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Insurance Regulatory Update

The information below is current as of the date of the report. Additional information about any of these proposals may be obtained from the California Department of Insurance (CDI) website at 

Department of Insurance Regulations Currently Under Review by OAL – There are no proposed Department of Insurance regulations currently under review by OAL.

Recently Approved Department of Insurance Regulations – The California Office of Administrative Law (OAL) has taken the following actions on CDI in the past 90 days.

  • Review of Complaints of Unlawful Cancellation, Rescission, or Nonrenewal of Health Insurance Policies: CDI File #2012-00022 – On November 20 OAL approved CDI regulations to implement AB 2470 of 2010. The regulations are intended to provide a procedural mechanism for the Department of Insurance to review the lawfulness of health insurance terminations following a consumer's request for review, the establishment of a proper complaint, and the insurer's request for a hearing. The regulations become effective on 1/1/14.
  • Hazardous Financial Condition Regulations: CDI File #2013-00005 – On November 11 OAL gave partial approval to CDI regulations relating to the

Commissioner’s determination that an insurer is in a hazardous financial condition. The regulation proposed by CDI listed various factors that the Commissioner may consider in examining the financial condition of an insurer and specified corrective actions the commissioner may order an insurer to take in order to correct, eliminate, or remedy the hazardous condition(s). OAL approved the portion of the regulation detailing the factors that may be considered, but CDI withdrew the sections authorizing corrective actions. A withdrawal such as this occurs most frequently if OAL advises the agency proposing the rules that it has objections to specific provisions which may, however, be severable from the rest of the proposal.

Health Insurance Emergency Regulations in Effect. CDI currently has two sets of emergency regulations in effect. Neither set has been formally proposed for permanent adoption but CDI does intend to adopt both sets on a permanent basis. Unless these regulations are adopted by CDI and submitted to OAL for review within 360 days after their initial effective date, they will be repealed by operation of Gov. Code § 11346.1, part of the Administrative Procedure Act (APA). 

  • Essential Health Benefits under the Patient Protection and Affordable Care Act (PPACA); CDI File #ER-2012-0001 – These CDI emergency regulations implement  SB 951 of 2012, legislation which established standards in California state law defining essential health benefits under the federal PPACA. These emergency regulations became effective on June 13, 2013. OAL approved the first of two permissible 90-day readoptions of these regulations on December 9, 2013.
  • Mental Health Parity: CDI File #ER-2013-0001 – These CDI emergency regulations establish standards for treatment of children with Autism. The regulations initially became effective on March 11, 2013. OAL approved a second 90-day readoption of these regulations on November 20, 2013. Under the APA this is the final permissible readoption. CDI must submit a proposal to OAL to enact these regulations permanently by February 18, 2014 in order to avoid an interruption in the applicability of the rules.

Currently Proposed CDI Regulations – There are no significant regulations affecting P&C insurers with open rulemaking files at CDI. There is one open health insurance proposal.

  • Prescription Drug Prior Authorization Requests: CDI File #REG-2012-00015 – This proposal creates a standardized process for health insurers to use in dealing with prior authorization requests from health care providers to approve the use of prescription drugs. The regulations must be submitted to OAL by January 24, 2014 or the rulemaking will expire pursuant to the APA (Gov. Code 11346.4(b)).
  • Mental Health Parity (Permanent Regulations): CDI File #REG-2013-00006 – On November 22 the Notice was published for adoption of the permanent mental health parity regulations. This is the rulemaking to complete the adoption of these rules begun in the emergency regulation proposal discussed above.
  • Essential Health Benefits under the Patient Protection and Affordable Care Act (PPACA); CDI File #2013-00015 – This proposal permanently adopts the emergency regulations discussed above. Notice of this proposal was published on November 29, 2013. The regulation must be submitted to OAL by March 9, 2014 in order to avoid a gap in the enforceability of the rule.

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.