SENIOR SENATE PROPOSAL NO. 3

INTRODUCED BY SENIOR SENATOR EPSTEIN

(PRINCIPAL COAUTHOR: SENIOR ASSEMBLY MEMBER LOH)

LEGISLATIVE COUNSEL'S DIGEST

SP 3: INSURANCE: FRAUDULENT DENIAL OF CLAIMS.

UNDER EXISTING LAW, THE INSURANCE COMMISSIONER MAY CONDUCT AN EXAMINATION OF ANY COMPANY AS OFTEN AS THE COMMISSIONER DEEMS APPROPRIATE BUT SHALL, AT A MINIMUM, CONDUCT AN EXAMINATION OF EVERY INSURER ADMITTED IN THIS STATE NOT LESS FREQUENTLY THAN ONCE EVERY FIVE YEARS. EXISTING LAW ALSO STATES THAT AN INSURANCE COMPANY IS COMMITTING AN UNFAIR CLAIMS SETTLEMENT PRACTICE WHEN IT IS KNOWINGLY COMMITTING OR PERFORMING WITH SUCH FREQUENCY AS TO INDICATE A GENERAL BUSINESS PRACTICE, ACTIONS, INCLUDING, BUT NOT LIMITED TO, MISREPRESENTING INSURANCE POLICY PROVISIONS RELATING TO ANY COVERAGE AT ISSUE, FAILING TO ACKNOWLEDGE AND ACT REASONABLE PROMPTLY UPON COMMUNICATIONS WITH RESPECT TO CLAIMS ARISING UNDER INSURANCE POLICIES, AND NOT ATTEMPTING IN GOOD FAITH TO EFFECTUATE PROMPT, FAIR, AND EQUITABLE SETTLEMENTS OF CLAIMS IN WHICH LIABILITY HAS BECOME REASONABLE CLEAR.

THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE GOVERNOR TO ENACT LEGISLATION THAT WOULD REQUIRE THE INSURANCE COMMISSIONER TO DEVELOP AND ENACT AN EFFICIENT METHOD OF REGISTERING COMPLAINTS OF FRAUDULENT DENIALS OF LONG-TERM CARE INSURANCE CLAIMS AT THE COUNTY LEVEL, INITIATE INVESTIGATIONS OF SUSPECTED FRAUDULENT DENIALS OF CLAIMS, AND PROSECUTE COMPANIES WHO ENGAGE IN THE FRAUDULENT DENIAL OF CLAIMS.

VOTE: MAJORITY.

SP 3: RELATING TO FRAUDULENT DENIAL OF LONG-TERM CARE INSURANCE CLAIMS

WHEREAS, IN CALIFORNIA NEARLY ONE IN EVERY FOUR LONG-TERM CARE INSURANCE CLAIMS WAS DENIED IN 2005; AND

WHEREAS, RECORDS OF INSURANCE COMPANY PAYMENTS INDICATE THAT SOME INSURERS FAIL TO PAY VALID CLAIMS; AND

WHEREAS, THERE IS STRONG EVIDENCE THAT SOME INSURANCE COMPANIES PURPOSEFULLY PUT UP A MYRIAD OF OBSTACLES TO THE PAYMENT OF CLAIMS, INTENTIONALLY TAKING ADVANTAGE OF THE ELDERLY AND INFIRM, MANY OF WHOM SUFFER FROM COGNITIVE IMPAIRMENT, AND THEREBY POSTPONING PAYMENT UNTIL THE INSURED GIVES UP OR DIES; AND

WHEREAS, THE DEPARTMENT OF INSURANCE HAS BEGUN A MARKET CONDUCT EXAMINATION OF LONG-TERM CARE INSURANCE PROVIDERS WITHIN THE STATE, WHICH FOCUSES ON THE BUSINESS PRACTICES OF INSURERS AND PRODUCERS, AND IS DESIGNED TO MONITOR MARKETING, ADVERTISING, POLICYHOLDER SERVICES, UNDERWRITING, RATING, AND CLAIM PRACTICES, WITH ITS RESULTING REPORTS BECOMING PUBLIC RECORDS; AND

WHEREAS, LARGE NUMBERS OF SENIORS HAVE BEEN UNABLE TO OBTAIN SATISFACTION IN A TIMELY MANNER FOR PAYMENT OF THEIR CLAIMS AND THERE NEEDS TO BE A SIMPLE, EXPEDITED WAY FOR THEM TO PRESENT THEIR CLAIMS AND HAVE THEM EXAMINED; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR ASSEMBLY AND THE SENIOR SENATE, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2007 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT THE INSURANCE COMMISSIONER BE REQUIRED TO DEVELOP AND ENACT AN EFFICIENT METHOD OF REGISTERING COMPLAINTS REGARDING THE DENIAL OF LONG-TERM CARE INSURANCE CLAIMS AT THE COUNTY LEVEL WHERE CLAIMANTS CAN EASILY PRESENT THEIR CLAIMS AND HAVE THEM DEALT WITH IN AN EXPEDITED FASHION, THAT THE COMMISSIONER BE REQUIRED TO INITIATE INVESTIGATIONS OF SUSPECTED FRAUDULENT DENIALS OF CLAIMS, AND THAT IF IT IS DETERMINED THAT A FRAUDULENT DENIAL HAS BEEN MADE, THE COMMISSIONER BE REQUIRED TO PROSECUTE THE OFFENDING INSURER; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZED THE LEGISLATURE AND THE GOVERNOR OF THE STATE OF CALIFORNIA TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE SPEAKER OF THE ASSEMBLY, THE PRESIDENT PRO TEMPORE OF THE SENATE, AND THE GOVERNOR OF THE STATE OF CALIFORNIA.

RN20072421209

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