Firm News Archives - Page 58 of 76

Insurers Cannot Escape Bad Faith Liability By Relying On In-House Experts And The “Genuine Dispute Doctrine”

Insurers often wrongfully deny policy benefits to their insureds in situations where there may be some uncertainty as to coverage. Despite an overarching duty to act reasonably and find in favor of coverage in such situations, insurers often will deny coverage and rely on their in-house medical experts’ (i.e., nurses, doctors) analysis and opinions as a basis for denial. In such situations, the insurer denies coverage at its peril.

California courts have consistently held that where there is a “genuine dispute” as to coverage, an insurer cannot be held liable for bad faith – this is known as the “genuine dispute doctrine.” However, an insurer’s reliance on the genuine dispute doctrine is often misplaced and misguided, and regularly results in substantial damages awards for plaintiffs for bad faith denial of coverage. California courts have routinely held that an insurer cannot “create” a genuine dispute to absolve itself from bad faith liability by relying on in-house experts. Instead, the courts have created an affirmative duty in such a situation to employ independent medical experts before making a coverage decision.

The recent decision of the District Court, Southern District of California in Barbour v. UNUM Life Ins. Co., 2011 U.S. Dist. LEXIS 91060 (S.D. Cal. 2011), is a primary example of how an insurer’s misuse of in-house experts and its reliance on the “genuine dispute doctrine” can result in potential bad faith liability, as well as punitive damages.

Barbour involved a disability policy issued by UNUM through a school district and covering the Principal of a school in the district. The Group Salary Protection Insurance Policy (“Policy”) at issue provided Accident and Sickness Disability Benefits for one year in the event of total disability, and after one year, the Policy provided monthly long term disability income benefits for as long as the claimant remains totally disabled or otherwise qualifies for benefits, up to age 65. The Policy defined “Total Disability” during the first two years as the inability “to perform the material duties of your own occupation.” After two years, the Policy defined “Total Disability” as the inability “to engage in any gainful occupation for which you are reasonably qualified by training, education or experience.” In February 2003, the insured submitted a claim for disability benefits based on abdominal pain that restricted her from driving, walking/standing and sitting for extended period, and UNUM began paying benefits. Over the course of several years, the insured suffered multiple further injuries relating to her initial injury, which required multiple surgeries, and which rendered her totally disabled. The insured submitted regular medical reports and updates, and UNUM continued to pay disability benefits.

In December 2007, UNUM hired an investigator to conduct surveillance on the insured to confirm the claimed disabilities. The investigator observed a “female subject believed to be the insured” who was moving without the physical limitations represented to UNUM by the insured and her doctors. The investigator’s report and video raised suspicion within UNUM regarding the insured’s disability, and resulted in UNUM conducting further surveillance. UNUM investigators made a field visit in October 2008, and again conducted surveillance in January 2009. In February 2009, UNUM’s in-house doctor/consultant reviewed the file and prepared a report which concluded that the insured’s claimed disability was inconsistent with her findings. Then, in March 2009, UNUM’s “Designated Medical Officer” reviewed the file and determined that there were three occupations that the insured was capable of performing, notwithstanding her disability. UNUM thereafter revoked the insured’s disability benefits effective March 31, 2009, and advised her that she had the right to file a civil action under the section 502(a) ERISA statute. Unsurprisingly, the insured hired an attorney.

The insured’s attorney sent a letter to UNUM advising that UNUM’s determination that the claim was governed by ERISA was erroneous. The attorney also provided a letter from the insured’s doctor stating that the person observed during surveillance in December 2007 was not the insured. UNUM was also provided a functional capacity evaluation by the insured’s physical therapist that concluded that the insured’s “physical limitations presented a barrier to work.” This information was reviewed by UNUM’s in-house medical experts. On October 6, 2009, UNUM sent a letter agreeing with the insured’s position as to ERISA, but stating that the new medical information did not change UNUM’s decision to deny benefits.

