Bill Text: PA HB477 | 2011-2012 | Regular Session | Introduced

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Bill Title: Providing for prohibition on rescissions of coverage; imposing a duty on the Insurance Department; and imposing penalties.

Sponsorship: Partisan Bill (Democrat 24-1)

Status: (Introduced - Dead) 2011-02-09 - Referred to INSURANCE [HB477 Detail]

Download: Pennsylvania-2011-HB477-Introduced.html

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PRINTER'S NO. 539
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 477 Session of2011
INTRODUCED BY K. BOYLE, DeLUCA, BOBACK, B. BOYLE, CALTAGIRONE, D. COSTA, DEASY, FABRIZIO, FREEMAN, GEORGE, GOODMAN, JOSEPHS, W. KELLER, KORTZ, LONGIETTI, McGEEHAN, M. O'BRIEN, PASHINSKI, PAYTON, STURLA, THOMAS, WAGNER AND GIBBONS, FEBRUARY 9, 2011
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 9, 2011
AN ACT
Providing for prohibition on rescissions of coverage; imposing a
duty on the Insurance Department; and imposing penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Department." The Insurance Department of the Commonwealth.
"Grandfathered plan coverage." Coverage provided by a health
carrier in which an individual was enrolled on March 23, 2010,
for as long as it maintains that status in accordance with
Federal regulations.
"Group health insurance coverage." In connection with a
group health plan, health insurance coverage offered in
connection with such plan.
"Group health plan." An employee welfare benefit plan as
defined in section 3(1) of the Employee Retirement Income
Security Act of 1974 (Public Law 93-406, 88 Stat. 829), to the
extent that the plan provides medical care, as defined in this
section, and including items and services paid for as medical
care to employees, including both current and former employees,
or their dependents as defined under the terms of the plan
directly or through insurance, reimbursement or otherwise.
"Health benefit plan." A policy, contract, certificate or
agreement offered by a health carrier to provide, deliver,
arrange for, pay for or reimburse any of the costs of health
care services. The term includes short-term and catastrophic
health insurance policies and a policy that pays on a cost-
incurred basis, except as otherwise specifically exempted in
this definition. The term does not include:
(1) Coverage only for accident or disability income
insurance or any combination thereof.
(2) Coverage issued as a supplement to liability
insurance.
(3) Liability insurance, including general liability
insurance and automobile liability insurance.
(4) Workers' compensation or similar insurance.
(5) Automobile medical payment insurance.
(6) Credit-only insurance.
(7) Coverage for onsite medical clinics.
(8) Other similar insurance coverage, specified in
Federal regulations issued pursuant to the Health Insurance
Portability Accountability Act of 1996 (Public Law 104-191,
110 Stat. 1936), under which benefits for medical care are
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secondary or incidental to other insurance benefits.
(9) The following benefits if they are provided under a
separate policy, certificate or contract of insurance or are
otherwise not an integral part of the plan:
(i) Limited scope dental or vision benefits.
(ii) Benefits for long-term care, nursing home care,
home health care, community-based care or any combination
thereof.
(iii) Other similar, limited benefits specified in
Federal regulations issued pursuant to the Health
Insurance Portability Accountability Act of 1996.
(10) The following benefits if the benefits are provided
under a separate policy, certificate or contract of
insurance, there is no coordination between the provision of
the benefits and any exclusion of benefits under any group
health plan maintained by the same plan sponsor, and the
benefits are paid with respect to an event without regard to
whether benefits are provided with respect to such an event
under any group health plan maintained by the same plan
sponsor:
(i) Coverage only for a specified disease or
illness.
(ii) Hospital indemnity or other fixed indemnity
insurance.
(11) The following if offered as a separate policy,
certificate or contract of insurance:
(i) Medicare supplemental health insurance as
defined under section 1882(g)(1) of the Social Security
Act (49 Stat. 620, 42 U.S.C. § 301 et seq.).
(ii) Coverage supplemental to the coverage provided
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under 10 U.S.C. Ch. 55 (relating to medical and dental
care).
(iii) Similar supplemental coverage provided to
coverage under a group health plan.
"Health carrier." A company or health insurance entity
licensed in this Commonwealth to offer or issue any individual
or group health, sickness or accident policy or subscriber
contract or certificate or plan that provides medical or health
care coverage by a health care facility or licensed health care
provider that is governed under this act or any of the
following:
(1) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(2) The act of May 18, 1976 (P.L.123, No.54), known as
the Individual Accident and Sickness Insurance Minimum
Standards Act.
(3) 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations) or 63 (relating to professional health services
