Health insurance: postclaims underwriting: unfair and deceptive practices.

Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law prohibits a health insurer from engaging in postclaims underwriting, as defined, and requires an insurer that willfully violates that provision to pay a $118 penalty to the state. Existing law prohibits any person in the state from engaging in any trade practices that are defined as unfair methods of competition or unfair or deceptive acts or practices in the business of insurance and makes a person who engages in those practices liable to the state for a civil penalty not to exceed $5,000 or $10,000, as specified. This bill would include engaging in health insurance postclaims underwriting as an unfair method of competition or unfair or deceptive act or practice in the business of insurance. The bill would specify the penalties that could be levied on a person who engages in postclaims underwriting, as specified, and would require that the amount by which a penalty exceeds $118 be deposited in the Major Risk Medical Insurance Fund to be used, upon appropriation by the Legislature, for the California Major Risk Medical Insurance Program.