Bill Text: CA SB585 | 2015-2016 | Regular Session | Amended


Bill Title: Insurance payments: interception.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2016-11-30 - From Assembly without further action. [SB585 Detail]

Download: California-2015-SB585-Amended.html
BILL NUMBER: SB 585	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JULY 2, 2015
	AMENDED IN SENATE  MAY 5, 2015
	AMENDED IN SENATE  APRIL 20, 2015

INTRODUCED BY   Senator Leyva

                        FEBRUARY 26, 2015

   An act to add Article 7.5 (commencing with Section 13550) to
Chapter 2 of Division 3 of the Insurance Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 585, as amended, Leyva. Insurance payments: interception.
   Existing law creates the Department of Child Support Services and
provides for the interception of funds from state tax refunds,
lottery winnings, unemployment compensation benefits, and benefits
under the Public Employees' Retirement System that otherwise would be
paid to a person owing past due child support. Existing law creates
the Department of Insurance, headed by the Insurance Commissioner,
and prescribes the department's powers and duties.
   This bill would, beginning July 1, 2016, 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,  
report, prior to the payment of a claim,  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.
   This bill would  authorize the commissioner, in his or her
discretion,   require the commissioner, if he or she
has good cause to believe that an insurer or self-insurer has not
complied with the bill's requirements, to give written notice of the
alleged noncompliance specifying a reasonable time, not less than 30
days, during which the insurer or self-insurer is required to correct
the noncompliance. The bill would require the commissioner  to
impose a fine, not to exceed $1,000,  upon   for
each violation if  an insurer or self-insurer  who
violates the bill's requirement to provide claim data. The bill would
additionally authorize the commissioner   fails to
correct the noncompliance within the specified timeframe, and 
to issue an order requiring the violator to comply with that
requirement.  The bill would authorize an insurer or self-insurer
who disagrees with the commissioner's determination of noncompliance
to request an administrative hearing within 30 days of receipt of
the notice of noncompliance. 
   Existing constitutional provisions require that a statute that
limits the right of access to the meetings of public bodies or the
writings of public officials and agencies be adopted with findings
demonstrating the interest protected by the limitation and the need
for protecting that interest.
   This bill would make legislative findings to that effect.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Article 7.5 (commencing with Section 13550) is added to
Chapter 2 of Division 3 of the Insurance Code, to read:

      Article 7.5.  Insurance Payment Intercept Program


   13550.  In furtherance of the enforcement of child support
obligations in the state, and to enhance efforts to notify the
Department of Child Support Services when an obligor is owed an
insurance claim payment, this article establishes and authorizes the
Insurance Payment Intercept Program.  This article is not
intended to delay payment of a claim. 
   13552.  (a) The Department of Child Support Services shall
facilitate a child support data match system using automated data
exchanges to the maximum extent feasible, through which an insurer or
self-insurer shall report,  no later than 30 days prior to a
claim payout,   prior to payment of a claim,  the
name, address, and, if known, date of birth and social security
number or other taxpayer identification number for each claimant.
   (b) An insurer or self-insurer may provide the claim data required
pursuant to subdivision (a) by any of the following methods:
   (1) Submitting the required claim data maintained by the insurer
or self-insurer directly to  the Department of Child Support
Services in hard copy or   a child support data match
program  in an electronic medium.
   (2) Authorizing an insurance claim data collection organization,
to which the insurer or self-insurer subscribes and submits the
required claim data, to conduct a data match of all claimants who owe
past due support and to submit the required data for each claimant
to  the Department of Child Support Services.  
a child support data match program. 
   (3) Receiving or accessing a data file from  an insurance
claim data collection organization   a child support
data match program  and conducting a data match of all claimants
who owe past due support and submitting the required data for each
claimant to  the Department of Child Support Services.
  a child support data match program.  
   (c) An insurance claim data collection organization acting on
behalf of the Department of Child Support Services shall submit the
required data for each claimant to the Department of Child Support
Services.  
   (c) With respect to claims involving periodic payments, the
insurer or self-insurer shall only report prior to issuing the
initial payment of benefits and each 12 months thereafter.  

