First Regular Session
Sixty-second General Assembly
LLS NO. 99-0020.02 Bart Miller HOUSE BILL 99-1197
STATE OF COLORADO
BY REPRESENTATIVE Grossman;
also SENATOR Epps.
HEALTH, ENVIRONMENT, WELFARE, & INSTITUTIONS
A BILL FOR AN ACT
101 CONCERNING THE CONDUCT OF HEALTH COVERAGE PLANS WHEN MAKING
102 DECISIONS REGARDING HEALTH CARE SERVICES OF COVERED
103 PERSONS, AND, IN CONNECTION THEREWITH, EXTENDING THE SCOPE
104 OF REQUIRED REVIEW PROCEDURES FOR SUCH DECISIONS AND
105 ESTABLISHING A CIVIL RIGHT OF ACTION AGAINST HEALTH
106 COVERAGE CARRIERS THAT ACT NEGLIGENTLY WITH RESPECT TO
107 SUCH DECISIONS.
Bill Summary
(Note: This summary applies to this bill as introduced and does
not necessarily reflect any amendments that may be subsequently
adopted.)
Extends review procedures available to policyholders for health
care services decisions made by health coverage plans to include
decisions involving the exercise of discretion by the plan affecting the
provision of health care services, including but not limited to
experimental treatments. Requires plans to offer policyholders the option
of an expedited arbitration process in addition to internal review. Provides
that plans that follow such review procedures and do not act negligently
when following such review procedures shall not be subject to civil
liability for such decisions.
For purposes of the "Health Care Availability Act", adds carriers
providing coverage through a managed care plan to the definition of
"health care institution".
Makes legislative findings that managed care plans operated by
carriers regulated by the division of insurance have a significant impact
on the delivery of health care to covered persons; that citizens of this state
[ ] denotes HOUSE amendment. { } denotes SENATE amendment.
Capital letters indicate new material to be added to existing statute.
Dashes through the words indicate material to be deleted from existing statute.
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that are covered persons pay significant sums in premiums to carriers
providing coverage through such plans; that the conduct of carriers in the
operation of such plans is of vital importance to the physical and mental
health of Colorado residents; that such plans constitute an integral part of
the business of insurance to carriers operating such plans and regulated
under the Colorado insurance laws; and that this act is a law of general
application that involves traditional areas of state regulation of the
business of insurance and, as such, the standard of care specified in this
act is consistent with the applicable provisions of the federal
"McCarran-Ferguson Act", as amended, and the federal "Employee
Retirement Income Security Act of 1974", as amended.
Establishes that carriers operating managed care plans have a duty
to act with reasonable care when making decisions involving the exercise
of discretion by the plan affecting the provision of health care services,
including but not limited to decisions regarding experimental treatments
and may be liable for damages for harm to a covered person proximately
caused by the carrier's or managed care plan's negligent acts. Provides
affirmative defenses to any action filed alleging negligence of a carrier.
Specifies that such duty does not create any obligation on the part
of a carrier providing coverage through a managed care plan to provide
to a covered person treatment that is not covered by the plan. Specifies
that the standard of care does not create any liability on the part of an
employer or other entity that purchases coverage or assumes risk on
behalf of its employees.
Prohibits carriers entering into contracts with health care providers
from including in such contracts an indemnification or hold harmless
clause for the acts or conduct of the carrier or managed care plan and
declares such clauses void as against public policy.
Requires notice to be given to a carrier at least 30 days prior to
filing an action alleging breach of the standard of care specified in this
act. Requires the exhaustion of review mechanisms authorized by law
prior to bring suit. Specifies that an action alleging breach of the standard
of care specified in this act must be brought within 2 years after the date
the action accrues as provided by law or within 3 years after the act or
omission that gave rise to the action. Specifies that the damages clause
of any pleading in any such action shall not recite any specific sum as
alleged damages other than an allegation that the damages are in excess
of any minimum dollar amount necessary to establish the jurisdiction of
the court.
