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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0562.01 JLB HOUSE BILL 98­1338

STATE OF COLORADO

BY REPRESENTATIVES Lawrence and Kreutz;

also SENATOR Schroeder.

HEWI

A BILL FOR AN ACT

CONCERNING CONSUMER PROTECTION STANDARDS FOR THE ADMINISTRATION OF MOTOR VEHICLE INSURANCE CONTRACTS.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)

Establishes the "Consumer Protection Standards Act for the Administration of Motor Vehicle Insurance Contracts". Includes consumer protection provisions similar to those adopted for managed care and other health benefit plans in House Bills 97­1122, 97­1161, and 97­1311. Prohibits insurers from denying emergency service benefits when an insured's medical condition prevents him or her from providing timely notification and from denying or restricting benefits when treatment is obtained outside the preferred provider network. Includes an exemption. Requires insurers to provide a written explanation of these provisions.

Requires insurers to provide insureds with certain information when benefits are denied, including a written notice of the denial and explanation of the reasons for the denial, the insured's right to appeal such denial, and the PIP examination program.

Requires insurers to provide a Colorado motor vehicle description form upon request of any insured and any person interested in purchasing or obtaining motor vehicle insurance coverage. Requires the commissioner of insurance to promulgate rules governing the style and substance of such form.

Makes the "Consumer Protection Standards Act for the Operation of Managed Care Plans" applicable to motor vehicle insurance policies effective January 1, 1999.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  Part 7 of article 4 of title 10, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read:

10­4­708.7.  Motor vehicle insurance ­ consumer protection. (1)  THIS SECTION SHALL BE KNOWN AND MAY BE CITED AS THE "CONSUMER PROTECTION STANDARDS ACT FOR THE ADMINISTRATION OF MOTOR VEHICLE INSURANCE CONTRACTS".

(2)  THE GENERAL ASSEMBLY HEREBY FINDS, DETERMINES, AND DECLARES THAT THE PURPOSES OF THIS SECTION ARE:

(a)  TO PROVIDE MOTOR VEHICLE INSURANCE CONSUMERS WITH PROTECTIONS SIMILAR TO THOSE ENACTED FOR OTHER TYPES OF INSURANCE PRODUCTS;

(b)  TO REQUIRE THAT CERTAIN CONSUMER PROTECTION FEATURES BE INCORPORATED INTO MOTOR VEHICLE INSURANCE CONTRACTS;

(c)  TO ESTABLISH STANDARDS TO ENSURE THAT CONSUMERS RECEIVE SUFFICIENT INFORMATION TO MAKE AN INFORMED DECISION; AND

(d)  TO INSTITUTE DUE PROCESS MEASURES TO BE FOLLOWED WHENEVER MOTOR VEHICLE INSURANCE BENEFITS ARE DENIED.

(3)  NO INSURER SHALL:

(a)  DENY BENEFITS FOR EMERGENCY MEDICAL SERVICES WHEN AN INSURED FAILS TO PROVIDE TIMELY NOTIFICATION OF SUCH SERVICES IN ACCORDANCE WITH THE COMPLYING POLICY BECAUSE THE INSURED'S MEDICAL CONDITION PREVENTED HIM OR HER FROM PROVIDING SUCH TIMELY NOTIFICATION; OR

(b)  DENY OR RESTRICT BENEFITS TO AN INSURED SOLELY BECAUSE SUCH INSURED OBTAINED TREATMENT OUTSIDE A NETWORK OF PARTICIPATING PROVIDERS, AS DEFINED IN SECTIONS 10­16­102 (27.5) AND 10­16­102 (28.5). NOTHING IN THIS PARAGRAPH (b) SHALL BE CONSTRUED TO REQUIRE A MANAGED CARE PLAN, AS DEFINED IN SECTION 10­16­102 (26.5), TO PAY FOR ANY BENEFIT OBTAINED OUTSIDE THE NETWORK OF PARTICIPATING PROVIDERS UNLESS THE COMPLYING POLICY PROVIDES FOR OUT­OF­NETWORK BENEFITS.

