SENATE BILL No. 930
January 25, 2000, Introduced by Senators BYRUM, EMERSON and A. SMITH and referred
to the Committee on Health Policy.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending the title and section 2006 (MCL 500.2006), the title
as amended by 1998 PA 457, and by adding section 2006a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 TITLE
2 An act to revise, consolidate, and classify the laws relat-
3 ing to the insurance and surety business; to regulate the incor-
4 poration or formation of domestic insurance and surety companies
5 and associations and the admission of foreign and alien companies
6 and associations; to provide their rights, powers, and immunities
7 and to prescribe the conditions on which companies and associa-
8 tions organized, existing, or authorized under this act may
9 exercise their powers; to provide the rights, powers, and
10 immunities and to prescribe the conditions on which other
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1 persons, firms, corporations, associations, risk retention
2 groups, and purchasing groups engaged in an insurance or surety
3 business may exercise their powers; to provide for the imposition
4 of a privilege fee on domestic insurance companies and associa-
5 tions and the state accident fund; to provide for the imposition
6 of a tax on the business of foreign and alien companies and asso-
7 ciations; to provide for the imposition of a tax on risk reten-
8 tion groups and purchasing groups; to provide for the imposition
9 of a tax on the business of surplus line agents; to provide for
10 the imposition of regulatory fees on certain insurers; to modify
11 tort liability arising out of certain accidents; to provide for
12 limited actions with respect to that modified tort liability and
13 to prescribe certain procedures for maintaining those actions; to
14 require security for losses arising out of certain accidents; to
15 provide for the continued availability and affordability of auto-
16 mobile insurance and homeowners insurance in this state and to
17 facilitate the purchase of that insurance by all residents of
18 this state at fair and reasonable rates; to provide for certain
19 reporting with respect to insurance and with respect to certain
20 claims against uninsured or self-insured persons; to prescribe
21 duties for certain state departments and officers with respect to
22 that reporting; to provide for certain assessments; to establish
23 and continue certain state insurance funds; to modify and clarify
24 the status, rights, powers, duties, and operations of the non-
25 profit malpractice insurance fund; to provide for the departmen-
26 tal supervision and regulation of the insurance and surety
27 business within this state; to provide for regulation over
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1 worker's compensation self-insurers; TO PROVIDE FOR CERTAIN
2 REGULATION OVER QUALIFIED HEALTH PLANS; to provide for the con-
3 servation, rehabilitation, or liquidation of unsound or insolvent
4 insurers; to provide for the protection of policyholders, claim-
5 ants, and creditors of unsound or insolvent insurers; to provide
6 for associations of insurers to protect policyholders and claim-
7 ants in the event of insurer insolvencies; to prescribe educa-
8 tional requirements for insurance agents and solicitors; to pro-
9 vide for the regulation of multiple employer welfare arrange-
10 ments; to create an automobile theft prevention authority to
11 reduce the number of automobile thefts in this state; to pre-
12 scribe the powers and duties of the automobile theft prevention
13 authority; to provide certain powers and duties upon certain
14 officials, departments, and authorities of this state; to repeal
15 acts and parts of acts; and to provide penalties for the viola-
16 tion of this act.
17 Sec. 2006. (1) A person must pay on a timely basis to its
18 insured, an individual or entity directly entitled to benefits
19 under its insured's contract of insurance, or a third party tort
20 claimant the benefits provided under the terms of its policy, or,
21 in the alternative, the person must pay to its insured, an indi-
22 vidual or entity directly entitled to benefits under its
23 insured's contract of insurance, or a third party tort claimant
24 12% interest, as provided in subsection (4), on claims not paid
25 on a timely basis. Failure to pay claims on a timely basis or to
26 pay interest on claims as provided in subsection (4) is an unfair
27 trade practice unless the claim is reasonably in dispute.
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1 (2) A person shall not be found to have committed an unfair
2 trade practice under this section if the person is found liable
3 for a claim pursuant to a judgment rendered by a court of law,
4 and the person pays to its insured, individual or entity directly
5 entitled to benefits under its insured's contract of insurance,
6 or third party tort claimant interest as provided in subsection
7 (4).