1 Be it enacted by the General Assembly of the State of Colorado:
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1 SECTION 1. 10-16-113 (1) and (7), Colorado Revised Statutes,
2 are amended, and the said 10-16-113 is further amended BY THE
3 ADDITION OF A NEW SUBSECTION, to read:
4 10-16-113. Procedure for denial of benefits. (1) A health
5 coverage plan shall not make a determination that it will deny a request
6 for reimbursement for or coverage of medical treatment or other benefits
7 for a covered individual on the grounds that such treatment or covered
8 benefit is not medically necessary, appropriate, effective, or efficient
9 unless such denial is made pursuant to this section. THIS SECTION AND
10 REGULATIONS PROMULGATED UNDER SUBSECTION (2) OF THIS SECTION
11 SHALL APPLY TO DECISIONS OF A HEALTH COVERAGE PLAN OR ANY AGENT
12 OR CONTRACTOR OF SUCH PLAN INVOLVING THE EXERCISE OF DISCRETION
13 BY THE PLAN AFFECTING THE PROVISION OF HEALTH CARE SERVICES,
14 INCLUDING BUT NOT LIMITED TO DECISIONS REGARDING EXPERIMENTAL
15 TREATMENTS. ALL SUCH DECISIONS SHALL CONSTITUTE UTILIZATION
16 REVIEW BY THE PLAN OR ITS AGENTS OR CONTRACTORS AND SHALL
17 ENTITLE A PERSON TO ALL REMEDIES AVAILABLE UNDER THIS SECTION AND
18 REGULATIONS PROMULGATED UNDER AUTHORITY OF THIS SECTION FOR AN
19 ADVERSE UTILIZATION REVIEW DETERMINATION.
20 (6.5) IN ADDITION TO THE INTERNAL REVIEW PROCESS CONDUCTED
21 PURSUANT TO THIS SECTION, A HEALTH COVERAGE PLAN SHALL ALSO
22 OFFER COVERED INDIVIDUALS THE OPTION OF UTILIZING AN EXPEDITED
23 BINDING ARBITRATION PROCESS. UNDER SUCH PROCESS, THE ARBITRATOR
24 SHALL DECIDE THE ARBITRATION WITHIN THIRTY DAYS AFTER THE
25 ARBITRATION HEARING. THE COMMISSIONER MAY PROMULGATE
26 REGULATIONS UNDER SUBSECTION (2) OF THIS SECTION SPECIFYING
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1 PROCEDURES FOR SUCH ARBITRATION PROCESS.
2 (7) Nothing in this section shall preclude or deny the right of the
3 covered individual to seek any other remedy or relief. and nothing in this
4 section shall be a condition precedent to any legal proceeding. NO
5 HEALTH COVERAGE PLAN THAT FOLLOWS THE PROCEDURES OF THIS
6 SECTION AND REGULATIONS PROMULGATED UNDER SUBSECTION (2) OF THIS
7 SECTION AND ACTS WITH REASONABLE CARE SHALL BE SUBJECT TO
8 LIABILITY UNDER THE PROVISIONS OF PART 6 OF ARTICLE 64 OF TITLE 13,
9 C.R.S.
10 SECTION 2. 13-64-202 (3), Colorado Revised Statutes, is
11 amended to read:
12 13-64-202. Definitions. As used in this part 2, unless the context
13 otherwise requires:
