Amended  IN  Assembly  April 02, 2018
Amended  IN  Assembly  March 21, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2674
Introduced by Assembly Member Aguiar-Curry

February 15, 2018

An act to amend Section 1386 of, and to add Section 1386.5 to, to the Health and Safety Code, relating to health care service plans.


LEGISLATIVE COUNSEL'S DIGEST

AB 2674, as amended, Aguiar-Curry. Health care service plans: disciplinary actions.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (the act), 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 authorizes the Director of the Department of Managed Health Care, after appropriate notice and opportunity for a hearing, to by order suspend or revoke a license issued pursuant to the act to a health care service plan or assess administrative penalties if the director determines that the licensee has committed any of the acts or omissions constituting grounds for disciplinary action. Existing law prohibits a health care service plan from engaging in an unfair payment pattern, as defined, and requires the department to adopt regulations that ensure that plans have adopted a dispute resolution mechanism, as specified.

This bill would require, rather than authorize, the director to assess administrative penalties if he or she makes that determination. The bill would also make technical changes.

Existing law prohibits a health care service plan from engaging in an unfair payment pattern, as defined, and requires the department to adopt regulations that ensure that plans have adopted a dispute resolution mechanism, as specified.

This bill would require the department to investigate provider complaints that a health care service plan has underpaid or failed to pay the provider and would establish a procedure for a provider to file a complaint with the department. Upon a final determination by the department that a health care service plan has underpaid or failed to pay a provider, the bill would require the director to assess an administrative penalty in, and to require the plan to pay the provider, an amount not less than the amount owed plus interest. The bill would require the administrative penalties to be transferred to a specified fund upon appropriation by the Legislature. The bill would also prohibit a health care service plan from delegating a statutory liability pursuant to these provisions. By creating new crimes, 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.
Digest Key Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  
Bill Text
The people of the State of California do enact as follows:
SECTION 1.Section 1386 of the Health and Safety Code is amended to read:1386.

(a)The director shall by order assess administrative penalties and may by order suspend or revoke a license issued under this chapter to a health care service plan if, after appropriate notice and opportunity for a hearing, the director determines that the licensee has committed any of the acts or omissions constituting grounds for disciplinary action.

(b)The following acts or omissions constitute grounds for disciplinary action by the director:

(1)The plan is operating at variance with the basic organizational documents as filed pursuant to Section 1351 or 1352, or with its published plan, or in any manner contrary to that described in, and reasonably inferred from, the plan as contained in its application for licensure and annual report, or any modification thereof, unless amendments allowing the variation have been submitted to, and approved by, the director.

(2)The plan has issued, or permits others to use, evidence of coverage or uses a schedule of charges for health care services that do not comply with those published in the latest evidence of coverage found unobjectionable by the director.

(3)The plan does not provide basic health care services to its enrollees and subscribers as set forth in the evidence of coverage. This subdivision shall not apply to specialized health care service plan contracts.

(4)The plan is no longer able to meet the standards set forth in Article 5 (commencing with Section 1367).

(5)The continued operation of the plan will constitute a substantial risk to its subscribers and enrollees.

(6)The plan has violated or attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate a provision of this chapter, a rule or regulation adopted by the director pursuant to this chapter, or any order issued by the director pursuant to this chapter.

(7)The plan has engaged in conduct that constitutes fraud or dishonest dealing or unfair competition, as defined by Section 17200 of the Business and Professions Code.

(8)The plan has permitted, or aided or abetted a violation by an employee or contractor who is a holder of a certificate, license, permit, registration, or exemption issued pursuant to the Business and Professions Code or this code that would constitute grounds for discipline against the certificate, license, permit, registration, or exemption.

(9)The plan has aided or abetted or permitted the commission of any illegal act.

(10)The engagement of a person as an officer, director, employee, associate, or provider of the plan contrary to the provisions of an order issued by the director pursuant to subdivision (c) of this section or subdivision (d) of Section 1388.

(11)The engagement of a person as a solicitor or supervisor of solicitation contrary to the provisions of an order issued by the director pursuant to Section 1388.

(12)The plan, its management company, or any other affiliate of the plan, or any controlling person, officer, director, or other person occupying a principal management or supervisory position in the plan, management company, or affiliate, has been convicted of or pleaded nolo contendere to a crime, or committed an act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this chapter. The director may revoke or deny a license hereunder irrespective of a subsequent order under the provisions of Section 1203.4 of the Penal Code.