8 (3) An insurer shall specify in writing the materials
9 which
THAT constitute a satisfactory proof of loss not later
10 than 30 days after receipt of a claim unless the claim is settled
11 within the 30 days. If proof of loss is not supplied as to the
12 entire claim, the amount supported
by proof of loss shall be
13 deemed to be
IS CONSIDERED paid on a timely basis if paid within
14 60 days after receipt of proof of loss by the insurer. Any part
15 of the remainder of the claim that is later supported by proof of
16 loss shall be deemed to
be IS CONSIDERED paid on a timely basis
17 if paid within 60 days after receipt of the proof of loss by the
18 insurer. Where
IF the proof of loss provided by the claimant
19 contains facts which
THAT clearly indicate the need for addi-
20 tional medical information by the insurer in order to determine
21 its liability under a policy of life
insurance, the claim shall
22 be deemed to be
IS CONSIDERED paid on a timely basis if paid
23 within 60 days after receipt of necessary medical information by
24 the insurer. Payment of a claim shall not be untimely during any
25 period in which the insurer is unable to pay the claim when there
26 is no recipient who is legally able to give a valid release for
27 the payment, or where the insurer is unable to determine who is
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1 entitled to receive the payment, if the insurer has promptly
2 notified the claimant of that inability and has offered in good
3 faith to promptly pay the claim upon determination of who is
4 entitled to receive the payment.
5 (4) When
IF benefits are not paid on a timely basis the
6 benefits paid shall bear simple interest from a date 60 days
7 after satisfactory proof of loss was received by the insurer at
8 the rate of 12% per annum, if the claimant is the insured or an
9 individual or entity directly entitled to benefits under the
10 insured's contract of insurance.
Where IF the claimant is a
11 third party tort claimant, then the benefits paid shall bear
12 interest from a date 60 days after satisfactory proof of loss was
13 received by the insurer at the rate of 12% per annum if the
14 liability of the insurer for the claim is not reasonably in
15 dispute, and
the insurer has refused payment in bad faith ,
16 such AND
THE bad faith having been WAS determined by a court
17 of law. The interest shall be paid in addition to and at the
18 time of payment of the loss. If the loss exceeds the limits of
19 insurance coverage available, interest shall be payable based
20 upon the limits of insurance coverage rather than the amount of
21 the loss. If payment is offered by the insurer but is rejected
22 by the claimant, and the claimant does not subsequently recover
23 an amount in excess of the amount
offered, interest shall IS
24 not be due.
Interest paid pursuant to this section shall be
25 offset by any award of interest that is payable by the insurer
26 pursuant to the award.
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1 (5) Where
IF a person contracts to provide benefits and
2 reinsures all or a portion of the risk, the person contracting to
3 provide benefits shall be
IS liable for interest due to an
4 insured, an individual or entity directly entitled to benefits
5 under its insured's contract of insurance, or a third party tort
6 claimant under this section where a reinsurer fails to pay bene-
7 fits on a timely basis.
8 (6) In the event of
IF THERE IS any specific inconsistency
9 between this section and
the provisions of Act No. 294 of the
10 Public Acts of 1972, as
amended, being sections 500.3101 to
11 500.3177 of the
Compiled Laws of 1970 or of the provisions of Act
12 No. 317 of the Public
Acts of 1969, as amended, being sections
13 418.101 to 418.941 of
the Compiled Laws of 1970, SECTIONS 3101
14 TO 3177 OR THE WORKER'S DISABILITY COMPENSATION ACT OF 1969, 1969
15 PA 317, MCL 418.101 TO 418.941, the provisions of this section
16 shall DO
not apply.