14 (3) "Health care institution" means any licensed or certified
15 hospital, health care facility, dispensary, or other institution for the
16 treatment or care of the sick or injured. EXCEPT FOR THE PURPOSES OF
17 SECTION 13-64-301, "HEALTH CARE INSTITUTION" INCLUDES A CARRIER, AS
18 DEFINED IN SECTION 10-16-102 (8), C.R.S., PROVIDING COVERAGE
19 THROUGH A MANAGED CARE PLAN, AS DEFINED IN SECTION 10-16-102
20 (26.5), C.R.S., WHEN MAKING DECISIONS INVOLVING THE EXERCISE OF
21 DISCRETION BY THE PLAN AFFECTING THE PROVISION OF HEALTH CARE
22 SERVICES, AS DEFINED IN SECTION 10-16-102 (22), C.R.S., INCLUDING BUT
23 NOT LIMITED TO DECISIONS REGARDING EXPERIMENTAL TREATMENTS.
24 SECTION 3. Article 64 of title 13, Colorado Revised Statutes, is
25 amended BY THE ADDITION OF A NEW PART to read:
26 PART 6
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1 CIVIL LIABILITY OF MANAGED CARE PLANS
2 13-64-601. Civil liability of carriers providing coverage
3 through managed care plans when making decisions with respect to
4 health care services - legislative declaration. (1) (a) THE GENERAL
5 ASSEMBLY HEREBY FINDS AND DETERMINES THAT:
6 (I) MANAGED CARE PLANS, AS DEFINED IN SECTION 10-16-102
7 (26.5), C.R.S., OPERATED BY CARRIERS, AS DEFINED IN SECTION 10-16-102
8 (8), C.R.S., WHEN MAKING DECISIONS INVOLVING THE EXERCISE OF
9 DISCRETION BY THE PLAN AFFECTING THE PROVISION OF HEALTH CARE
10 SERVICES, AS DEFINED IN SECTION 10-16-102 (22), C.R.S., INCLUDING BUT
11 NOT LIMITED TO DECISIONS REGARDING EXPERIMENTAL TREATMENTS,
12 HAVE A SIGNIFICANT IMPACT ON THE DELIVERY OF HEALTH CARE SERVICES,
13 AS DEFINED IN SECTION 10-16-102 (22), C.R.S., THAT HEALTH CARE
14 PROFESSIONALS PROVIDE TO COVERED PERSONS, AS DEFINED IN SECTION
15 10-16-102 (13.5), C.R.S.;
16 (II) CITIZENS OF THIS STATE THAT ARE COVERED PERSONS PAY
17 SIGNIFICANT SUMS IN PREMIUMS TO CARRIERS THAT PROVIDE COVERAGE
18 THROUGH THE OPERATION OF MANAGED CARE PLANS;
19 (III) THE CONDUCT OF CARRIERS IN THE OPERATION OF MANAGED
20 CARE PLANS WHEN MAKING DECISIONS INVOLVING THE EXERCISE OF
21 DISCRETION BY THE PLAN AFFECTING THE PROVISION OF HEALTH CARE
22 SERVICES, AS DEFINED IN SECTION 10-16-102 (22), C.R.S., INCLUDING BUT
23 NOT LIMITED TO DECISIONS REGARDING EXPERIMENTAL TREATMENTS IS OF
24 VITAL IMPORTANCE TO THE PHYSICAL AND MENTAL HEALTH OF RESIDENTS
25 OF THIS STATE;
26 (IV) THE CONDUCT OF CARRIERS IN THE OPERATION OF MANAGED
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1 CARE PLANS WHEN MAKING DECISIONS INVOLVING THE EXERCISE OF
2 DISCRETION BY THE PLAN AFFECTING THE PROVISION OF HEALTH CARE
3 SERVICES, AS DEFINED IN SECTION 10-16-102 (22), C.R.S., INCLUDING BUT
4 NOT LIMITED TO DECISIONS REGARDING EXPERIMENTAL TREATMENTS
5 CONSTITUTES AN INTEGRAL PART OF THE BUSINESS OF INSURANCE OF
6 CARRIERS OPERATING SUCH PLANS AND IS SUBJECT TO REGULATION UNDER
7 TITLE 10, C.R.S., AS PART OF THE REGULATION OF THE BUSINESS OF
8 INSURANCE; AND
9 (V) THIS PART 6 IS A LAW OF GENERAL APPLICATION THAT
10 INVOLVES TRADITIONAL AREAS OF STATE REGULATION OF THE BUSINESS OF
11 INSURANCE AND, AS SUCH, THE PROVISIONS OF THIS PART 6 ARE
12 CONSISTENT WITH THE APPLICABLE PROVISIONS OF THE FEDERAL
13 "MCCARRAN-FERGUSON ACT", AS AMENDED, 15 U.S.C. SEC. 1011 ET SEQ.
14 AND THE FEDERAL "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
15 1974", AS AMENDED, INCLUDING BUT NOT LIMITED TO 42 U.S.C. SECS.
16 1144 AND 1191.
