Bill Text: CA SB1142 | 2013-2014 | Regular Session | Amended

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

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Bill Title: Health insurance fraud: annual special purpose assessments.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2014-08-22 - Chaptered by Secretary of State. Chapter 251, Statutes of 2014. [SB1142 Detail]

Download: California-2013-SB1142-Amended.html

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BILL NUMBER: SB 1142	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 19, 2014

INTRODUCED BY   Senator Monning

                        FEBRUARY 20, 2014

   An act to amend Section 1872.85 of the Insurance Code, relating to
health insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1142, as amended, Monning. Health insurance fraud: annual
special purpose assessments.
   Existing law provides for the regulation of disability insurers by
the Insurance Commissioner. Existing law requires every admitted
disability insurer or other entity liable for any loss due to health
insurance fraud doing business in California to pay an annual special
purpose assessment that does not exceed $0.20 per year for each
insured under an individual or group insurance policy it issues in
this state, in order to fund increased investigation and prosecution
of fraudulent disability insurance claims. Existing law requires that
30% of those funds be distributed to the Fraud Division of the
Department of Insurance for enhanced investigative efforts and that
the other 70% be distributed to local district attorneys for the
investigation and prosecution of disability insurance fraud cases, as
specified.
   This bill would instead require that the annual special purpose
assessment be paid for each  insured who is a California
resident   person in this state covered  under an
individual or group policy regardless of the situs of the contract or
master group policyholder,  and regardless of whether the
insured has been issued an individual certificate of coverage, and
 including blanket insurance.  The bill would also require
that the data supporting the special purpose assessment not be
required to be submitted more often than once each calendar year,
except that responses to questions from the commissioner and
clarifying information regarding the data would not be considered as
  additional submissions of data. The bill would authorize,
for group and blanket insurance contracts, insurers to rely on
information requested from and provided by the group policyholder
after a reasonable effort to obtain timely and accurate information.

   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1872.85 of the Insurance Code is amended to
read:
   1872.85.  (a) Every admitted disability insurer or other entity
liable for any loss due to health insurance fraud doing business in
this state shall pay an annual special purpose assessment to be
determined by the commissioner, but not to exceed twenty cents
($0.20) annually for each  insured who is a California
resident   person in this state covered  under an
individual or group insurance policy regardless of the situs of the
contract or master group policyholder,  and regardless of whether
the insured has been issued an individual   certificate of
coverage,   and  including blanket insurance as defined
in Section 10270.2, in order to fund increased investigation and
prosecution of fraudulent disability insurance claims.  The data
supporting the special purpose assessment shall not be required to be
submitted more often than once each calendar year, except that
responses to questions from the commissioner and clarifying
information regarding the data shall not be considered as additional
submissions of data. For group and blanket insurance contracts,
insurers may rely on information requested from and provided by the
group policyholder after a reasonable effort to obtain timely and
accurate information.  After incidental expenses, 30 percent of
those funds received from the assessment per insured shall be
distributed to the Fraud Division of the Department of Insurance for
enhanced investigative efforts, and 70 percent of the funds shall be
distributed to local district attorneys, pursuant to subdivisions (b)
and (c), for investigation and prosecution of disability insurance
fraud cases. The funds received pursuant to this section shall be
deposited into the Disability Insurance Fraud Account, which is
hereby created in the Insurance Fund, and shall be expended and
distributed, when appropriated by the Legislature, only for enhanced
investigation and prosecution of disability insurance fraud.
   In the course of its investigation, the Fraud Division shall
aggressively pursue all reported incidents of probable fraud and, in
addition, shall forward to the appropriate disciplinary body the
names of any individuals licensed under the Business and Professions
Code who are convicted of engaging in fraudulent activity along with
all relevant supporting evidence.
   (b) The commissioner shall distribute funds pursuant to
subdivision (a) to district attorneys who are able to show a likely
positive outcome that will enhance the prosecution of disability
insurance fraud in their jurisdiction based on specific criteria
promulgated by the commissioner. A district attorney desiring funds
pursuant to subdivision (a) shall submit to the commissioner an
application that includes, but is not limited to, all of the
following:
   (1) The proposed use of the moneys and the anticipated outcome.
   (2) A list of all prior cases or projects in the district attorney'
s jurisdiction that have been funded under the provisions of this
section, and a copy of the final accounting for each case or project.
If a case or project is ongoing, the most recent accounting shall be
provided.
   (3) A detailed budget for the moneys, including salaries and
general expenses, that specifically identifies the purchase or rental
cost of equipment or supplies.
   (c) (1) A district attorney who receives moneys pursuant to this
section shall submit a final detailed accounting at the conclusion of
each case or project funded. For a case or project that continues
for longer than six months, an interim accounting shall be submitted
every six months, or as otherwise directed by the commissioner.
   (2) A district attorney who receives moneys pursuant to this
section shall submit a final report to the commissioner, which may be
made public, as to the success of each case or project funded by
this section. The report shall provide information and statistics on
the number of active investigations, arrests, indictments, and
convictions associated with a case or project. The applications for
moneys, the distribution of moneys, and the annual report required by
Section 1872.9 shall be public documents.
   (3) Notwithstanding any other provision of this section,
information submitted to the commissioner pursuant to this section
concerning criminal investigations, whether active or inactive, shall
be confidential.
   (4) The commissioner may conduct a fiscal audit of the programs
administered under this subdivision. The fiscal audit shall be
conducted by an internal audit unit of the department. The cost of
fiscal audits shall be paid from the Disability Insurance Fraud
Account, upon appropriation by the Legislature.
   (5) If the commissioner determines that a district attorney is
unable or unwilling to investigate or prosecute a relevant disability
insurance fraud case, the commissioner may discontinue distribution
of moneys allocated for that matter pursuant to this section, and may
redistribute moneys to other eligible district attorneys.
   (d) Activities of the Fraud Division with regard to investigating
and prosecuting fraudulent disability insurance claims pursuant to
this section shall be included in the report required by Section
1872.9.
   (e) This section shall not apply to policies issued by a
reciprocal or interinsurance exchange, as defined by Sections 1303
and 1350, or coverage provided by or through a motor club, as defined
by Section 12142, affiliated with a reciprocal or interinsurance
exchange, if the annual premium charged for the coverage or the
annual cost to the insurer for providing that coverage does not
exceed one dollar ($1) per insured.
   (f) The commissioner shall adopt regulations to implement this
section in accordance with the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).