Most
agents are honest, hard working people.
Unfortunately they must jump through some legal hoops as a result of
those who are not.
California
Regulations
As types of care change, so may
regulations. Regulations change for
a variety of reasons, but as they relate to insurance, the fair treatment of
consumers is usually the primary reason.
Authority
To Bring Actions and Access Penalties
The California Commissioner, in addition
to all other powers and remedies available to him, has the administrative
authority to assess the penalties for violation of any provision committed in
California by insurers, brokers, agents, and other entities, which have been
determined by the Commissioner to be engaged in the business of insurance. 10234.2 (a)
A court may also assess penalties prescribed by law
for any violation in any civil action. The court may award reasonable attorneys
fees and costs to a prevailing plaintiff who establishes a violation. 10234.2 (b)
Actions for injunctive relief, penalties
prescribed by California law, damages, restitution, and all other remedies in
law or equity may be brought in superior
court by the Attorney General, a district attorney, or city attorney
on behalf of the people of the California for violation of any legal
provision. Reasonable attorney fees
and court costs may be awarded to the prevailing plaintiff. 10234.2 (c)
Penalties
Penalties
The
Agent
The Insurance Commissioner will
determine fines. They are levied
against any broker, agent or other entity that engages in the business of
insurance. Fines are levied in the
following amounts:
1.
Not less than $250, for
an agents first violation;
2.
Not less than $1,000,
but not more than $25,000 for an agents subsequent or knowing
violation;
3.
Not more than $5,000
per violation for inappropriate replacement.
The
Insurer
Fines may also be levied against an
insurer by the Commissioner in the following amounts:
1.
Not less than $5,000,
for an insurers first violation;
2.
Not less than $10,000,
for an insurers subsequent or knowing violation;
3.
Not less than $10,000,
but not more than $500,000 for an insurers general
practice.
Penalties will be paid into the
Insurance Fund. 10234.3
(a)(b)(c)
Non-Penalty
Actions
The Commissioner may elect to take other
measures following the determination that a violation has occurred,
including:
1.
Suspend or revoke the
agents insurance license.
2.
Suspend the insurers
Certificate of Authority, which allows them to transact disability
insurance.
3.
Order any broker,
agent, insurer, or other entity engaged in the business of insurance to cease
marketing a particular policy form of long-term care insurance in that is not in
compliance with Californias requirements.
10234.4 (a)(b)(c)
Due
Process Is Required
When a person or company has been
charged with a violation by the California Insurance Department they must be
afforded due process through proper notice and public hearing, if requested,
before the penalty is actually assessed.
10234.5 (a)
Requirement
For Written Notice
The written notice of the violation must
be sent by registered mail and must include:
1.
of the facts
establishing reasonable cause that a violation has
happened.
2.
A citation of the code
section or other standard allegedly violated.
3.
A statement of the
Commissioners intent to assess a penalty, which must include the amount of the
penalty, or his intent to seek another remedy.
4.
A statement of the
respondents right to elect any of the following:
Acceptance of the
penalty or other remedy as stated in the notice.
Respond to the charge
in writing, after which the Commissioner will issue a final order or set a
hearing.
Request a public
hearing within 10 days of receipt of the notice.
10234.5
(b)
Public
Hearing Within 30 Days
A public hearing, if requested within
the required time, must be held before the Administrative Law bureau of the
department within 30 days after the notice is served. Within 20 days after the hearing, the
administrative law judge must issue findings of fact and a proposed order. Unless reconsideration is given for good
cause by the administrative law judge, either the proposed order or an order
issued by the Commissioner must become the final
order within 30 working days following the hearing. 10234.5 (c)
If a penalty of $100,000 or more is
imposed, and the respondent has timely requested, the hearing must be conducted
in accordance with the Government Code and the commissioner has all the powers
granted therein. The actual amount
of the penalty is not limited to the amount stated in the notice to the
respondent. It could be more. The Commissioner could also, in addition
to penalties, suspend an insurers certificate of authority if the Commissioner
finds, after proper notice and hearing, that the insurer has violated
regulations or laws or that the insurer knowingly permitted any person or entity
of theirs to do so.
Section 704 of the Insurance Code states
that the Commissioner may suspend the certificate of authority for one year or
less (following a proper hearing notice) if it is determined that the insurer
engaged in any of the following:
Fraudulently conducting
their business
Not carrying out their
contracts in good faith
Habitually, as an
ordinary practice or custom, compelled their claimants under their policies, or
liability judgment creditors of the insured, to either accept less than the
amount due under the terms of the policies or resorted to litigation against the
insurer in order to secure payment of the amount due.
In any proceeding brought under Section
704 of the Insurance Code for violations cited in that section the Commissioner
may permit an insurer to pay a fine (not to exceed $55,000) as an alternative to
the suspension of the insurers certificate of authority.
Consumer
Rate Guide
By June first of each year, the
commissioners office must design the format and content of a consumer rate
guide for long-term care insurance with a working group that include
representatives of the Health Insurance Counseling and Advocacy Program (HICAP),
the insurance industry, and insurance agents. The commissioner must prepare this rate
guide each year for the long-term care industry.
The guide will contain several
things:
A comparison of the
different types of long-term care insurance and coverage available in
California.
A premium history of
each insurer that writes long-term care contracts for all the types available
with each insurer. 10234.6
(a)
There will be two parts to the Consumer
Rate Guide: a history of the rates for all policies issued in the US on or after
January 1, 1990, and a comparison of the policies, benefits, and sample premiums
for all those issued in California.
Annual
Report to the Legislature
The California Commissioner prepares an
annual report to the Legislature, which must be compiled in consultation with a
task force selected by the Commissioner for this purpose. This task force must include insurance
industry representatives, other individuals deemed appropriate and one or more
representatives from each of the following:
1.
The Health Insurance
Counseling and Advocacy Program, and
2.
The California Health
Policy and Data Advisory Commission.
10234.7
End of Chapter
Nine