17 (b) THE GENERAL ASSEMBLY, THEREFORE, DECLARES THAT THIS
18 PART 6 IS ENACTED TO PROMOTE THE PUBLIC WELFARE AS PART OF THIS
19 STATE'S REGULATION OF THE BUSINESS OF INSURANCE IN ORDER TO
20 PROVIDE COVERED PERSONS WITH A CIVIL RIGHT OF ACTION IF CARRIERS
21 THAT OPERATE MANAGED CARE PLANS DO NOT ACT WITH REASONABLE
22 CARE IN MAKING DECISIONS INVOLVING THE EXERCISE OF DISCRETION BY
23 THE PLAN AFFECTING THE PROVISION OF HEALTH CARE SERVICES, AS
24 DEFINED IN SECTION 10-16-102 (22), C.R.S., INCLUDING BUT NOT LIMITED
25 TO DECISIONS REGARDING EXPERIMENTAL TREATMENTS.
26 (2) A CARRIER PROVIDING COVERAGE THROUGH A MANAGED CARE
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1 PLAN SHALL ACT WITH REASONABLE CARE WHEN MAKING DECISIONS
2 INVOLVING THE EXERCISE OF DISCRETION BY THE PLAN AFFECTING THE
3 PROVISION OF HEALTH CARE SERVICES, AS DEFINED IN SECTION 10-16-102
4 (22), C.R.S., INCLUDING BUT NOT LIMITED TO DECISIONS REGARDING
5 EXPERIMENTAL TREATMENTS.
6 (3) A CARRIER PROVIDING COVERAGE THROUGH A MANAGED CARE
7 PLAN WHEN MAKING DECISIONS INVOLVING THE EXERCISE OF DISCRETION
8 BY THE PLAN AFFECTING THE PROVISION OF HEALTH CARE SERVICES, AS
9 DEFINED IN SECTION 10-16-102 (22), C.R.S., INCLUDING BUT NOT LIMITED
10 TO DECISIONS REGARDING EXPERIMENTAL TREATMENTS SHALL BE LIABLE
11 FOR DAMAGES FOR HARM TO A COVERED PERSON PROXIMATELY CAUSED BY
12 ANY DECISION MADE BY THE PLAN OR SUCH MANAGED CARE PLAN'S
13 EMPLOYEES, AGENTS, OR REPRESENTATIVES WHO ARE ACTING ON BEHALF
14 OF SUCH PLAN, AND OVER WHOM A CARRIER OPERATING SUCH PLAN HAS
15 THE RIGHT TO EXERCISE INFLUENCE OR CONTROL, OR HAS ACTUALLY
16 EXERCISED INFLUENCE OR CONTROL THAT IS SHOWN TO BE NEGLIGENT OR
17 THAT RESULTS IN ANY NEGLIGENT ACT OR OMISSION.
18 (4) IT SHALL BE A DEFENSE TO ANY ACTION ASSERTED AGAINST A
19 CARRIER THAT:
20 (a) THE CARRIER, THE MANAGED CARE PLAN, OR ANY AGENT,
21 EMPLOYEE, OR REPRESENTATIVE OF SUCH CARRIER OR PLAN FOR WHOSE
22 CONDUCT SUCH CARRIER OR PLAN IS LIABLE UNDER SUBSECTION (3) OF
23 THIS SECTION DID NOT CONTROL, INFLUENCE, OR PARTICIPATE IN THE
24 HEALTH CARE SERVICES DECISION; AND
25 (b) THE CARRIER OR MANAGED CARE PLAN DID NOT DENY OR
26 DELAY PAYMENT FOR ANY TREATMENT PRESCRIBED OR RECOMMENDED BY
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1 A PROVIDER TO THE COVERED PERSON.