UNUM filed a motion for summary judgment to dismiss the insured’s claims for breach of the implied covenant of good faith and fair dealing (bad faith), intentional infliction of emotional distress and punitive damages. To defeat the bad faith claim, UNUM relied on the “genuine dispute doctrine.” In rendering its ruling, the court noted that the overarching issue in a bad faith claim is whether the insurer’s claims-handling conduct was reasonable. Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1161 (9th Cir. 2002). The court then explained the applicability of the genuine dispute doctrine:

“The genuine issue rule in the context of bad faith claims allows a district court to grant summary judgment when it is undisputed or indisputable that the basis for the insurer’s denial of benefits was reasonable–for example, where even under the plaintiff’s version of the facts there is a genuine issue as to the insurer’s liability under California law. In such a case, because a bad faith claim can succeed only if the insurer’s conduct was unreasonable, the insurer is entitled to judgment as a matter of law.” Amadeo, 290 F.3d at 1161-62 (citation omitted). “On the other hand, an insurer is not entitled to judgment as a matter of law where, viewing the facts in the light most favorable to the plaintiff, a jury could conclude that the insurer acted unreasonably.” Id. at 1162 (citation omitted)(emphasis added).

The court held that a reasonable jury could conclude that UNUM acted unreasonably when it was informed that the evidence UNUM relied upon to deny the insured’s claim was wrong (i.e., the surveillance was of someone other than the insured). The court further determined that there was no evidence that UNUM’s experts evaluated the evidence with an eye towards favoring the insured and in a manner which would indicate that she was indeed disabled as she and her doctors asserted. The court relied upon the facts as viewed “in the light most favorable to Plaintiff” to determine that a jury could conclude that UNUM acted unreasonably, and thus in bad faith when it denied the insured’s claim. The court therefore denied UNUM’s motion for summary judgment.

The court also discussed UNUM’s initial erroneous determination that the claim was governed by ERISA, and held that it created evidence of insurer bias, which could also indicate and support a claim for bad faith. Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1010 (9th Cir. 2004) (citing Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335, 348 (2001)).

The court placed a premium on UNUM’s apparent failure to reasonably and thoroughly investigate the insured’s claim. In particular, the court found that UNUM’s failure to seek an independent medical examination of the insured supported her claim that UNUM acted unreasonably. In so finding, the court discussed a line of cases which suggest that an insurer’s sole reliance on its own in-house experts, and its failure to obtain an independent medical examination, is clear evidence that an insurer has acted unreasonably.

Based on these findings, the court held that the insured’s claims for intentional infliction of emotional distress and for punitive damages were equally as viable based on UNUM’s potentially unreasonable conduct in evaluating the insured’s claim.

With this decision, the court made it very clear that an insurer cannot escape liability for bad faith by relying on its own in-house experts and ignoring evidence presented by an insured which, when viewed in favor of the insured, would indicate coverage should be afforded. An insurer cannot create a “genuine dispute” as to coverage on which it can deny an insured’s claim simply by relying on its own in-house experts. An insurer who does so, does so at its own peril, and opens itself up to claims for bad faith and punitive damages.

Why Does The Pollution Exclusion in California Insurance Policies Exclude Asbestos Building Contamination But Not Pesticide Building Contamination?

According to a recent California appellate court decision, a contractor’s negligent release of asbestos fibers during the removal of asbestos-containing acoustical spray in a condominium complex is excluded by the pollution exclusion in a homeowner association’s property and liability policy, despite a 2003 California Supreme Court ruling that a contractor’s negligent spraying of pesticide in an apartment complex is not excluded by a similar pollution exclusion in an apartment owner’s policy. The Villa Los Alamos Homeowners Association v. State Farm General Insurance Company, __ Cal. App. 4th __, 2011 WL 3586475 (August 17, 2011). How can that be?

Facts

In 2006 the Villa Los Alamos Homeowners Association (HOA) contracted to have spray-applied acoustical (“popcorn”) ceiling texture in common area ceilings and stairways scraped and removed. During the removal, asbestos fibers were released into the air, common areas, individual units and public areas outside the building. The Bay Area Air Quality Management District (District) cited the contractor and ordered the HOA to clean up the asbestos fibers. The HOA submitted a first party claim to State Farm, its insurance carrier, for approximately $650,000 in cleanup costs. The HOA also sued the contractor. The contractor then cross-complained against the HOA and its management company. The HOA tendered its defense to State Farm.

