Bill Text: CA AB1521 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Health care coverage: solicitation.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2009-08-27 - In committee: Held under submission. [AB1521 Detail]

Download: California-2009-AB1521-Amended.html

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BILL NUMBER: AB 1521	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 29, 2009
	AMENDED IN ASSEMBLY  APRIL 16, 2009

INTRODUCED BY   Assembly Member Jones

                        FEBRUARY 27, 2009

   An act to add  Sections 1359.1 and 1359.2  
Section 1359.1  to the Health and Safety Code, and to add
 Sections 10119.4 and 10119.45   Section 10119.4
 to the Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1521, as amended, Jones. Health care coverage: solicitation.
   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 also provides for the
regulation of health insurers by the Department of Insurance.
Existing law regulates the solicitation of health care service plan
products and health insurance.  Existing law specifies that
certain persons who assist applicants in submitting an application to
a health care service plan or health insurer have a duty to assist
those applicants in providing answers to health questions accurately
and completely and requires those persons to make a specified
attestation on the written application.   Existing law
prohibits a plan or insurer from   entering into an
agreement with an agent, broker, or solicitor that provides for or
results in the compensation paid to the agent, broker, or solicitor
for the sale of a health care service plan contract or health
insurance policy to a small employer or an individual to be varied
because of specified characteristics of the small employer or
individual.  
   This bill would prohibit a plan or insurer from entering into an
agreement with a solicitor, as specified, that provides for or
results in the compensation paid to the solicitor for the sale,
offer, or application for an individual health care service plan
contract or individual health insurance policy to be varied because
of the health status, claims experience, industry, or occupation of
the individual. The bill would also prohibit a plan or insurer from
entering into an agreement with a solicitor that provides for or
results in a different percentage of premium or compensation level
paid to the solicitor if the solicitor, at the time of renewal of an
individual or group contract, submits an application that results in
the offer or purchase of coverage for a different health plan
contract or health insurance policy with the same health plan or
health insurer instead of renewal of the individual or group's
existing plan contract or insurance policy. The bill also would
require a plan or insurer, or solicitor representing a plan or
insurer, at the time of renewal of an individual health care service
plan contract or individual health insurance policy, to notify the
individual that application for a different contract or policy may
result in an offer, an offer for a higher premium, or denial of
coverage for that different contract or policy. The bill would
prohibit an application for a different benefit design from changing
the terms and conditions of the individual plan currently held by the
applicant and would require a solicitor to identify the specific
plans or insurers that the solicitor is offering.  
   This bill would specify that an entity submitting an application
to a plan or insurer that results in the offer, sale, or purchase of
health care coverage has a duty of honesty, good faith, and fair
dealing to the offeree or purchaser of that coverage. The bill would
also require that entity to disclose to the offeree or purchaser,
prior to the sale or purchase of coverage, any compensation received
by the entity as fees, commissions, or any other remuneration or
thing of value, as specified. The bill would prohibit the entity from
receiving any compensation other than that disclosed pursuant to
these provisions. If the application or offer is made by an employee
of the plan or insurer, the bill would require the application or
offer to include a written disclosure of that fact. 
   Because a willful violation of the bill's requirements 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 1359.1 is added to the 
 Health and Safety Code   , to read:  
   1359.1.  (a) A plan shall not, directly or indirectly, enter into
any contract, agreement, or arrangement with a solicitor that
provides for or results in the compensation paid to the solicitor for
the sale, offer, or application of an individual health care service
plan contract to be varied because of the health status, claims
experience, industry, or occupation of the individual. This
subdivision does not apply to a compensation arrangement paid to a
solicitor on the basis of a percentage of premium, provided that the
compensation level shall not vary because of the health status,
claims experience, industry, or occupation of the individual.
   (b) A plan shall not, directly or indirectly, enter into any
contract, agreement, or arrangement with a solicitor that provides
for or results in a different percentage of premium or compensation
level paid to the solicitor if, at the time of renewal of an
individual or group plan contract, the solicitor submits an
application that results in the offer or purchase of coverage for a
different health plan contract with the same health care service plan
instead of renewal of the individual or group's existing health plan
contract.
   (c) At the time of renewal of an individual health care service
plan contract, the health plan, or any solicitor representing the
health plan, shall notify the individual that application for a
different individual health plan contract may result in a review of
the applicant's medical history that could result in an offer, an
offer for higher premium, or denial of coverage entirely for the
different plan being applied for. An application for a different
benefit plan design shall not change the terms and conditions of the
individual health plan currently held by the applicant.
   (d) The solicitor shall identify the specific health plan or
health plans the solicitor is offering.
   (e) For purposes of this section, "solicitor" shall have the same
meaning as provided in subdivision (m) of Section 1345 and shall
include an agent, broker, solicitor, solicitor firm, or any other
entity that engages in solicitation as defined in subdivision (l) of
Section 1345. 
   SEC. 2.    Section 10119.4 is added to the  
Insurance Code   , to read:  
   10119.4.  (a) A health insurer shall not, directly or indirectly,
enter into any contract, agreement, or arrangement with an agent,
broker, solicitor, or any other entity engaging in the sale, offer,
or application for individual health insurance that provides for or
results in the compensation paid to the agent for the sale of a
health insurance policy to be varied because of the health status,
claims experience, industry, or occupation of the individual. This
subdivision does not apply to a compensation arrangement that
provides compensation to an agent on the basis of a percentage of
premium, provided that the compensation level shall not vary because
of the health status, claims experience, industry, or occupation of
the individual.
   (b) A health insurer shall not, directly or indirectly, enter into
any contract, agreement, or arrangement with an agent, broker,
solicitor, or any other entity that provides for or results in a
different percentage of premium or compensation level paid to the
agent, broker, solicitor or other entity if, at the time of renewal
of an individual or group health insurance policy, the agent, broker,
solicitor, or other entity submits an application that results in
the offer or purchase of coverage for a different health insurance
policy with the same health insurer instead of renewal of the
individual or group's existing health insurance policy.
   (c) At the time of renewal of an individual health insurance
policy, the health insurer, or any agent, broker, solicitor, or any
other entity representing the health insurer, shall notify the
individual that application for a different individual health
insurance policy may result in a review of the applicant's medical
history that could result in an offer, an offer for a higher premium,
or denial of coverage entirely for the different plan being applied
for. An application for a different benefit plan design shall not
change the terms and conditions of the individual health plan
contract currently held by the applicant.
   (d) The agent, broker, or solicitor or other entity shall identify
the specific insurer or insurers the agent, broker, or solicitor is
offering.  
  SECTION 1.    Section 1359.1 is added to the
Health and Safety Code, to read:
   1359.1.  An agent, broker, solicitor, solicitor firm,
representative, or any other entity that submits an application to a
health care service plan that results in the offer, sale, or purchase
of individual or group health care coverage from a health care
service plan has a duty of honesty, good faith, and fair dealing to
the offeree or purchaser of that coverage.  
  SEC. 2.    Section 1359.2 is added to the Health
and Safety Code, to read:
   1359.2.  (a) (1) An agent, broker, solicitor, solicitor firm,
representative, or any other entity that submits an application to a
health care service plan that results in the offer, sale, or purchase
of individual or group health care coverage from a health care
service plan shall disclose to the offeree or purchaser of that
coverage any compensation received by the agent, broker, solicitor,
solicitor firm, representative, or other entity involved in the
transaction as fees, commissions, or any other remuneration or thing
of value. The disclosure shall include any compensation to be
received by the agent, broker, solicitor, solicitor firm,
representative, or other entity at any time prior to, during, or
after the period of coverage as a result of the transaction or
potential transaction.
   (2) If the application or offer is made by an employee of the
health care service plan, the application or offer shall include a
disclosure in writing that the application or offer is being made by
an employee of the health care service plan. If the compensation of
the employee is dependent on the volume or amount of purchases he or
she generates, this shall also be disclosed to the offeree or
purchaser.
   (b) The disclosure to the offeree or purchaser shall be made prior
to the sale or purchase of coverage.
   (c) (1) The disclosure shall provide an estimate of the percentage
of the premium to be paid by the offeree or purchaser as
compensation to the agent, broker, solicitor, solicitor firm,
representative, or other entity.
   (2) The estimate shall include the percentage of premium to be
paid to the agent, broker, solicitor, solicitor firm, representative,
or other entity in the first year of coverage and in future years,
if any.
   (d) The health care service plan may provide to the offeree or
purchaser of individual or group health care coverage the information
required under this section. If the plan provides the information to
the offeree or purchaser, it shall also provide the same information
to the agent, broker, solicitor, solicitor firm, representative, or
other entity engaged in the transaction.
   (e) The agent, broker, solicitor, solicitor firm, representative,
or other entity shall receive no compensation from the plan, the
offeree or purchaser, or any other source except for the compensation
disclosed to the offeree or purchaser pursuant to this section.
 