2 (5) THE STANDARDS IN SUBSECTIONS (2) AND (3) OF THIS SECTION
3 CREATE NO OBLIGATION ON THE PART OF A CARRIER PROVIDING COVERAGE
4 THROUGH A MANAGED CARE PLAN WHEN MAKING DECISIONS INVOLVING
5 THE EXERCISE OF DISCRETION BY THE PLAN AFFECTING THE PROVISION OF
6 HEALTH CARE SERVICES, AS DEFINED IN SECTION 10-16-102 (22), C.R.S.,
7 INCLUDING BUT NOT LIMITED TO DECISIONS REGARDING EXPERIMENTAL
8 TREATMENTS TO PROVIDE TO A COVERED PERSON TREATMENT THAT IS NOT
9 COVERED BY THE PLAN.
10 (6) THIS SECTION DOES NOT CREATE ANY LIABILITY ON THE PART
11 OF AN EMPLOYER OR OTHER ENTITY THAT PURCHASES COVERAGE OR
12 ASSUMES RISK ON BEHALF OF ITS EMPLOYEES.
13 (7) A CARRIER PROVIDING COVERAGE THROUGH A MANAGED CARE
14 PLAN MAY NOT ENTER INTO A CONTRACT WITH A HEALTH CARE PROVIDER
15 THAT INCLUDES AN INDEMNIFICATION OR HOLD HARMLESS CLAUSE FOR
16 THE ACTS OR CONDUCT OF THE CARRIER OR MANAGED CARE PLAN WHEN
17 MAKING DECISIONS INVOLVING THE EXERCISE OF DISCRETION BY THE PLAN
18 AFFECTING THE PROVISION OF HEALTH CARE SERVICES, AS DEFINED IN
19 SECTION 10-16-102 (22), C.R.S., INCLUDING BUT NOT LIMITED TO
20 DECISIONS REGARDING EXPERIMENTAL TREATMENTS. ANY SUCH
21 INDEMNIFICATION OR HOLD HARMLESS CLAUSE SHALL BE VOID AS AGAINST
22 THE PUBLIC POLICY OF COLORADO.
23 (8) NOTWITHSTANDING THE PROVISIONS OF SECTION 10-16-421,
24 C.R.S., OR ANY OTHER PROVISION OF LAW TO THE CONTRARY, NO LAW
25 THAT PROHIBITS A CARRIER PROVIDING COVERAGE THROUGH A MANAGED
26 CARE PLAN FROM PRACTICING MEDICINE OR BEING LICENSED TO PRACTICE
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1 MEDICINE MAY BE ASSERTED AS A DEFENSE BY SUCH CARRIER IN ANY
2 ACTION BROUGHT AGAINST IT PURSUANT TO THIS SECTION.
3 (9) IN AN ACTION AGAINST A CARRIER PROVIDING COVERAGE
4 THROUGH A MANAGED CARE PLAN UNDER THIS SECTION, A FINDING THAT
5 A HEALTH CARE PROVIDER IS AN EMPLOYEE, AGENT, OR REPRESENTATIVE
6 OF SUCH CARRIER OR MANAGED CARE PLAN SHALL NOT BE BASED SOLELY
7 ON PROOF THAT SUCH PERSON'S NAME APPEARS IN A LISTING OF APPROVED
8 HEALTH CARE PROVIDERS MADE AVAILABLE TO COVERED PERSONS UNDER
9 SUCH PLAN.
10 (10) A COVERED PERSON WHO FILES AN ACTION PURSUANT TO THIS
11 SECTION SHALL COMPLY WITH THE REQUIREMENTS OF PART 6 OF ARTICLE
12 20 OF THIS TITLE AND SHALL HAVE EXHAUSTED ALL REVIEW MECHANISMS
13 AVAILABLE PURSUANT TO SECTION 10-16-113, C.R.S.
14 (11) A PERSON MAY NOT MAINTAIN A CAUSE OF ACTION PURSUANT
15 TO THIS SECTION AGAINST A CARRIER PROVIDING COVERAGE THROUGH A
16 MANAGED CARE PLAN UNLESS SUCH PERSON, BEFORE INSTITUTING THE
17 ACTION, GIVES WRITTEN NOTICE OF THE CLAIM. SUCH NOTICE SHALL BE
18 DELIVERED OR MAILED TO THE CARRIER PROVIDING COVERAGE THROUGH
19 A MANAGED CARE PLAN NOT LATER THAN THE THIRTIETH DAY BEFORE THE
20 DATE THE CLAIM IS FILED.
21 (12) NO ACTION ALLEGING A VIOLATION OF THE PROVISIONS OF
22 THIS SECTION SHALL BE MAINTAINED UNLESS SUCH ACTION IS INSTITUTED
23 WITHIN TWO YEARS AFTER THE DATE THAT SUCH ACTION ACCRUES
24 PURSUANT TO SECTION 13-80-108 (1), BUT IN NO EVENT SHALL AN ACTION
25 BE BROUGHT MORE THAN THREE YEARS AFTER THE ACT OR OMISSION THAT
26 GAVE RISE TO THE ACTION.
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1 (13) IN ANY ACTION ALLEGING A VIOLATION OF THE PROVISIONS OF
2 THIS SECTION, THE AD DAMNUM CLAUSE OR PRAYER FOR DAMAGES IN ANY
3 PLEADING SHALL NOT RECITE ANY SUM AS ALLEGED DAMAGES OTHER
4 THAN AN ALLEGATION THAT DAMAGES ARE IN EXCESS OF ANY MINIMUM
5 DOLLAR AMOUNT NECESSARY TO ESTABLISH THE JURISDICTION OF THE
6 COURT.
7 SECTION 4. Effective date - applicability. This act shall take
8 effect July 1, 1999, and shall apply to review procedures available to
9 persons under section 10-16-113, Colorado Revised Statutes, and civil
10 actions filed on or after said date.
11 SECTION 5. Safety clause. The general assembly hereby finds,
12 determines, and declares that this act is necessary for the immediate
13 preservation of the public peace, health, and safety.