A pollution exclusion in the first party coverage section of the policy excluded coverage for any loss caused by the “presence, release, discharge or dispersal of pollutants,” while the exclusion pertinent to third party claims removes coverage for injuries arising out of “discharge, seepage, migration, dispersal, spill, release or escape of pollutants.” State Farm denied coverage for both the first party and third party claims, citing the pollution exclusion and faulty workmanship exclusions in the policy.

The HOA sued State Farm for breach of contract, bad faith and declaratory relief. The trial court granted summary adjudication in favor of State Farm on the first party claims based on the pollution exclusion. The HOA dismissed its third party claims, and appealed.

Discussion

In MacKinnon v. Truck Ins. Exchange, 31 Cal. 4th 635 (2003), the California Supreme Court found that the standard pollution exclusion clause in a comprehensive general liability policy was intended to exclude coverage for injuries resulting from events commonly regarded as “environmental pollution.” The Court rejected a broader, literal interpretation of the clause that would foreclose coverage for any and all injuries arising from harmful substances. So, the Court held that it was unlikely that a reasonable policyholder would think that the activity in question there—namely, the ordinary but negligent spraying of pesticides around an apartment building in order to kill yellow jackets—was an act of pollution.

The HOA argued that MacKinnon applied here, and that the pollution exclusion in the State Farm policy did not cover a single, negligent, localized asbestos release. After reviewing MacKinnon and its progeny, the Villa Los Alamos court agreed that the general principles announced in MacKinnon concerning the pollution exclusion also pertain in the context of a coverage dispute over first party property insurance claims based on analogous pollution exclusion—despite the well-recognized analytical differences between first party property and third party liability policies. But the Villa Los Alamos court otherwise rejected the HOA’s application of MacKinnon to the facts at hand.

Reading the State Farm pollution exclusion in accord with MacKinnon as pertaining to environmental pollution, the Villa Los Alamos court asked this question: Did the accidental release and airborne dissemination of asbestos fibers in this case amount to what is commonly regarded as “environmental” pollution? The court concluded that asbestos is a pollutant as a matter of law, and that it was “released” into the air and areas around the popcorn ceiling texture during the contractor’s scraping and removal. Emphasizing factual differences between a homeowner being able to buy and apply pesticides in a residential setting, and the removal of asbestos containing building materials being highly regulated by a myriad county, state and federal laws, the court rejected the HOA’s analogy of the asbestos removal to a single, ordinary act of negligence. In short, the Villa Los Alamos court concluded that the ordinary layperson would understand the release of asbestos fibers under these circumstances to be “environmental pollution.” Citing American Casualty Co. of Reading, PA. v. Miller, 159 Cal. App. 4th 501, 515-516 (2008), the court explained that

the key point under a MacKinnon analysis is whether the act in question is commonly thought of as environmental pollution. Thus, even if the accident consisted of a one-time negligent release of methylene chloride [as in Miller], the pollution exclusion would preclude coverage because permitting the chemical to be released into a public sewer was an act of environmental pollution. (Ibid.) Miller is persuasive. To establish bright-line rules as to what constitutes “environmental pollution” makes no sense: A one-time event can be a polluting event if it creates “‘impurity, something objectionable and unwanted.’” (MacKinnon, supra, 31 Cal. 4th at p. 654.) To reiterate: The release of asbestos from a product into the air people breathe constitutes a health hazard for which no level of exposure is safe. The work here apparently occurred over several days and resulted in the sufficient release of asbestos fibers into the air to contaminate the building complex and the adjacent outside areas, constituting environmental pollution.