17 (7) THIS SECTION DOES NOT APPLY TO ANY OF THE FOLLOWING:
18 (A) BENEFITS PROVIDED UNDER AN EXPENSE-INCURRED HOSPITAL,
19 MEDICAL, OR SURGICAL POLICY OR CERTIFICATE, INCLUDING ANY POLICY
20 OR CERTIFICATE THAT PROVIDES COVERAGE FOR SPECIFIC DISEASES OR
21 ACCIDENTS ONLY, OR ANY HOSPITAL INDEMNITY, MEDICARE SUPPLEMENT,
22 LONG-TERM CARE, DISABILITY INCOME, OR 1-TIME LIMITED DURATION
23 POLICY OR CERTIFICATE.
24 (B) HOSPITAL, MEDICAL, SURGICAL, VISION, DENTAL, AND SICK
25 CARE BENEFITS PROVIDED BY A MEWA REGULATED UNDER CHAPTER 70.
26 SEC. 2006A. (1) NOTWITHSTANDING ANY OTHER PROVISION OF THIS
27 ACT, THIS SECTION APPLIES TO ALL OF THE FOLLOWING:
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1 (A) BENEFITS PROVIDED UNDER AN EXPENSE-INCURRED HOSPITAL,
2 MEDICAL OR SURGICAL POLICY OR CERTIFICATE, INCLUDING ANY POLICY
3 OR CERTIFICATE THAT PROVIDES COVERAGE FOR SPECIFIC DISEASES OR
4 ACCIDENTS ONLY, OR ANY HOSPITAL INDEMNITY, MEDICARE SUPPLEMENT,
5 LONG-TERM CARE, DISABILITY INCOME, OR 1-TIME LIMITED DURATION
6 POLICY OR CERTIFICATE.
7 (B) HOSPITAL, MEDICAL, SURGICAL, VISION, DENTAL, AND SICK
8 CARE BENEFITS PROVIDED BY A MEWA REGULATED UNDER CHAPTER 70.
9 (C) BENEFITS PROVIDED UNDER A HEALTH MAINTENANCE ORGANIZA-
10 TION CONTRACT.
11 (D) BENEFITS PROVIDED UNDER A HEALTH CARE CORPORATION
12 CERTIFICATE.
13 (E) BENEFITS PROVIDED UNDER A QUALIFIED HEALTH PLAN.
14 (2) EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (4), AN
15 INSURER SHALL PAY IN FULL THE CLAIM PAYMENT AMOUNT FOR A HEALTH
16 CARE CLAIM, OR ANY UNDISPUTED PART OF A HEALTH CARE CLAIM, AS
17 FOLLOWS:
18 (A) WITHIN 30 DAYS FOLLOWING RECEIPT OF A CLEAN CLAIM BY
19 ELECTRONIC TRANSMISSION.
20 (B) WITHIN 45 DAYS FOLLOWING RECEIPT OF A CLEAN CLAIM BY
21 HARD COPY.
22 (3) A HEALTH CARE CLAIM SHALL BE CONSIDERED A CLEAN CLAIM,
23 UNLESS AN INSURER, WITHIN 30 DAYS FOLLOWING RECEIPT OF A CLAIM BY
24 ELECTRONIC TRANSMISSION OR WITHIN 45 DAYS FOLLOWING RECEIPT OF A
25 CLAIM BY HARD COPY, REQUESTS IN WRITING FROM THE CLAIMANT ALL
26 ADDITIONAL INFORMATION, IF ANY, REASONABLY NEEDED TO DETERMINE
27 LIABILITY TO PAY THE HEALTH CARE CLAIM. UPON THE INSURER'S
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1 RECEIPT OF ALL ADDITIONAL REQUESTED INFORMATION, THE HEALTH CARE
2 CLAIM SHALL BE CONSIDERED A CLEAN CLAIM. AN INSURER THAT
3 REQUESTS ADDITIONAL INFORMATION THAT IS NOT REASONABLY NEEDED TO
4 DETERMINE LIABILITY TO PAY A HEALTH CARE CLAIM IS LIABLE FOR THE
5 PAYMENT OF INTEREST AS PROVIDED IN SUBSECTION (8).
6 (4) AN INSURER SHALL PAY A CLEAN CLAIM WITHIN THE APPLICABLE
7 30- AND 45-DAY TIME PERIODS PRESCRIBED IN SUBSECTION (2)(A) AND
8 (B) UNLESS THE INSURER REASONABLY DISPUTES ITS OBLIGATION TO PAY
9 THE CLEAN CLAIM, IN WHOLE OR IN PART, BASED ON 1 OR MORE OF THE
10 FOLLOWING GROUNDS:
11 (A) THE ELIGIBILITY OF A PERSON FOR COVERAGE.
