
department's Internet Web site for not less than 60 days after the
date of public notice.
   (1) The department and the health insurer shall make the
information submitted under this article readily available to the
public on their                                             Internet
Web sites, in plain language, and in a manner and format specified by
the department, except as provided in subdivision (b).
   (2) The entirety of the rate application shall be made available
upon request to the department, except as provided in subdivision
(b).
   (e) The department shall accept and post to its Internet Web site
any public comment on a proposed rate submitted to the department
during the 60-day period described in subdivision (a) of Section
10180.4 or subdivision (a) of Section 10180.5.
   10180.9.  (a) The department shall notify the public of any rate
application by a health insurer.
   (b) If the application process in Section 10180.4 or 10180.5 has
been followed, the department shall issue a decision within 60 days
after the date of the public notice provided under subdivision (a),
unless the department and the applicant agree to waive the 60-day
period or the department notices a public hearing on the application.
If the department holds a hearing on the application, the department
shall issue a decision and findings within 100 days after the
hearing. The department shall hold a hearing on any of the following
grounds:
   (1) A  consumer   policyholder  , or his
or her representative, requests a hearing within 45 days of the date
of the public notice, and the department grants the request for a
hearing. If the department denies the request for a hearing, it shall
issue written findings in support of that decision.
   (2) The department determines for any reason to hold a hearing on
the application.
   (3) The proposed change would exceed 10 percent of the amount of
the current rate under the plan contract, or would exceed 15 percent
for any individual insured subject to the rate increase, in which
case the department shall hold a hearing upon a timely request for a
hearing.
   (c) The public notice required by this section shall be posted on
the department's Internet Web site and distributed to the major
statewide media and to any member of the public who requests
placement on a mailing list or electronic mail list to receive the
notice.
   10180.10.  All hearings under this article shall be conducted
pursuant to the provisions of Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code,
with the following exceptions:
   (a) For purposes of Sections 11512 and 11517 of the Government
Code, the hearing shall be conducted by an administrative law judge
appointed pursuant to Section 11502 of the Government Code or by the
commissioner.
   (b) The hearing shall be commenced by filing a notice, in lieu of
Sections 11503 and 11504 of the Government Code.
   (c) The commissioner shall adopt, amend, or reject a decision only
under Section 11518.5 of the Government Code and subdivisions (b)
and (c) of Section 11517 of the Government Code and solely on the
basis of the record as provided in Section 11425.50 of the Government
Code.
   (d) The right to discovery shall be liberally construed and
discovery disputes shall be determined by the administrative law
judge as provided in Section 11507.7 of the Government Code.
   (e)  Judicial review shall be conducted in accordance with
Section 1858.6 of the Insurance Code.  For purposes of
judicial review, a decision by the department to hold a hearing on an
application is not a final order or decision; however, a decision
not to hold a hearing on an application is a final order or decision
for purposes of judicial review.  Any final finding,
determination, rule, ruling, or order made by the commissioner under
this article shall be subject to review by the courts of the state,
and proceedings on review shall be in accordance with the provisions
of the Code of Civil Procedure. In these proceedings on review, the
court is authorized and directed to exercise its independent judgment
on the evidence and unless the weight of the evidence supports the
findings, determination, rule, ruling, or order of the commissioner,
the same shall be annulled. Any petition for review of any such
finding, determination, rule, ruling, or order shall be filed within
60 days of the public notice of the order or decision.  

   10180.11.  (a) A person may initiate or intervene in any
proceeding permitted or established pursuant to this article,
challenge any action of the department under this article, and
enforce any provision of this article on behalf of himself or herself
or members of the public. 
    10180.11.    (a) A policyholder may initiate or
intervene in any proceeding pursuant to this article. Compensation
shall be provided for reasonable advocate's fees, reasonable expert
witness fees, and other reasonable costs to policyholders for
participation or intervention in any proceeding of the department
under this article, subject to subdivision (b). For purposes of this
section, "policyholder" includes any of the following:  
   (1) A representative of one or more policyholders of any health
insurer that is subject to the jurisdiction of the department. 

   (2) A representative of a group or organization authorized
pursuant to its articles of incorporation or bylaws to represent the
interests of policyholders. 
   (b) (1) The department or a court shall  award reasonable
advocacy fees and costs, including witness fees, in a proceeding
described in subdivision (a) to a person who demonstrates both of the
following:  
   (A) The person represents the interests of consumers. 
    (B)     The person
 award  , in a proceeding described in subdivision (a),
the fees and costs set forth in that subdivision to a policyholder
who  has made a substantial contribution to the adoption of any
order, regulation, or decision by the department or a court.
   (2) The award made under this section shall be paid by the rate
applicant.
   10180.12.  (a) A violation of this article is subject to the
penalties set forth in Section 1859.1. The commissioner may also
suspend or revoke in whole or in part the certificate of authority of
a health insurer for a violation of this article.
   (b) If the commissioner finds that a health insurer has violated
this article, the commissioner may order that insurer to pay a civil
penalty, in addition to any other penalties that may be prescribed by
law, which may be recovered in a civil action, in an amount not
exceeding fifty thousand dollars ($50,000), but if the violation is
willful, the insurer shall be liable for an amount not exceeding one
hundred thousand dollars ($100,000). In determining the amount of a
civil penalty to be paid under this subdivision, the commissioner
shall consider the gravity of the violation, the history of previous
violations by the insurer, and any other factors the commissioner
deems relevant.
   (c) Moneys collected under this section shall be deposited in the
fund specified in Section 10180.13.
   10180.13.  (a) The department may charge a health insurer a fee
for the actual and reasonable costs related to filing and reviewing
an application under this article.
   (b) The fees shall be deposited into the Department of Insurance
Health Rate Approval Fund, which is hereby created in the State
Treasury. Moneys in the fund shall be available to the department,
upon appropriation by the Legislature, for the sole purpose of
implementing this article.
   10180.14.  (a) On or before July 1, 2012, the commissioner may
issue guidance to health insurers regarding compliance with this
article. This guidance shall not be subject to the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).
   (b) The department shall consult with the Department of Managed
Health Care in issuing guidance under subdivision (a), in adopting
necessary regulations, in posting information on its Internet Web
site under this article, and in taking any other action for the
purpose of implementing this article.
   (c) The department, working in coordination with the Department of
Managed Health Care, shall have all necessary and proper powers to
implement this article and shall adopt regulations to implement this
article no later than January 1, 2013.
   10180.15.  (a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, the department may review
any rate to ensure compliance with this article.
   (b) The department shall report to the Legislature at least
semiannually on all rate applications approved, modified, or denied
under this article. The report required pursuant to this subdivision
shall be submitted pursuant to the procedures specified under Section
9795 of the Government Code.
   (c) The department shall post on its Internet Web site any changes
submitted by an insurer to a rate application, including any
documentation submitted by the insurer supporting those changes.
   (d) The department shall post on its Internet Web site whether it
approved, denied, or modified a proposed rate change pursuant to this
article.
   (e) If the department finds that a rate change is excessive,
inadequate, or unfairly discriminatory, or that a rate application
contains inaccurate information, the department shall post its
finding on its Internet Web site.
   (f) Nothing in this article shall be construed to impair or impede
the department's authority to administer or enforce any other
provision of this chapter.
  SEC. 5.  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.