Legislative News


* Legislation in Congress would require insurance departments to follow federal standards for releasing private info and dealing with data breaches. The bill works to protect against ID theft, fraud and economic loss. It’s pending in the House Financial Services Committee. The bill would amend the well-known Gramm-Leach-Bliley Act. Insurers are called out specifically to protect data. Keep your hands off our state, retorts Dave Jones, California’s insurance commissioner. Jones opposes the bill. It lags behind California’s current consumer privacy protections. “California law, by contrast, always requires notification to consumers when personal information is reasonably believed to have been acquired by an unauthorized person, irrespective of any subjective judgment as to whether such acquisition is reasonably likely’ to result in theft, fraud or financial harm that may befall the consumer,” he says. Privacy and cyber-security legislation will be actively debated in statehouses and on Capitol Hill in 2019, the Coalition predicts.

* The feds will create an advisory committee to study spiraling costs of air-ambulance trips that often force injured and sick policyholders to pay large and uninsured transport bills from their own pockets. The bill tackles so-called balanced billing as part of an FAA overhaul. The law would start an FAA study of provisions for air ambulance services and their fees. So-called balanced bills often have no tie to the real cost of air transports. Insurers that refuse to pay can leave injured policyholders liable for bills of $50,000 or more. Consumer complaints are rising; people can be charged for helicopter rides when a ground ambulance would do the job, critics say. The advisory committee will review ways to improve disclosure of charges and fees for air medical services … better inform consumers of insurance options … and recommend ways to protect people from excessive balanced-billing fees.


* Fraudsters who profit from addicts seeking rehab will face stiffer penalties and loss of their clinic licenses under a new California law. The measure clamps down on lucrative kickbacks and referral fees that have made rehab a windfall for profiteers who soak insurers for inflated and often useless treatment of addicts. The state Department of Health Care Services gains broad investigative powers in a bid to quell a costly painkiller epidemic. “All people in recovery from substance use disorders are entitled to safety and security throughout their recovery,” the bill urges.

* Another sober-home fraud bill was vetoed by California Gov. Jerry Brown, for non-fraud reasons. The measure would’ve restricted 3rd parties from paying an addict’s health premiums unless the payor is a federal, state or tribal agency, or family member. Dishonest sober homes buy health coverage for addicts to pile up bogus rehab bills. The bill would “prohibit the questionable practice of financially interested entities providing premium assistance payments to patients for the purpose of obtaining higher fees for medical services,” Brown admitted. Yet it would’ve gone too far. It would’ve let health plans and insurers refuse premium assistance, and thereby choose which patients to cover, he asserted.

* With past fraud and insolvencies looming large, California refuses to let sole proprietors join health plans recently authorized by the Trump Administration. The new law is a blow to the Administration’s efforts to let small businesses band together in so-called Association Health Plans. The Administration has loosened standards for creating the plans to let small businesses gain coverage as large-group plans. Yet California was among dozens of states that saw a surge of fake health plans and insolvencies in the early 2000s. The loosened new AHP standards will re-open the doors to more scams against small businesses and consumers, critics say. The federal rule allows more people access to needed health coverage, AHP supporters respond. California is the first state to forbid some residents such as real estate agents to join AHPs.

* Legislation in New Jersey would limit insurer release of personal info of policyholders, though would allow release for fraud investigations. SB 2970 would restrict insurers from disclosing personal or privileged info involving an insurance transaction unless the person authorizes it. The carveout includes releasing info for fraud investigations or suspected material misrepresentation. The bill was introduced last week, and referred to the Senate Commerce Committee. A hearing date is being set. The legislature stays in session through January 2020, so there’s plenty of time. Initial prospects for passage, however, appear unlikely.


* Two comp-fraud laws went onto the books in California: State agencies with fraud info must release that info, upon request, to other investigative state agencies. Exceptions: if releasing violates federal law or compromises an investigation. State DAs also can roll unspent funds into the next FY. … In the second bill: Healthcare workers must get continuing ed about opioid addiction risks. Warning labels and discussions with patients about addiction risks also are required. And California became the first state requiring youth athletic programs to distribute drug-risk info to athletes annually.

* In a surprise move, Gov. Jerry Brown vetoed a workers-comp fraud bill passed unanimously by the Assembly and Senate in California. The measure would’ve created a data-analytics unit in the Department of Industrial Relations. The unit would’ve identified unknown fraud, measured fraud’s impact and shared the data with fraud fighters statewide. “The work required by this measure is already underway. Additionally, the bill would require the Department to reveal sensitive details about its enforcement practices. This will compromise the state’s efforts to combat workers’ compensation fraud, a result that nobody wants,” Brown said.