Lesson Learned

There is no “bright-line” rule for when an ordinary layperson will consider a “release” of harmful substances in or around a residential structure to be “environmental pollution” rather than an “ordinary act of negligence.” One can imagine the Villa Los Alamos court just as easily analogizing the release of asbestos fibers from asbestos-containing building materials in a residential building to be an “ordinary act of negligence” on par with pesticide contamination a la MacKinnon rather than “environmental pollution” a la Miller. The clever insurance coverage attorney will start framing and controlling the analogy early on.

California Courts Deal Another Blow To Plaintiffs’ Efforts To Bring Class Actions Based on Insurer and Agents Misrepresentations

The California Court of Appeals for the Second District has upheld a trial court finding that may effectively limit and discourage attorneys from filing class actions based on misrepresentations in the sale of insurance policies through agents. In Fairbanks et al. v. Farmers New World Life Ins. Co. et al., __ Cal. App. 3d __ (2011), the court of appeal affirmed the trial court’s denial of class certification on the basis that common issues did not prevail, and that the issue was incapable of common proof. The case involved Farmers’ marketing and sale of universal life insurance policies. It was alleged that Farmers created a common marketing strategy with respect to the marketing and sale of such policies, and that Farmers instructed its agents to implement such strategy by using Farmers’ marketing materials in the agents’ sales pitch to prospective customers. After a lengthy discussion of the types of life insurance policies at issue, the appellate court focused on the actual narrow bases on which Plaintiffs sought relief, which was based on a single unified theory relating to fraudulent misrepresentations and concealments made by agents during the marketing of the policies to the individual prospective customers. The court determined that the bases for class certification “were not four separate bases for class relief, but part of one overarching allegedly fraudulent scheme.” The court noted, “Plaintiffs argued that proof of this fraudulent scheme could be established by common, rather than individual, proof, based on a combination of common policy language, common language in annual policyholder statements, and a common marketing scheme.” Plaintiffs sought to certify a class based on very broad conduct involving myriad misrepresentations made in written marketing materials as well as alleged misrepresentations by Farmers’ agents. Farmers argued that plaintiffs’ broad theory could not sustain a certifiable class in that it would require independent proof as to each policyholder. Specifically, it would require proof as to the individual representations made to each policyholder, and the materiality of such representations as to each policyholder.

The trial court agreed with Farmers and denied Plaintiffs’ motion for class certification, and the Court of Appeals affirmed the ruling. The appellate court, citing a string of recent Court of Appeals rulings, held:

Nonetheless, a class action cannot proceed for a fraudulent business practice under the UCL when it cannot be established that the defendant engaged in uniform conduct likely to mislead the entire class. (Knapp v. AT&T Wireless Services, Inc. (2011) 195 Cal.App.4th 932, 942-943 petn. for review filed June 1, 2011; Kaldenbach, supra, 178 Cal.App.4th at p. 850.) Specifically, when the class action is based on alleged misrepresentations, a class certification denial will be upheld when individual evidence will be required to determine whether the representations at issue were actually made to each member of the class. (Knapp v. AT&T Wireless Services, Inc., supra, 195 Cal.App.4th at p. 944-945, Kaldenbach, supra, 178 Cal.App.4th at p. 850; see also Pfizer Inc. v. Superior Court, supra, 182 Cal.App.4th at p. 632.) “ ‘[W]e do not understand the UCL to authorize an award for injunctive relief and/or restitution on behalf of a consumer who was never exposed in any way to an allegedly wrongful business practice.’ ” (Knapp v. AT&T Wireless Services, Inc., supra, 195 Cal.App.4th at p. 945; see also Pfizer Inc. v. Superior Court, supra, 182 Cal.App.4th at p. 632.)

The court discussed at length Kaldenbach v. Mutual of Omaha Life Ins. Co., 178 Cal. App. 4th 830, 848 (2009), which was a case in which it was alleged, as in Fairbanks, that the insurer had utilized uniform marketing materials in the sale of insurance policies, and directed its agents to use those materials in their sales pitch to prospective customers. The court in Kaldenbach found, based on evidence provided by the insurer, that there was no evidence that the sales presentations were actually common. The Fairbanks court followed the lead of the Kaldenbach court and found similarly that there was no evidence that the sales presentations, and therefore the alleged misrepresentations made by Defendants’ agents were common to all policyholders and prospective class members. The court held that “In the absence of a common marketing scheme, the class action fails.” In essence, the court held that the broad scope of the alleged misrepresentations made it impossible to certify a common class based on common proof. The Court here distinguished Massachusetts Life Insurance Company v. Superior Court, 97 Cal. App. 4th 1282, 848 (2002) on the basis that Massachusetts Mutual “involved identical misrepresentations and/or nondisclosures by the defendants to the entire class.”