(13)The plan violates Section 510, 2056, or 2056.1 of the Business and Professions Code or Section 1375.7.

(14)The plan has been subject to a final disciplinary action taken by this state, another state, an agency of the federal government, or another country for any act or omission that would constitute a violation of this chapter.

(15)The plan violates the Confidentiality of Medical Information Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil Code).

(16)The plan violates Section 806 of the Military and Veterans Code.

(17)The plan violates Section 1262.8.

(c)(1)The director may prohibit a person from serving as an officer, director, employee, associate, or provider of a plan or solicitor firm, or of any management company of a plan, or as a solicitor, if either of the following applies:

(A)The prohibition is in the public interest and the person has committed, caused, participated in, or had knowledge of a violation of this chapter by a plan, management company, or solicitor firm.

(B)The person was an officer, director, employee, associate, or provider of a plan or of a management company or solicitor firm of a plan whose license has been suspended or revoked pursuant to this section and the person had knowledge of, or participated in, any of the prohibited acts for which the license was suspended or revoked.

(2)A proceeding for the issuance of an order under this subdivision may be included with a proceeding against a plan under this section or may constitute a separate proceeding, subject in either case to subdivision (d).

(d)A proceeding under this section shall be subject to appropriate notice to, and the opportunity for a hearing with regard to, the person affected in accordance with subdivision (a) of Section 1397.

SEC. 2.SECTION 1. Section 1386.5 is added to the Health and Safety Code, to read:
1386.5. (a) The department shall investigate provider complaints that a health care service plan has underpaid or failed to pay the provider in violation of this chapter as follows:
(1) If the provider has submitted the dispute to the health care service plan’s internal dispute resolution process established pursuant to subdivision (h) of Section 1367 at least 45 working days earlier or if the department has received the health care service plan’s written determination, whichever occurs first, the department may commence an investigation pursuant to this subdivision.
(2) A provider may file a complaint with the department pursuant to this section not later than four years after the time period described in paragraph (1). Upon receipt of a complaint pursuant to this section, the department shall do all of the following:
(A) Acknowledge receipt of the complaint.
(B) Provide a complaint number to the provider.
(C) Provide the provider with a list of any required supporting documentation.
(D) Provide instructions to the provider regarding how to submit the supporting documentation.
(3) Within 45 days of receiving all necessary supporting documentation, the department shall issue a final determination regarding whether the health care service plan has underpaid or failed to pay a provider in violation of this chapter.
(b) (1) Upon a final determination by the department that a health care service plan has underpaid or failed to pay a provider in violation of this chapter, the director shall, by order, do both of the following:
(A) Assess an administrative penalty in an amount not less than the amount owed plus interest.
(B) Require the plan to pay the provider an amount not less than the amount owed plus interest.
(2) For purposes of this subdivision, a final determination includes, but is not limited to, a final determination that a health care service plan has violated Section 1371.8 or has engaged in an unfair payment pattern as provided in Section 1371.37.
(3) Notwithstanding the date on which the director makes a final determination as described in this subdivision, the calculation of the amount of the remedy imposed pursuant to paragraph (1) shall be determined based on the date on which the plan committed the violation.
(c) (1) Except as provided in paragraph (2), a provider is not required to resubmit a claim to a health care service plan in order to receive payment pursuant to this section.
(2) If the department makes a determination that an extraordinary circumstance exists, the department may require a provider to resubmit a claim to a health care service plan in order to receive payment pursuant to this section, provided that the department also requires the plan to add to the amount owed to the provider a reasonable amount necessary to reimburse the provider for the cost of resubmission.
(d) Remedies provided by this section are not exclusive, and may be sought and employed in any combination with civil, criminal, and other administrative remedies deemed warranted by the department to enforce this chapter.
(e) A proceeding pursuant to this section shall be conducted in accordance with Section 1374.27.
(f) A health care service plan may not delegate a statutory liability under this section.
(g) The administrative penalties collected pursuant to this section shall be transferred to the Managed Care Administrative Fines and Penalties Fund, as described in Section 1341.45, upon appropriation by the Legislature.
SEC. 3.SEC. 2. 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.