* Consumers can better protect against fraud by freezing their credit reporting thanks to a new federal law. Stealing an ID is often the first step in schemes such as medical ID theft and buying policies under stolen names. Credit reporting agencies now must honor consumer requests to freeze their credit files — and unfreeze the reports upon request. It’s all free to consumers. Consumers must contact each credit-reporting agency to freeze their files. Freezing your credit file should deny fraudsters the ability to open an account or buy a policy using a fake name. Consumers who secure credit must remember to unfreeze their files before applying.


* Florida’s CFO is setting up roundtables to help solve Florida’s ever-growing scams involving Assignment of Benefits. Citizens Property Insurance will cohost the stakeholder sessions around the state. Citizens recently was denied a rate hike sought to offset rising costs of spurious AOB claims and lawsuits. “When used correctly with reputable contractors, assigning your benefits over isn’t a bad practice,” Patronis says. “However, in the hands of bad actors who want to make a quick buck, that could mean skyrocketing insurance rates for everyone.” The Coalition also held a strategy meeting with key stakeholders this week in Tallahassee. Reforms have stalled for 6 years in the statehouse. Yet 2019 may see new legislative leadership, and voters will elect a new governor. A recent state appeals-court decision also creates conflicting AOB court rulings. The state Supreme Court likely will break that logjam — and may impose solutions in the absence of legislation.

* A resource guide to better understanding controversial Association Health Plans is available from the Coalition. The Administration authorized the plans to make it easier for smaller businesses to get group health coverage. Yet the loose standards for creating AHPs has ignited wide concern that crooks will try to sell fake health coverage. Prior waves of fake health plans have left consumers holding the bag with worthless coverage. The Coalition’s new guide links to the AHP rule itselfDOL compliance guidelines … fraud analyses by noted AHP experts … comments the Coalition filed … news on how states are implementing or blocking the rule … plus other info. The guide is a handy tool for understanding possible scams and staying informed on how AHPs are progressing around the U.S. The guide will be regularly updated.

* The feds would pilot-test Medicare smart cards to ward off scams under a House-passed bill now in the Senate. Medicare test cards would use integrated circuit chips to store and process data — to verify beneficiaries at point of service. The pilot will last 3 years if enacted. Smart Medicare cards could’ve affected all or part of about 165 fraud cases, or 22 percent of cases reviewed, a GAO investigation showed. This includes lack of verifying beneficiaries or providers. Smart credit cards are performing well, a federal report also says.


* Michigan gained a long-sought fraud bureau when the governor inked the agency onto the books with an executive order this week. Gov. Rick Snyder bypassed the legislature, which has repeatedly failed to act. Michigan is among the few states without a fraud bureau. Most recently, fraudfighters sought an auto-fraud agency to tamp down spreading crash rings and other auto cons. Snyder took the idea a big step farther by authorizing a fraud bureau for all property-casualty schemes, including workers comp. It will be housed in the insurance department. Frustration had mounted as legislation to set up the auto-fraud authority went nowhere despite wide bipartisan support. Detroit’s mayor even sued to impose no-fault reforms. The new agency is a “positive step forward in addressing the universally recognized problem of fraud in the insurance and financial services sectors,” insurance director Patrick McPharlin says. Legislators appear caught by surprise and have yet to respond.

* South Carolina has become the first state to enact the NAIC’s Cybersecurity Model Act into law. Consumer advocates and insurers are waiting to see which other states will adopt the model, in whole or part. The model safeguards policyholders’ personal info. Insurers and their agents must create data security standards to mitigate breach risk … notify the state’s DOI in case of a breach … and have security programs in place, including alerts to affected policyholders. Insurance fraud also is a big cybersecurity concern. On the watch lists are theft of personal data for everything from medical fraud to stealing IDs in order to fraudulently buy policies. The Coalition plans an active role with this emerging issue, and in how states take action in 2019.

* Montana is the first state to prefile a fraud bill for 2019. It would expand victims of fraud or impropriety to seek restitution. The text will be available later. Yet the early filing is a promising early sign that states will continue showing interest in fraud bills for 2019. About 80 percent of consumers say they’re concerned about insurance fraud, Coalition consumer research shows. Legislators seem to be taking their concerns to heart. The Coalition expects a record number of anti-fraud bills to be filed once legislatures resume sessions next year.