In an effort to overturn the trial court’s ruling, Plaintiffs argued in the alternative on appeal that a class could be certified based solely on the misrepresentations made in the policies themselves. However, in dicta, the court also rejected this argument, stating, “[I]t is still impossible to consider the language of the policies without considering the information conveyed by the Farmers agents in the process of selling them. “ (citation omitted.) The court therefore indicated that alleged misrepresentations in the policies could not be evaluated independent from the sales presentations made by the agents when evaluating whether the allegations could be established by common proof. Such a statement brings into question the potential for certification of any class based on representations in an insurer’s marketing materials and/or policy.

The court also noted that the issue of materiality of the representations was not subject to common proof. The court noted that under the circumstances of this case, the possible reasons for which an individual policyholder purchased the type of insurance at issue were many, and therefore must be a matter of individual proof. The Court left it to the trial court to determine on remand whether plaintiffs could successfully establish any other basis for class certification.

Insurance Commissioner Jones Charges that Blue Shield Improperly Denied Health Insurance Coverage for Necessary Autism Treatment

California Insurance Commissioner Dave Jones recently announced that the California Department of Insurance is investigating whether Blue Shield of California Life and Health Insurance Company (“Blue Shield”) failed to comply with the California Mental Health Parity Act. Specifically, Blue Shield is required to respond to an Order to Show Cause regarding its handling of claims for treatment of autism.

During a recent hearing before the California Senate Select Committee on Autism, Department of Insurance representatives testified that Applied Behavior Analysis (“ABA”) therapy must be covered by California health insurers. While ABA therapy is proven to improve the lives of children with autism, the Department of Insurance charges that Blue Shield violated the California Mental Health Parity Act by:

Denying coverage on the ground that ABA isn’t “medically necessary”
Denying coverage on the ground that ABA is “experimental”
Denying coverage on the ground it is available only for services performed by a licensed provider and ABA providers are not licensed
Denying coverage on the ground that ABA is not a “health care service,” but instead is a service for “learning disabilities or behavioral problems or social skills training/therapy”
Not including ABA providers in its network
Refusing to provide insureds with definitive denials of coverage within 30 days of receiving a claim, thereby preventing insureds from invoking IMR [independent medical reviews]

The Department of Insurance’s investigation of Blue Shield began after the parents of two autistic children sought the Department’s assistance after Blue Shield denied coverage for ABA therapy, despite a finding following an independent medical review that the therapy was medically necessary. The Department of Insurance explained that its Order to Blue Shield was necessary to “ensure that insurance companies are in full compliance with California’s mental health parity law.”

An Insurance Company Acting as a Claims Administrator is Again a Proper Defendant in an ERISA Suit for Benefits

The Ninth Circuit has reversed itself and ruled that insurance companies that make claim decisions or are responsible for paying benefits can serve as defendants in ERISA actions for benefits or to enforce the terms of the plan. In Cyr v. Reliance Standard Life Insurance Company, 642 F.3d 1202 (9th Cir. 2011), the Ninth Circuit overruled some of its earlier precedents, including Everhart v. Allmerica Financial Life Insurance Company, 275 F.3d 751 (9th Cir. 2001), and ruled that potential liability under 29 U.S.C. section 1132(a)(1)(B) of ERISA is not limited to the benefit plan or the Plan Administrator. In explaining this shift, which allows insurance companies that make the claim decision or are responsible for paying benefits to be named as a defendant, the Ninth Circuit stated:

Some of our previous decisions have indicated that only a benefit plan itself or the plan administrator of a benefit plan covered under ERISA is a proper defendant in a lawsuit under [29 U.S.C. § 1132(a)(1)(B)]. We conclude that the statute does not support that limitation, however, and that an entity other than the plan itself or the plan administrator may be sued under that statute in appropriate circumstances.