plan corporations).
(4) Article XXIV of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921.
"Health maintenance organization." An organized system which
combines the delivery and financing of health care and which
provides basic health services to voluntarily enrolled
subscribers for a fixed prepaid fee.
"Individual health insurance coverage." Health insurance
coverage offered to individuals in the individual market, which
includes a health benefit plan provided to individuals through a
trust arrangement, association or other discretionary group that
is not an employer plan, but does not include short-term limited
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duration insurance. For purposes of this subsection, a health
carrier offering health insurance coverage in connection with a
group health plan shall not be deemed to be a health carrier
offering individual health insurance coverage solely because the
carrier offers a conversion policy.
"Medical care." Amounts paid for:
(1) The diagnosis, care, mitigation, treatment or
prevention of disease or amounts paid for the purpose of
affecting any structure or function of the body.
(2) Transportation primarily for and essential to
medical care referred to in paragraph (1).
(3) Insurance covering medical care referred to in
paragraphs (1) and (2).
"Rescission." A cancellation or discontinuance of coverage
under a health benefit plan that has a retroactive effect. The
term does not include:
(1) a cancellation or discontinuance of coverage under a
health benefit plan if:
(i) the cancellation or discontinuance of coverage
has only a prospective effect; or
(ii) the cancellation or discontinuance of coverage
is effective retroactively to the extent it is
attributable to a failure to timely pay required premiums
or contributions towards the cost of coverage; or
(2) when the health benefit plan covers only active
employees and, if applicable, dependents and those covered
under continuation coverage provisions, the employee pays no
premiums for coverage after termination of employment and the
cancellation or discontinuance of coverage is effective
retroactively back to the date of termination of employment
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due to a delay in administrative recordkeeping.
Section 2. Applicability and scope.
These sections apply to a health carrier providing coverage
under an individual or group health benefit plan. These sections
do not apply to grandfathered plan coverage.
Section 3. Prohibition on rescissions of coverage.
(a) Prohibition.--
(1) A health carrier shall not rescind coverage under a
health benefit plan with respect to an individual, including
a group to which the individual belongs or family coverage in
which the individual is included, after the individual is
covered under the plan, unless:
(i) the individual or a person seeking coverage on
behalf of the individual performs an act, practice or
omission that constitutes fraud; or
(ii) the individual makes an intentional
misrepresentation of material fact, as prohibited by the
terms of the plan or coverage.
(2) For purposes of paragraph (1)(i), a person seeking
coverage on behalf of an individual does not include an
insurance producer or employee or authorized representative
of the health carrier.
(b) Notice.--A health carrier shall provide at least 30
days' advance written notice to each plan enrollee or, for
individual health insurance coverage, primary subscriber, who
would be affected by the proposed rescission of coverage before
coverage under the plan may be rescinded in accordance with
subsection (a) regardless of, in the case of group health
insurance coverage, whether the rescission applies to the entire
group or only to an individual within the group.
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(c) Applicability.--The provisions of this section apply
regardless of an applicable contestability period.
Section 4. Enforcement.
(a) Penalties and remedies.--Upon a determination by hearing
that this act has been violated, the commissioner may pursue one
or more of the following courses of action:
(1) Issue an order requiring the person in violation to
cease and desist from engaging in the violation.
(2) Suspend or revoke or refuse to issue or renew the
certificate or license of the person in violation.
(3) Impose a civil penalty of not more than $5,000 for
each violation.
(4) Impose any other penalty or remedy deemed
appropriate by the commissioner, including restitution.
(b) Other remedies.--The enforcement remedies imposed under
this section are in addition to any other remedies or penalties
that may be imposed by any other applicable statute, including
the act of July 22, 1974 (P.L.589, No.205), known as the Unfair
Insurance Practices Act. Violations of this act are deemed and
defined by the commissioner to be an unfair method of
competition and an unfair or deceptive act or practice pursuant
to the Unfair Insurance Practices Act.
Section 5. Regulations.
The department shall promulgate any rules and regulations
necessary to implement this act.
Section 20. Effective date.
This act shall take effect in 60 days.
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