(4) (a)  AN INSURER SHALL NOT DENY A REQUEST FOR REIMBURSEMENT OR A COVERED BENEFIT ON THE GROUNDS THAT THE TREATMENT OR COVERED BENEFIT IS NOT MEDICALLY NECESSARY, APPROPRIATE, OR EFFICIENT UNLESS SUCH INSURER PROVIDES THE INSURED WITH THE FOLLOWING INFORMATION:

(I)  A WRITTEN NOTICE OF SUCH DENIAL, SIGNED BY A LICENSED PHYSICIAN FAMILIAR WITH STANDARDS OF MEDICAL CARE IN THIS STATE;

(II) (A)  AN EXPLANATION OF THE INSURED'S RIGHT TO APPEAL SUCH DENIAL AND THE PROCEDURES UNDER THE PIP EXAMINATION PROGRAM, AS SET FORTH IN SECTION 10­4­706 (6);

(B)  INSURERS ISSUING POLICIES PROVIDING COVERAGES SET FORTH IN SECTION 10­4­706 SHALL PROVIDE A WRITTEN EXPLANATION OF THE PROVISIONS SET FORTH IN SUBPARAGRAPH (I) OF THIS PARAGRAPH (a).

(III)  AN EXPLANATION OF THE SPECIFIC MEDICAL BASIS FOR THE DETERMINATION THAT THE REIMBURSEMENT OR BENEFIT WAS NOT MEDICALLY NECESSARY, APPROPRIATE, OR EFFICIENT;

(IV)  A STATEMENT THAT THE INSURED'S HEALTH CARE PROVIDER HAS THE RIGHT TO COMMUNICATE WITH THE PHYSICIAN INVOLVED IN THE INITIAL DECISION TO DENY REIMBURSEMENT OR COVERED BENEFITS.

(b)  NOTHING IN THIS SUBSECTION (4) SHALL PRECLUDE THE INSURED FROM SEEKING ANY OTHER REMEDY AT LAW AND NOTHING IN THIS SUBSECTION (4) SHALL BE A CONDITION PRECEDENT TO ANY LEGAL PROCEEDING.

(5) (a)  EFFECTIVE JANUARY 1, 1999, INSURERS SHALL MAKE AVAILABLE A COLORADO MOTOR VEHICLE DESCRIPTION FORM FOR EACH COMPLYING POLICY, CONTRACT, AND PLAN UNDER THIS PART 7 THAT COVERS OR IS MARKETED TO A RESIDENT OF THIS STATE. THE STYLE AND SUBSTANCE OF SUCH FORM SHALL BE DETERMINED BY THE COMMISSIONER AFTER CONSULTATION WITH CONSUMER, PROVIDER, AND INSURER REPRESENTATIVES. THE COMMISSIONER SHALL REQUIRE, AT A MINIMUM, THAT INFORMATION OF GENERAL INTEREST BE MADE AVAILABLE TO PURCHASERS OF MOTOR VEHICLE INSURANCE. SUCH COLORADO MOTOR VEHICLE DESCRIPTION FORM SHALL BE DESIGNED TO FACILITATE A COMPARISON OF VARIOUS MOTOR VEHICLE INSURANCE PLANS. THE COMMISSIONER SHALL PROMULGATE RULES NO LATER THAN NOVEMBER 15, 1998, SETTING FORTH THE REQUIREMENTS OF THE COLORADO MOTOR VEHICLE DESCRIPTION FORM AS SET FORTH IN THIS PARAGRAPH (a).

(b)  INSURERS SHALL PROVIDE A COLORADO MOTOR VEHICLE DESCRIPTION FORM, UPON REQUEST, WITH EACH OF THEIR MOTOR VEHICLE INSURANCE PLANS TO ANY PERSON COVERED BY SUCH A PLAN AND ANY PERSON WHO MAY BE INTERESTED IN PURCHASING OR OBTAINING COVERAGE UNDER SUCH A PLAN.

(6)  PART 7 OF ARTICLE 16 OF TITLE 10 SHALL APPLY TO ALL COMPLYING POLICIES THAT ARE ISSUED, RENEWED, EXTENDED, OR MODIFIED ON OR AFTER JANUARY 1, 1999.

SECTION 2.  10­16­703, Colorado Revised Statutes, is amended to read:

10­16­703. Applicability. (1)  This part 7 applies to all managed care plans, except for workers' compensation and automobile insurance contracts, that are issued, renewed, extended, or modified on or after January 1, 1998.

(2)  SUBSECTION (1) OF THIS SECTION, AS AMENDED, SHALL BE EFFECTIVE JANUARY 1, 1999.

SECTION 3.  Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.