Laura Cyr was covered under a group long-term disability plan provided by her employer, Channel Technologies, Inc. Cyr was awarded disability benefits by Reliance Standard, but a dispute arose regarding whether her monthly benefits should be increased in light of a settlement with her employer over a dispute alleging gender discrimination based on unequal pay. Cyr named Reliance Standard as one of the defendants, but the district court granted Reliance Standard’s motion for summary judgment on the grounds that only the plan or the plan administrator could be held liable under section 1132(a)(1)(B). The district court then reversed its ruling in response to the parties’ supplemental briefing and awarded summary judgment to Cyr.

Reliance Standard appealed the decision, and the Ninth Circuit heard the case en banc. In considering only the issue of whether an insurer/claim administrator is a proper defendant in an action to recover benefits under the terms of the plan, the Ninth Circuit noted that “[b]y its terms, § 1132(a)(1)(B) does not appear to limit which parties may be proper defendants in a civil action. Nor has the Secretary of Labor promulgated a regulation setting out such limits.” The Ninth Circuit analyzed the United States Supreme Court’s decision in Harris Trust & Saving Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (2008) which examined a similar issue with respect to § 1132(a)(3) and noted that the section “makes no mention at all of which parties may be proper defendants—the focus, instead, is on redressing the ‘act or practice which violates any provision of [ERISA Title I]’” Given the Supreme Court’s analysis of § 1132(a)(3), the Ninth Circuit could “see no reason to read a limitation into § 1132(a)(1)(B).”

The Ninth Circuit explained that, in this litigation, Reliance Standard was a proper defendant because:

Reliance denied Cyr’s request for increased benefits even though, as the plan insurer, it was responsible for paying legitimate benefit claims. Reliance is, therefore, a logical defendant for an action by Cyr to recover benefits due to her under the terms of the plan and to enforce her rights under the terms of the plan, which is precisely the civil action authorized by § 1132(a)(1)(B).

With this ruling, the Ninth Circuit specifically overruled its previous rulings to the contrary, including Everhart, Ford v. MCI Communications Corp. Health & Welfare Plan, 399 F.3d 1076, 1081 (9th Cir. 2005), Spain v. Aetna Life Insurance Co., 13 F.3d 310, 312 (9th Cir. 1993) and Gelardi v. Pertec Computer Corp., 761 F.2d 1323 (9th Cir. 1985).

While, on its face, this case seems to impose liability on insurance companies they did not previously face, in reality, this is not the case. In most ERISA cases for life insurance benefits, health insurance benefits or disability insurance benefits for which the insurance company was financially responsible, the insurance company typically controlled the defense of these lawsuits and paid any amounts due after a settlement or judgment, regardless of whether it was named as a defendant. This decision realized the practical reality that insurance companies should be allowed defendants in ERISA cases involving life insurance benefits, health insurance benefits or disability insurance benefits for which insurance companies are financially responsible. This decision simply put into law what was already happening in actual practice.

Consumer Protection Insurance Bills Sponsored by Insurance Commissioner Jones Clear Hurdles

An important package of strong consumer protection bills, sponsored by Insurance Commissioner Dave Jones, passed through their respective houses of the Legislature, clearing a major hurdle toward passage. Jones stated in his recent press release:

“When I took office in January, I vowed we would work to strengthen our consumer protection laws,” said Commissioner Jones. “I applaud the authors of the bills I am sponsoring, which protect the rights of consumers and expand the opportunity to purchase and keep insurance. I will continue to work toward ensuring these important pieces of legislation win final passage and become law in order to protect the consumers, vulnerable seniors, and hard-working families of this state.”

