California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 2 - Policy Forms and Other Documents › Article 11 - Standards for Health History Questionnaires in Health Insurance Applications, Pre-Issuance Medical Underwriting and Rescission of Health Insurance Policies › Section 2274.78 - Post-Contract Issuance Rescission or Cancellation Investigations

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) This Section,
				  2274.78, applies only to claims investigations intended to produce facts or
				  other information that could be used as the basis for an evaluation by the
				  insurer of whether to rescind or cancel the policy where the insurer has either
				  received a claim from a claimant as defined in Subdivision (c) of Section
				  2695.2 or a notice of a claim as
				  defined in Section
				  2695.2(n).
(b) The provisions of this Section
				  2274.78 that follow this
				  Subdivision (b) do not apply to claims investigations not intended to produce
				  information that could serve as the basis for an evaluation by the insurer of
				  whether to rescind or cancel the policy. Accordingly, claims investigations not
				  subject to the provisions of this section include, but are not limited to, (1)
				  investigations interpreting policy provisions such as exclusion of pre-existing
				  conditions, exclusion of investigational or experimental treatment, exclusion
				  of care not medically necessary and coordination of benefits provisions or (2)
				  investigations of member or provider appeals.
(c) If an insurer receives medical or health
				  history information about an insured after having issued health insurance
				  coverage to the insured and such information reasonably raises a question of
				  whether the insured misrepresented or omitted material information prior to
				  issuance of the policy, any review or investigation conducted by the insurer
				  shall commence immediately but in no event later than fifteen (15) calendar
				  days from receipt of the information. The dates relevant to the conduct of the
				  investigation and any decisions regarding the investigation shall be clearly
				  documented in the insurer's claim file.
(d) Immediately but in no event later than
				  seven (7) days after an insurer's decision to commence an investigation or
				  review as described in subdivision (c), the insurer shall send a written notice
				  to the insured that it is conducting an investigation as described in
				  subdivision (c).
(e) In the
				  required written notice to the insured described in subdivision (d), the
				  insurer shall clearly describe, in lay terms, the reason for the investigation
				  and the substantive information on which the investigation is based. The
				  insurer shall include with the notice copies of any applicable documents, such
				  as claims, medical records, or any other information in the insurer's
				  possession at the time of the notice and that is included in the insurer's
				  review and investigation. The insurer shall provide to the insured all
				  documents the insurer uses in its investigation that provided the basis for
				  initiating the investigation except that an insurer is not required to provide
				  documents that are otherwise protected by law.
(f) The insurer shall conduct and diligently
				  pursue an investigation as described in subdivision (c) of this Section
				  2274.78, but shall not seek
				  information that is not reasonably required for or material to the resolution
				  of the investigation. The insurer shall only request information from the
				  insured that is material to its investigation and such request shall be clear
				  and timely. The insurer shall not request information from the insured that it
				  can obtain directly, including but not limited to medical records.
(g) The insurer's investigation as described
				  in subdivision (c) of this Section
				  2274.78 shall be completed
				  promptly, but in no event later than ninety (90) calendar days after delivery
				  of the notice described in Subdivision (d) of this Section
				  2274.78, unless the insurer can
				  demonstrate good cause for delay. The insurer shall send a written notice of
				  the status of its investigation to the insured every thirty (30) calendar days
				  providing the insured with detailed information and an opportunity to provide
				  further information to the insurer regarding its investigation.
(h) Immediately, but in no event later than
				  seven (7) calendar days after concluding its investigation, the insurer shall
				  send a written notice to the insured, which shall include detailed findings and
				  the insurer's final determination regarding the insured's health insurance
				  coverage.
(i) The notice of
				  determination pursuant to Subdivision (h) of this Section
				  2274.78 shall indicate that if the
				  insured believes the decision is incorrect and wishes to dispute it, he or she
				  may have the matter reviewed by the Department of Insurance. This notice shall
				  include the address and telephone number of the unit of the Department of
				  Insurance that reviews claims and underwriting practices. The insurer shall not
				  require the rescinded former insured to file an appeal with the insurer prior
				  to seeking assistance from the Department of Insurance.
(j) The insurer must comply at all times with
				  applicable insurance statutes, regulations and other laws governing claims
				  payment, claims handling, benefits, and coverage determinations including
				  during the investigation described in Subdivision (c) of this Section
				  2274.78.
1. New
					 section filed 7-19-2010; operative 8-18-2010 (Register 2010, No.
					 30).
2. Change without regulatory effect amending NOTE filed
					 9-23-2010 pursuant to section
					 100, title 1, California Code of
					 Regulations (Register 2010, No. 39).
Note: Authority cited: Sections
						790.10,
						10291.5,
						10384,
						12921 and
						12926,
						Insurance Code; CalFarm Ins. Co. v. Deukmejian, 48 Cal.3d 805 (1989); and 20th
						Century Ins. Co. v. Garamendi, 8 Cal. 4th 216 (1994). Reference: Sections
						106,
						380,
						730,
						733,
						734,
						790.03,
						796.04,
						10113,
						10291.5,
						10380,
						10381.5 and
						10384,
						Insurance Code.