Legislation & Court Cases

legislation_green.jpg

Here are some highlights of new health care laws in
California, which took effect 1-1-16.

 1.)    Insurance Offered by Large Employers   AB 248 provides that large employers must now follow consumer protections that ensure they do not offer so-called junk insurance that does not offer minimum value, as defined. (*junk insurance is an interesting phrase, and would be a good topic for another article.)

2.)    Caps On Co-Pays  AB 339 limits patient’s cost-sharing on specialty drugs to $250/month, and prohibits placing all or most drugs used to treat a certain condition on the highest cost tier in drug formularies.

3.)    Translation of Prescription Drug InformationPharmacists are now required, upon request, to provide labels or medication information in the five most common languages in California, after English: Spanish, Tagalog, Chinese, Vietnamese, and Korean. (*could you have named these?)

4.)    Sperm DonationAB 960 was inspired by lesbian couples who want to have children. Many receive sperm donations from friends or relatives. This law says that the donor will not be viewed as the “natural parent” unless otherwise agreed to in writing prior to the conception of the child.

5.)    Vaccination for SchoolThe most controversial of all health care legislation, the new law takes effect 7-1-16, prior to the start of the 2016-2017 school year. SB277 requires that all children be fully vaccinated to attend school—both public and private—unless they have a medical exemption.  The fight over this bill dominated headlines for months.

CA Legislative Up-dates 2nd Quarter of 2015

Prepared by:  Diane Bauer, JD, CPCU

Legislative Calendar

The Legislature adjourned on September 11, 2015 and the Governor had until October 11, 2015 to sign or veto bills.  This is the first of a two-year session so bills that did not make it out of the legislature have the ability to move next year.  Below is a summary of legislation from this year as well as an update on the ITV regulation litigation.  New laws, if not specified, will have an effective date of January 1, 2016. 

ACIC v. Jones – Supreme Court of California Grants Review

In 2011, new regulations became effective which contained a long list of requirements that insurance companies and agents would have to satisfy when establishing replacement cost of a home.  If an insurer did not follow the requirements, it was considered a “misleading communication” and a violation under the California Unfair Insurance Practices Act (UIPA).  The industry trades filed suit alleging that the California Department of Insurance (CDI) had exceeded its authority in promulgating these regulations.  The California Court of Appeals, in upholding the trial court’s decision, rejected CDI’s argument that they had such authority, finding that the UIPA has a specific and set of procedures CDI must use to determine if a practice is “unfair”.  The rejection of CDI’s argument was a victory for the industry in that the establishment of replacement cost is not confined to only one method.  The broader implication of the Court’s ruling, with respect to CDI’s authority to promulgate regulations, comes into play with the recent precedential decision in Pacificare v Jones (see the Q1 Legislative Summary).  CDI filed a petition to have the Supreme Court take up the case, and they granted review.  This will be a lengthy process as oral arguments have not even begun.  A final ruling from the Supreme Court will undoubtedly impact the breadth of the Commissioner’s authority.

Legislation/Regulatory

Pending Bills (insurance related)

AB 53 – Requires require a parent, legal guardian, or the driver of a motor vehicle to properly secure a child who is under 2 years of age in an appropriate rear-facing child passenger restraint system, unless the child weighs 40 or more pounds or is 40 or more inches in height.  Signed by Governor – Effective 1/1/17

AB 160 – This bill would provide a new avenue to prosecute insurance fraud, tax fraud, and piracy as criminal profiteering activity.  Signed by Governor – Effective 1/1/16

AB 198 – This bill would allow tow truck drivers working with law enforcement to utilize either the center median or the right shoulder to remove disabled vehicles or other impediments to traffic, assuming certain conditions are met.  Signed by Governor – Effective 1/1/16

AB 202 – This bill would provide certain rights and benefits (i.e. workers compensation) to cheerleaders of California-based professional sports teams.  Signed by Governor – Effective 1/1/16

AB 229 – Allows the State to reimburse employees if they use short term rentals (i.e. AirBnB) or transportation network companies (i.e. Uber). Signed by Governor – In effect until 1/1/19

AB 305 - Prohibits apportionment of permanent disability, in the case of a physical injury occurring on or after January 1, 2016, from being based on pregnancy or menopause if the condition is contemporaneous with the claimed physical injury. The bill would also prohibit apportionment of permanent disability, in the case of a psychiatric injury occurring on or after January 1, 2016, from being based on psychiatric disability or impairment caused by sexual harassment, pregnancy, or menopause if the condition is contemporaneous with the claimed psychiatric injury. The bill would also provide, notwithstanding any other law, for injuries occurring on or after January 1, 2016, that the impairment ratings for breast cancer and the aftereffects of the disease, known as sequelae, shall in no event be less than comparable ratings for prostate cancer and its sequelae. Vetoed by Governor

AB 447 – Prohibits an insurer admitted to issue insurance policies covering real property designed for human habitation (including single family homes, condominiums and multi-unit commercial apartments) from failing or refusing to accept an application for insurance, issue a policy to an applicant for insurance, or cancel a policy based on the source of income of residential tenants or the receipt of housing assistance by tenants from the federal or state government or from a local public entity (i.e. Section 8); and prohibits the insurer from requiring this information on the application for insurance, as specified. Signed by Governor – Effective 1/1/16

AB 828 – Excludes vehicles used in transportation network company activities from the definition of commercial vehicles. Died in Committee

AB 933 – Provides that consent to the use of a person's driver's license number by the insurance agent or broker of an insurer, insurance licensee, employer, or prospective employer to obtain, transmit, or otherwise utilize the motor vehicle records of that person pursuant to the provision described above is presumed if the person provides his or her driver's license number to an insurer, insurance licensee, employer, or prospective employer for the purpose of eligibility, underwriting, and rating of personal or commercial insurance coverage or eligibility for employment or continued employment involving the use of a motor vehicle.  Died in Committee

SB 142 – Makes flying a drone lower than 350 feet above private property without consent a trespass violation. Vetoed by Governor

SB 585 - Beginning July 1, 2016, would create the Insurance Payment Intercept Program within the Department of Insurance. The bill would require the Department of Child Support Services to facilitate a data match system using automated data exchanges through which an insurer or self-insurer would be required to report, no later than 30 days prior to a claim payout, the name, address, and, if known, date of birth and social security number or other taxpayer identification number for each claimant to match a claimant who owes past due support, as specified.  Died in Committee


Legislation Updates from Diane E. Bauer, CPCU

2014-09 Legislative Update
2015-01 Legislative Update


Notices from the CA Department of Insurance

August 2014 - New Public Adjuster Exam Content
October 2013 - New Ethics CE Requirements