The package of Assembly bills includes:

AB 52, which would give the Insurance Commissioner the power to reject excessive health insurance rate increases by requiring health plans and insurers to seek approval from state regulators prior to raising health care premiums, copayments, or deductibles, passed on a vote of 44-27. The bill is jointly authored by Assembly Judiciary Chair Mike Feuer and Assembly Water, Parks and Wildlife Committee Chair Jared Huffman and now moves to the Senate.

AB 315, which would incorporate provisions of the federal Dodd-Frank Wall Street Reform and Protection Act into California law relating to the business and taxation practices of surplus lines of insurance, passed on a vote of 78-0. The bill is authored by Assembly Insurance Committee Chair Jose Solorio and now moves to the Senate Insurance Committee. The bill is an urgency measure and must be enacted by July 21, 2011, to avert federal preemption of California’s surplus lines of activities.

AB 624, which would extend the sunset date to January 1, 2017 on an on-going tax credit program for insurance companies, corporations, and other taxpayers that invest in Community Development Financial Institutions certified by the Department of Insurance’s California Organized Investment Network, passed on a vote of 75-2. The bill is authored by Assembly Speaker John A. Pérez and now moves to the Senate.

AB 689, which would require insurance producers and insurers selling annuities to have reasonable grounds to believe their recommendations are suitable for seniors and consumers and to adopt a comprehensive regulatory process at the Department of Insurance to enforce this new standard, passed on a vote of 79-0. The bill is authored by Assembly Budget Committee Chair Bob Blumenfield and now moves to the Senate Insurance Committee.

AB 793, which would prohibit unscrupulous insurance professionals from participating with, employing, or making referrals to an individual involved in the sale of reverse mortgages with the sole purpose of selling insurance policies and annuities in order to provide further financial protection to seniors, passed on a vote of 70-0. The bill is authored by Assembly Banking and Finance Committee Chair Mike Eng and now moves to the Senate Insurance Committee.

AB 999, which would protect consumers from excessive premium rate volatility that has characterized the long-term care insurance market by modifying the long-term insurance premium rate development process, passed on a vote of 42-33. The bill is authored by Assembly Aging and Long-Term Care Committee Chair Mariko Yamada and now moves to the Senate.

AB1416, which is the annual omnibus bill for the Department of Insurance and makes minor and technical changes to various code sections, passed on a vote of 75-0. The bill is authored by the Assembly Insurance Committee and now moves to the Senate.

The package of Senate bills includes:

SB 51, which would implement broader protections for California consumers in the large group, small group, and individual markets by conforming California law to the federal medical loss ratio and rebate requirements as well as to the federal prohibitions against annual and lifetime dollar limitations on essential health benefits, passed on a vote of 25-15. The bill is authored by Senator Elaine Alquist and now moves to the Assembly.

SB 599, which would protect consumers from being unwittingly enrolled in life insurance “retained asset accounts” by ensuring that beneficiaries have an opportunity to decide how they want their life insurance proceeds paid, passed on a vote of 37-1. The bill is authored by Senate Appropriations Committee Chair Christine Kehoe and now moves to the Assembly.

SB 621, which would prohibit disability insurance policies from containing discretionary clauses that give discretionary authority to insurers to determine eligibility for benefits or coverage insofar that these clauses give so much power to insurance companies that they can easily justify their denial of benefits in court even when the medical evidence overwhelmingly supports the case of the disabled policyholder, passed on a vote of 37-0. The bill is authored by Senate Insurance Committee Chair Ron Calderon and now moves to the Assembly Insurance Committee.

SB 684, which would provide another level of protection for businesses by making workers’ compensation policies more transparent, requiring that these policies be subject to California law, and prohibiting the practice of unfiled collateral agreements often used by insurers to gain the advantage in arbitrations of disputes, passed on a vote of 23-13. The bill is authored by Senate Majority Leader Ellen Corbett and now moves to the Assembly Insurance Committee.

SB 712, which would incorporate the essential elements of the National Association of Insurance Commissioners (NAIC) Model Law relating to Property and Casualty Actuarial Opinion into California law to ensure that the Department of Insurance retains its NAIC accreditation status, passed on a vote of 39-0. The bill is authored by the Senate Insurance Committee and now moves to the Assembly.

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