Source: http://www.lifehealthdisabilityinsurancelaw.com/tags/department-of-insurance-1/
Timestamp: 2013-05-21 14:37:19
Document Index: 325790115

Matched Legal Cases: ['§ 790', '§ 790', '§ 790', '§ 790', '§ 2695', '§ 2189', '§ 2695', '§ 2274', '§ 2274', '§ 790', '§ 790', 'art 2', '§ 790', '§ 790', '§ 790', '§ 12921', '§ 790']

Department of Insurance : Life, Health and Disability Insurance Law Blog
Home > Department of Insurance > Administrative Law Judge Invalidates Fair Claims Settlement Practices Regulations by California Department of Insurance
An OSC drawn from the conclusions or statements in a Market Conduct Examination is improper to support a valid pleading. Such examinations lack specificity about each act. OSC pleadings must assert violations under Insurance Code § 790.03(h)(1)-(16) and pleadings must set forth the charges and allegations in ordinary and concise language, such that the acts or omissions of which the respondent is charged may be reasonably ascertained. Hogeboom’s observations on the ruling are the following:
The ruling is an extraordinary indictment of the FCPR and how for the last 20 years the CDI has required insurers to follow the FCPR under threat of an OSC proceeding and large fines.
The ruling will require the CDI to plead OSCs using pertinent facts relating to each specific transaction.
The ruling may result in changes made to Market Conduct Examinations if they are to serve as the basis for an OSC proceeding.
The ruling requires the CDI to show a general business practice as a condition for a violation of claims settlement practices specified in § 790.03(h)(1-16).
The ruling also covers all Insurance Code § 790.03 unfair practices. Accordingly, this brings into question the validity of the § 790.03 penalty provisions in the recent regulation containing the standards for homeowners’ estimates of replacement value contained in CCR § 2695.183 and the long-standing broker fee regulations in CCR § 2189.5.
Because of the impact of this decision on the claims regulations and market conduct examinations, Mr. Hogeboom will hold a seminar on the background of the FCPR, the court’s decision and Market Conduct Examinations in the near future. Mr. Hogeboom is also available to meet with specific insurers at their home offices upon request.
For more information or for a copy of the ruling, please contact Robert Hogeboom at (213) 614-7304 or via e-mail; or Mr. Hogeboom’s assistant, Veronica Montero-Kossak, at (213) 680-2800 ext. 7204 or via e-mail.
Originally posted on Barger & Wolen's Insurance Litigation & Regulatory Law blog. Email This
Comments Trackbacks Tags: 10 CA ADC § 2695.1, 11342.2", California, California Government Code Section 11152, California Government Code Section 11506, Client Alerts, Code, Department of Insurance, Fair Claims Settlement Practices Regulations, Government, Insurance Code Section 790.03, Insurance Code Section 790.03(h), Insurance Code Section 790.03(h)(1)-(16), Insurance Code Section 790.035, Market Conduct Examinations, Order to Show Cause Proceedings, Section
Posted on June 10, 2011 by John LeBlanc
On May 26, 2011, the California Department of Insurance (“CDI”) released a second draft of its Guidance 2470, which is designed to implement various provisions of AB 2470. AB 2470, enacted in 2010, legislated certain aspects of rescission, non-renewal, and cancellation of health insurance policies and health care service plans in California. The CDI’s draft Guidance 2470 purports to set forth requirements concerning the CDI’s review of complaints related to the cancellation, rescission, or non-renewal of a health insurance policy. T
he draft Guidance includes, among other items, provisions concerning the notice health insurers are required to provide to policyholders about the CDI’s review process and information concerning the mechanisms for the review process. The draft Guidance also purports to enumerate the factual showing required of health insurers in order to demonstrate that a cancellation or rescission is lawful.
Comments Trackbacks Tags: AB 2470, Client Alerts, Department of Insurance, Guidance 2470, Health Insurance Law, cancellation, health care service plan, health insurance, rescission
Comments Trackbacks Tags: AB 52, Client Alerts, Department of Insurance, Department of Managed Health Care, Health Insurance Law, rate approval, rate increase review, rate regulation
Posted on January 6, 2011 by John LeBlanc
On December 30, 2010, Sacramento County Superior Court Judge Michael Kenny invalidated several recently issued regulations by the California Department of Insurance (“CDI”) in response to a challenge filed by the Association of California Life & Health Insurance Companies (“ACLHIC”). ACLHIC was represented by Gregory Pimstone of Manatt, Phelps and Phillips and by Barger & Wolen partner John M. LeBlanc. The regulations were issued by the CDI on August 5, 2010, and attempted to impose a series of underwriting requirements on health insurers and restrict health insurers’ ability to rescind health insurance policies in California. A copy of the Court’s ruling can be found here.
ACLHIC challenged the regulations on several grounds, claiming that the CDI abused its discretion in adopting the regulations.
In particular, ACLHIC argued that the CDI lacked the authority to promulgate the regulations. The Court agreed with the ACLHIC with respect to the key regulations at issue. It held that the CDI lacked authority to issue either 10 California Code of Regulations § 2274.74 or 10 California Code of Regulations § 2274.77. The CDI argued, unsuccessfully, that its authority to issue these sections was found in Insurance Code §§ 790.10 and 12921. Proposed Section 2274.74, entitled “Standard for Avoiding Prohibited Postclaims Underwriting,” would have prohibited a health insurer from rescinding or canceling a policy if it did not comply with certain underwriting requirements set forth in the regulation, including requiring insurers to obtain health history information from a source other than the applicant. The regulation also purported to define medical underwriting by seven enumerated activities required of health insurers, without limiting medical underwriting to those seven activities. Further, the regulation attempted to establish the six activities that a health insurer had to conduct in order to resolve all questions arising from application materials.
If a health insurer failed with respect to either of these two items (i.e., any failure to complete the seven enumerated medical underwriting activities or the six activities required to resolve application questions), the regulation barred any rescission or cancellation. Finally, if a health insurer made any error in applying its own underwriting procedures – no matter how minor – the regulation likewise prohibited any rescission or cancellation. The Court concluded that the CDI lacked the authority to promulgate Section 2274.74. It determined that Insurance Code§ 790.10 only applied to those activities governed by Article 6.5 of Chapter 1 of Part 2 of Division 1 of the Insurance Code (within which section 790.10 falls) and that postclaims underwriting is governed by a separate article outside the reach of Insurance Code § 790.10. It reinforced this conclusion with the fact that the items prohibited by Insurance Code§§ 790.03, which Insurance Code § 790.10 governs, included an exhaustive list of prohibited business practices, none of which included postclaims underwriting and rescission based thereon. Finally, the Court concluded that Insurance Code§ 12921 only permitted the CDI to enforce existing laws regulating the insurance industry and that it did not provide authority for the CDI to promulgate new regulations.
The Court also invalided Section 2274.77 for these same reasons, as the CDI again relied on Insurance Code§§ 790.10 and 12921 to support its position that it was empowered to promulgate this regulation. Section 2274.77 purported to require an insurer, at the time of issuance and delivery of a policy, to return a complete copy of the application to the insured for review by including it in the same mailing, or other delivery mechanism, as the policy. If the insurer failed to comply with this requirement, it was precluded from using the information in the application as the basis for rescinding or canceling the policy.
Comments Trackbacks Tags: 10 California Code of Regulations section 2274.74, 10 California Code of Regulations section 2274.77, Department of Insurance, Health Insurance Law, Insurance Code section 12921, Insurance Code section 790.10, Postclaims Underwriting, cancellation, health insurance, health insurance policy, medical underwriting, regulations, rescission