   (d) An insurer or self-insurer that provides claim data in
accordance with subdivision (b) is in compliance with subdivision
(a).  
   (e) When a child support data match program identifies a match, it
shall notify the Department of Child Support Services and the
Department of Child Support Services shall send a notice, if
appropriate, to the insurer or self-insurer.  
   (f) Upon receipt by the insurer or self-insurer of notice from the
Department of Child Support Services on a reported insurance claim
payable to an obligor with a child support delinquency, the insurer
or self-insurer shall comply with the requirements of the notice.
 
   (g) (1) If the insurer or self-insurer is in receipt of a notice
from the Department of Child Support Services on a reported insurance
claim payable to an obligor who has a child support delinquency
after a payment on a periodic payment is issued, the insurer or
self-insurer shall comply with the notice with respect to subsequent
payments.  
   (2) Except as required by paragraph (1), this section does not
require an insurer or self-insurer to comply with a notice from the
Department of Child Support Services on a reported insurance claim
payable to an obligor with a child support delinquency, if the notice
is received after an insurer or self-insurer has issued payment on a
claim.  
   (h) A support obligation shall be inferior to any lien or written
notice of assignment of interest of a health care provider or a
repair facility, attorney's fees, or another assignment of interest
for services and expenses related to a claim.  
   (i) No requirement of this section shall delay payment of a claim.

   13554.  For purposes of this article, the following terms have the
following meanings: 
   (a) A "child support data match program" means an automated data
match or interactive lookup program that matches the names of
claimants with the names of child support obligors who owe past due
child support.  
   (a) 
    (b)  (1) "Claim" means any of the following:
   (A) Coverage for  an open, unresolved,   a
pending  bodily injury claim that is payable by an insurer or
self-insurer to an individual, or to a third party for the benefit of
the individual,  who is a resident of the state 
for the following types of insurance:
   (i) "Automobile liability coverage" has the meaning set forth in
Section 660.
   (ii) "Homeowners' liability coverage" means coverage under a
policy of residential property insurance for  the legal
liability of a natural person or persons for loss of, damage to, or
injury to, persons or property,  bodily injury, 
but not including policies primarily insuring risks arising from the
conduct of a commercial or industrial enterprise. "Residential
property insurance" has the meaning set forth in Section 10087.
   (iii) "Commercial liability insurance coverage" means coverage
under a policy of commercial insurance for the legal liability of any
person for loss of, damage to, or injury to persons or property,
arising from the conduct of a commercial or industrial enterprise.
"Commercial insurance" has the meaning set forth in Section 675.5.
   (iv) "Liability insurance" has the meaning set forth in Section
108. 
   (v) "Workers' compensation coverage" means the coverage described

    (b)     Workers' compensation coverage
described  in Sections  3208.3,  4653, 4654, 4655,
4658, 4800, 4800.5, 4804.1, 4806, 4816,  and 4850 
 4850, and 5000  of the Labor Code. 
   (B) Claims for a beneficiary who is making a claim on a life
policy or annuity that was delivered to an individual or a group
policyholder.  
   (C) (i) Payment to the beneficiary of a life insurance policy or
annuity contract, including a payment in the form of a structured
settlement.  
   (ii) Payment of benefits resulting from cashing out or
accelerating benefits of a life insurance policy or annuity contract.
 
   (iii) Payment of a loan taken against a life insurance policy or
annuity contract.  
   (D) "Disability income insurance" means the coverage described in
paragraph (5) of subdivision (b) of Section 106.  
   (2) A "claim" includes a nonrecurring payment of five hundred
dollars ($500) or more or cumulative periodic payments of one
thousand two hundred dollars ($1,200) or more over a 12-month period
prior to deductions allowed by this section.  
   (2) 
    (3)  A "claim" does not include  a liability
policy that does not pay for bodily injury,  a claim for
property damage or loss of use of property, or a claim made against
 an accident or   a  health insurance
policy, as defined in Section 106, or an accident policy, 
whether the policy is an expense incurred policy or an indemnity
policy. 
   (c) An "insurance claim data collection organization" means an
insurance industry service provider that maintains a central database
of insurance claims information to assist subscribing insurers in
claims processing and in detecting and preventing fraud. 