12 (B) THE LIABILITY OF ANOTHER INSURER OR PERSON FOR ALL OR
13 PART OF THE CLAIM.
14 (C) THE AMOUNT OF THE CLAIM.
15 (D) THE COVERED BENEFITS.
16 (E) THE MANNER IN WHICH SERVICES WERE ACCESSED OR PROVIDED.
17 (F) THAT THE CLAIM WAS SUBMITTED FRAUDULENTLY SO LONG AS
18 THERE IS A REASONABLE BASIS SUPPORTED BY SPECIFIC INFORMATION
19 AVAILABLE FOR REVIEW BY THE COMMISSIONER TO SUPPORT THIS BELIEF.
20 (5) FOLLOWING RECEIPT OF A CLEAN CLAIM AND WITHIN THE APPLI-
21 CABLE 30- AND 45-DAY TIME PERIODS PRESCRIBED IN SUBSECTION (2)(A)
22 AND (B), AN INSURER THAT DISPUTES ITS OBLIGATION TO PAY A CLEAN
23 CLAIM, IN WHOLE OR IN PART, SHALL NOTIFY THE CLAIMANT IN WRITING
24 THAT IT IS NOT OBLIGATED TO PAY SOME OR ALL OF THE CLAIM STATING
25 WITH SPECIFICITY ALL REASONS WHY IT IS NOT LIABLE. AN INSURER
26 THAT VIOLATES SUBSECTION (4) OR UNREASONABLY DISPUTES LIABILITY
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1 TO PAY A CLAIM IS LIABLE FOR THE PAYMENT OF INTEREST AS PROVIDED
2 IN SUBSECTION (8).
3 (6) EACH HEALTH CARE CLAIM PROCESSED IN VIOLATION OF THIS
4 SECTION CONSTITUTES A SEPARATE VIOLATION AND IS AN UNFAIR TRADE
5 PRACTICE. AN INSURER IS RESPONSIBLE TO ENSURE THAT ANY PERSON
6 THAT PROCESSES HEALTH CARE CLAIMS ON ITS BEHALF COMPLIES WITH
7 THIS SECTION.
8 (7) IF, AFTER OPPORTUNITY FOR A HEARING HELD PURSUANT TO THE
9 ADMINISTRATIVE PROCEDURES ACT OF 1969, 1969 PA 306, MCL 24.201 TO
10 24.328, THE COMMISSIONER DETERMINES THAT AN INSURER HAS VIOLATED
11 THIS SECTION, THE COMMISSIONER SHALL REDUCE HIS OR HER FINDINGS
12 AND DECISION TO WRITING AND SHALL ISSUE AND CAUSE TO BE SERVED
13 UPON THE INSURER A COPY OF THE FINDINGS AND AN ORDER REQUIRING
14 THE INSURER TO CEASE AND DESIST FROM VIOLATING THIS SECTION AND
15 SHALL ORDER PAYMENT OF A MONETARY PENALTY OF $5,000.00 FOR EACH
16 VIOLATION. IF AN INSURER KNOWINGLY AND REPEATEDLY VIOLATES THIS
17 SECTION, THE COMMISSIONER MAY ORDER THE SUSPENSION OR REVOCATION
18 OF THE INSURER'S CERTIFICATE OF AUTHORITY OR LICENSE.
