2009 California Health and Safety Code - Section 1374.20-1374.29 :: Article 5.5. Health Care Service Plan Coverage Contract Changes

1374.20.  (a) No group health care service plan shall change the
premium rates or applicable copayments or coinsurances or deductibles
for the length of the contract, except as specified in subdivision
(b), during any of the following time periods:
   (1) After the group contractholder has delivered written notice of
acceptance of the contract.
   (2) After the start of the employer's annual open enrollment
period.
   (3) After the receipt of payment of the premium for the first
month of coverage in accordance with the contract effective date.
   (b) Changes to the premium rates or applicable copayments or
coinsurances or deductibles of a contract shall, subject to the plan
meeting the requirements of this article, be allowed in any of the
following circumstances:
   (1) When authorized or required in the group contract.
   (2) When the contract was agreed to under a preliminary agreement
that states that it is subject to execution of a definitive
agreement.
   (3) When the plan and contractholder mutually agree in writing.

1374.21.  No change in premium rates or changes in coverage stated
in a group health care service plan contract shall become effective
unless the plan has delivered in writing a notice indicating the
change or changes at least 30 days prior to the contract renewal
effective date.

1374.22.  (a) The written notice shall be delivered by mail at the
last known address at least 30 days prior to the renewal effective
date to the group contract holder.
   (b) The written notice shall state in italics either the actual
dollar amount or a specific percentage of the premium rate increase.
Further, the notice shall describe in plain understandable English
and highlighted in italics any changes in the plan design or change
in benefits with reduction in benefits, waivers, exclusions, or
conditions.
   (c) The written notice shall specify in 10-point bold typeface the
reason or reasons for premium rate changes, plan design, or plan
benefit changes.

1374.23.  Notwithstanding subdivision (a) of Section 1374.22, if the
plan does not guarantee either premium rates or plan design or
benefits for any specified time period greater than 180 days, it
shall deliver the written notice by mail to the group contract holder
at least 30 days prior to the group contract renewal effective date.

1374.24.  There shall be no liability on the part of, and no cause
of action of any nature shall arise against, any health care service
plan required to provide the notice or its authorized
representatives, or agents, for any statement made, unless shown to
have been made with malice in fact, by any of them in (a) any written
notice or in any other oral or written communication specifying the
reasons for the notice, (b) any communication providing information
pertaining to that notice, or (c) evidence submitted at any court
proceeding or informal inquiry in which that notice is at issue.

1374.25.  Proof of mailing a notice and the reason therefor to the
appropriate entity or individual at the most current policy or plan
address shall be sufficient proof of the notice required by this
chapter.

1374.26.  The director may, as required by this article, or from
time to time as conditions warrant, pursuant to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, adopt reasonable regulations, and amendments
and additions thereto, as are necessary to administer this article.

1374.27.  The director may levy administrative penalties and may
suspend or revoke the license or licenses issued to any health care
service plan, after notice and hearing, to have violated this article
or a regulation adopted pursuant to the authority of this article.
Notice of hearing shall be accomplished and a hearing conducted in
accordance with Chapter 5 (commencing with Section 11500) of Part 1
of Division 3 of Title 2 of the Government Code, and the director
shall have all of the powers granted therein.
   The remedies available to the director pursuant to this article
are not exclusive, and may be sought and employed in any combination
with other remedies deemed advisable by the director to enforce the
provisions of this article.

1374.28.  In addition to any other penalty provided by law or the
availability of any administrative procedure, if a health care
service plan, after notice and hearing, is found to have violated
this article, or regulations adopted pursuant to this article, or
knowingly permits any person to do so, the director may suspend the
authority of the plan to transact business.

1374.29.  The purpose of this article is to promote the public
interest, to prevent unfair and unlawful health care business
practices, and to promote adequate consumer and employer advance
notice of changes in the cost of health coverage in order to allow
for comparative shopping and to reduce the cost of health coverage.