   (b) 
    (d)  "Insurer" means an organization organized for the
purpose of assuming the risk of loss under a contract of insurance or
reinsurance,  and   or an entity administering
claims on behalf of the organization.   "Insurer  
"  also includes any of the following organizations:
   (1) An admitted insurer. 
   (2) A nonadmitted domestic insurer.  
   (3) 
    (2)  A nonadmitted foreign  insurer. 
 insurer, if the coverage was placed in accordance with Section
1760 or 1763.  
   (4) 
    (3)  A nonadmitted alien  insurer. 
 insurer, if the coverage   was placed in accordance
with Section 1760 or 1763.  
   (4) The California Insurance Guarantee Association.  
   (5) The Uninsured Employers Fund.  
   (6) The Subsequent Injuries Benefits Trust Fund.  
   (7) The State Compensation Insurance Fund.  
   (c) 
    (e)  "Obligor" means a person owing a duty of support.

   (d) 
    (f)  "Self-insurer" means any entity that is
self-insured for its legal responsibility without the benefit of
primary insurance, through the use of a self-insured retention. This
includes, but is not limited to, any entity that directs handling of
its claims through a third party or as a result of a policy-buy-back,
cost-sharing agreement, or coverage-in-place agreement. 
   (e) 
    (g)  "Support" means a support obligation owing on
behalf of a  child, spouse, or family, or an amount owing
  child  pursuant to Section  17402
  4001 or 17400  of the Family Code, and includes
 past due support or arrearage   "child support
delinquency," as defined in Section 17500 of the Family Code, 
when it exists.  "Support," when used with reference to a
minor child or a child described in Section 3901 of the Family Code,
includes maintenance and education. 
   13556.  (a) An  insurer   insurer,
self-insurer, child support data match program, insurance claim data
collection organization, or insured  acting in good faith that
complies with this article shall be immune from civil liability to an
individual or agency.
   (b) Data obtained pursuant to this article may be used only for
the purpose of identifying child support obligors. If the Department
of Child Support Services does not match data obtained pursuant to
this article with a child support obligor, the  department
  Department of Child Support Services  shall not
maintain that data and shall immediately destroy that data.
   (c) An insurance claim data collection organization, child support
data match program, insurer or self-insurer that provides, attempts
to provide, or in any way accesses data pursuant to this article
shall comply with all applicable state and federal laws for the
protection of the privacy and the security of that data, including,
but not limited to, the Insurance Information and Privacy Protection
Act (Chapter 1 (commencing with Section 791.01) of Part 2 of Division
1), the Information Practices Act of 1977 (Chapter 1 (commencing
with Section 1798.80) of Part 4 of Division 3 of Title 1.81 of the
Civil Code), and the federal Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191).
   13560.   (a)    If  the commissioner has
good cause to believe that  an insurer or self-insurer 
violates Section 13552,   has not complied with this
article,  the commissioner  may, in his or her
discretion,   shall give written notice of the alleged
noncompliance specifying a reasonable timeframe, not less than 30
days, during which the insurer or self-insurer shall correct the
noncompliance. If the insurer or self-insurer fails to correct the
noncompliance within the specified timeframe, the commissioner shall
 impose a fine not to exceed one thousand dollars ($1,000) for
each violation, and  may   shall  issue an
order requiring the violator to comply with  Section 13552.
  this article.  
   (b) If the insurer or self-insurer disagrees with the commissioner'
s determination of noncompliance, the insurer or self-insurer may
request a hearing within 30 days of receipt of the commissioner's
notice of noncompliance. If a hearing is held pursuant to this
section, the proceedings shall be conducted in accordance with
Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of
Title 2 of the Government Code.  
   (c) This section does not require an insurer or self-insurer to
comply with a notice from the Department of Child Support Services on
a reported insurance claim payable to an obligor who has a child
support delinquency, if the insurer or self-insurer receives the
notice after having issued payment on the claim. If the payment
issued is a periodic payment, the insurer or self-insurer shall
comply with the notice with respect to subsequent payments. 
   13561.  This article shall become operative July 1, 2016.
  SEC. 2.
   The Legislature finds and declares that Section 1 of this act,
which adds Section 13556 to the Insurance Code, imposes a limitation
on the public's right of access to the meetings of public bodies or
the writings of public officials and agencies within the meaning of
Section 3 of Article I of the California Constitution. Pursuant to
that constitutional provision, the Legislature makes the following
findings to demonstrate the interest protected by this limitation and
the need for protecting that interest:  In order to protect the
privacy of insurance claimants and persons owed past-due support, it
is necessary that data obtained by the Department of Child 
Protective   Support  Services from insurers,
self-insurers, and insurance claim data collection organizations
pursuant to this act be confidential.
                                     
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