19 (8) AN INSURER THAT VIOLATES THIS SECTION SHALL PAY THE
20 CLAIMANT INTEREST ON THE CLAIM PAYMENT AMOUNT COMPUTED AT THE
21 RATE OF 18% PER ANNUM FROM THE DATE ON WHICH THE CLAIM PAYMENT
22 AMOUNT WAS REQUIRED TO BE PAID UNTIL THE DATE ON WHICH THE CLAIM
23 PAYMENT AMOUNT IS PAID IN FULL. INTEREST SHALL BE PAID AT THE
24 TIME THE CLAIM PAYMENT AMOUNT IS PAID IN FULL.
25 (9) A POLICYHOLDER, COVERED PERSON, OR CLAIMANT MAY BRING A
26 CIVIL ACTION AGAINST AN INSURER TO RECOVER THE CLAIM PAYMENT
27 AMOUNT AND INTEREST PAYABLE UNDER SUBSECTION (8), TOGETHER WITH
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1 ACTUAL ATTORNEY FEES AND LITIGATION EXPENSES AND COSTS. THIS
2 SUBSECTION DOES NOT ABROGATE OR IMPAIR ANY OTHER LEGAL OR EQUITA-
3 BLE ACTION, CLAIM, OR REMEDY THAT A POLICYHOLDER, COVERED PERSON,
4 OR CLAIMANT MAY HAVE AGAINST AN INSURER.
5 (10) IF AN INSURER CONTRACTS TO PROVIDE BENEFITS AND REIN-
6 SURES ALL OR A PORTION OF THE RISK, THE INSURER IS LIABLE FOR
7 INTEREST DUE TO A CLAIMANT UNDER THIS SECTION IF A REINSURER
8 FAILS TO PAY BENEFITS ON A TIMELY BASIS.
9 (11) A HEALTH CARE PROVIDER WHOSE MEMBERSHIP ON ANY PROVIDER
10 PANEL IS TERMINATED SHALL BE PROVIDED WITH A WRITTEN EXPLANATION
11 OF ALL REASONS FOR THE TERMINATION. THE PERSON WHO MAINTAINS THE
12 PANEL SHALL FURNISH THE EXPLANATION TO THE HEALTH CARE PROVIDER
13 WHEN THE HEALTH CARE PROVIDER IS GIVEN NOTICE OF TERMINATION.
14 (12) A PERSON SHALL NOT TERMINATE THE PARTICIPATION OF A
15 HEALTH CARE PROVIDER ON ANY PROVIDER PANEL, OR OTHERWISE DISCRIM-
16 INATE AGAINST A HEALTH CARE PROVIDER, BECAUSE THE HEALTH CARE
17 PROVIDER CLAIMS THAT A PERSON HAS VIOLATED THIS SECTION. A
18 HEALTH CARE PROVIDER WHO ALLEGES A VIOLATION OF THIS SUBSECTION
19 MAY BRING A CIVIL ACTION FOR APPROPRIATE INJUNCTIVE RELIEF, DAM-
20 AGES, OR BOTH, TOGETHER WITH ACTUAL ATTORNEY FEES AND LITIGATION
21 EXPENSES AND COSTS.
22 (13) EACH INSURER SHALL RECEIVE AND PROCESS THOSE CLAIMS
23 THAT ARE TRANSMITTED ELECTRONICALLY.
24 (14) FOR PURPOSES OF THIS SECTION:
