Section 2274.78 - Post-Contract Issuance Rescission or Cancellation Investigations(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.Cal. Code Regs. Tit. 10, § 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.
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).