  SEC. 3.    Section 10119.4 is added to the
Insurance Code, to read:
   10119.4.  An agent, broker, or any other entity that submits an
application to a health insurer that results in the offer, sale, or
purchase of individual or group health insurance, as defined in
Section 106, has a duty of honesty, good faith, and fair dealing to
the offeree or purchaser of that insurance.  
  SEC. 4.    Section 10119.45 is added to the
Insurance Code, to read:
   10119.45.  (a) (1) An agent, broker, or any other entity that
submits an application to a health insurer that results in the offer,
sale, or purchase of individual or group health insurance, as
defined in Section 106, from a health insurer shall disclose to the
offeree or purchaser of that insurance any compensation received by
the agent, broker, or other entity involved in the transaction as
fees, commissions, or any other remuneration or thing of value. The
disclosure shall include any compensation to be received by the
agent, broker, or other entity at any time prior to, during, or after
the period of insurance as a result of the transaction or potential
transaction.
   (2) If the application or offer is made by an employee of the
health insurer, the application or offer shall include a disclosure
in writing that the application or offer is being made by an employee
of the health insurer. If the compensation of the employee is
dependent on the volume or amount of purchases he or she generates,
this shall also be disclosed to the offeree or purchaser.
   (b) The disclosure to the offeree or purchaser shall be made prior
to the sale or purchase of insurance.
   (c) (1) The disclosure shall provide an estimate of the percentage
of the premium to be paid by the offeree or purchaser as
compensation to the agent, broker, or other entity.
   (2) The estimate shall include the percentage of premium to be
paid to the agent, broker, or other entity in the first year of
insurance and in future years, if any.
   (d) The health insurer may provide to the offeree or purchaser of
individual or group health insurance the information required under
this section. If the insurer provides the information to the offeree
or purchaser, it shall also provide the same information to the
agent, broker, or other entity engaged in the transaction.
   (e) The agent, broker, or other entity shall receive no
compensation from the insurer, the offeree or purchaser, or any other
source except for the compensation disclosed to the offeree or
purchaser pursuant to this section. 
   SEC. 5.   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.