25 (A) "CLAIM PAYMENT AMOUNT" MEANS THE AMOUNT THAT AN INSURER
26 IS LIABLE TO PAY ON A HEALTH CARE CLAIM.
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1 (B) "CLAIMANT" MEANS A PERSON WHO SUBMITS A HEALTH CARE
2 CLAIM TO AN INSURER, INCLUDING A POLICYHOLDER, COVERED PERSON, OR
3 HEALTH CARE PROVIDER.
4 (C) "CLEAN CLAIM" MEANS A HEALTH CARE CLAIM THAT CAN BE PRO-
5 CESSED IN ACCORDANCE WITH AN INSURER'S REASONABLE PROCEDURES
6 WITHOUT THE OBTAINING OF ADDITIONAL INFORMATION FROM THE CLAIMANT
7 OR ANY OTHER PERSON.
8 (D) "HEALTH CARE CLAIM" MEANS A REQUEST FOR THE PAYMENT OF
9 ANY OF THE FOLLOWING BENEFITS:
10 (i) BENEFITS UNDER AN EXPENSE-INCURRED HOSPITAL, MEDICAL, OR
11 SURGICAL POLICY OR CERTIFICATE, INCLUDING ANY POLICY OR CERTIFI-
12 CATE THAT PROVIDES COVERAGE FOR SPECIFIC DISEASES OR ACCIDENTS
13 ONLY, OR ANY HOSPITAL INDEMNITY, MEDICARE SUPPLEMENT, LONG-TERM
14 CARE, DISABILITY INCOME, OR 1-TIME LIMITED DURATION POLICY OR
15 CERTIFICATE.
16 (ii) HOSPITAL, MEDICAL, SURGICAL, VISION, DENTAL, AND SICK
17 CARE BENEFITS PROVIDED BY A MEWA REGULATED UNDER CHAPTER 70.
18 (iii) BENEFITS PROVIDED UNDER A HEALTH MAINTENANCE ORGANIZA-
19 TION CONTRACT.
20 (iv) BENEFITS PROVIDED UNDER A HEALTH CARE CORPORATION
21 CERTIFICATE.
22 (v) BENEFITS PROVIDED UNDER A QUALIFIED HEALTH PLAN.
23 (E) "HEALTH CARE PROVIDER" MEANS A PERSON LICENSED, CERTI-
24 FIED, OR REGISTERED UNDER PART 62 OR PARTS 161 TO 183 OF THE
25 PUBLIC HEALTH CODE, 1978 PA 368, MCL 333.6201 TO 333.6251 AND
26 333.16101 TO 333.18311, OR A HEALTH FACILITY.
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1 (F) "HEALTH FACILITY" MEANS:
2 (i) A FACILITY OR AGENCY LICENSED OR AUTHORIZED UNDER
3 ARTICLE 17 OF THE PUBLIC HEALTH CODE, 1978 PA 368, MCL 333.20101
4 TO 333.22260.
5 (ii) A MENTAL HOSPITAL, PSYCHIATRIC HOSPITAL, PSYCHIATRIC
6 UNIT, OR MENTAL RETARDATION FACILITY OPERATED BY THE DEPARTMENT
7 OF MENTAL HEALTH OR CERTIFIED OR LICENSED UNDER THE MENTAL HEALTH
8 CODE, 1974 PA 258, MCL 330.1001 TO 330.2106.
9 (iii) A FACILITY PROVIDING OUTPATIENT PHYSICAL THERAPY SERV-
10 ICES, INCLUDING SPEECH PATHOLOGY SERVICES.
11 (iv) A KIDNEY DISEASE TREATMENT CENTER, INCLUDING A FREE-
12 STANDING HEMODIALYSIS UNIT.
13 (v) AN ORGANIZED AMBULATORY HEALTH CARE FACILITY.
14 (vi) A TERTIARY HEALTH CARE SERVICE FACILITY.
15 (vii) A SUBSTANCE ABUSE TREATMENT PROGRAM LICENSED UNDER
16 PARTS 61 TO 65 OF THE PUBLIC HEALTH CODE, 1978 PA 368, MCL
17 333.6101 TO 333.6523.
18 (viii) AN OUTPATIENT PSYCHIATRIC CLINIC.
19 (ix) A HOME HEALTH AGENCY.
20 (G) "INSURER" INCLUDES A HEALTH MAINTENANCE ORGANIZATION, A
21 QUALIFIED HEALTH PLAN, A HEALTH CARE CORPORATION, AND A MEWA REG-
22 ULATED UNDER CHAPTER 70.
23 (H) "QUALIFIED HEALTH PLAN" MEANS, AT A MINIMUM, AN ORGANI-
24 ZATION THAT MEETS THE CRITERIA FOR DELIVERING THE COMPREHENSIVE
25 PACKAGE OF SERVICES UNDER THE DEPARTMENT OF COMMUNITY HEALTH'S
26 COMPREHENSIVE HEALTH PLAN.
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1 Enacting section 1. This amendatory act takes effect 6
2 months after it is enacted into law.
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