1365
. (a) An enrollment or a subscription shall not be canceled or
not renewed except for the following reasons:
(1) (A) For nonpayment of the required premiums by the individual,
employer, or contractholder if the individual, employer, or
contractholder has been duly notified and billed for the charge and
at least a 30-day grace period has elapsed since the date of
notification or, if longer, the period of time required for notice
and any other requirements pursuant to Section 2703, 2712, or 2742 of
the federal Public Health Service Act (42 U.S.C. Secs. 300gg-2,
300gg-12, and 300gg-42) and any subsequent rules or regulations has
elapsed.
(B) Pursuant to subparagraph (A), a health care service plan shall
continue to provide coverage as required by the individual's,
employer's, or contractholder's health care service plan contract
during the period described in subparagraph (A).
(2) The plan demonstrates fraud or an intentional
misrepresentation of material fact under the terms of the health care
service plan contract by the individual contractholder or employer.
(3) In the case of an individual health care service plan
contract, the individual subscriber no longer resides, lives, or
works in the plan's service area, but only if the coverage is
terminated uniformly without regard to any health status-related
factor of covered individuals.
(4) In the case of a group health care service plan contract,
violation of a material contract provision relating to employer
contribution or group participation rates by the contractholder or
employer.
(5) If the plan ceases to provide or arrange for the provision of
health benefits for new health care service plan contracts in the
individual or group market, or all markets, in this state, provided,
however, that the following conditions are satisfied:
(A) Notice of the decision to cease new or existing health benefit
plans in the state is provided to the director, the individual or
group contractholder or employer, and the enrollees covered under
those contracts, at least 180 days prior to discontinuation of those
contracts.
(B) Health benefit plans shall not be canceled for 180 days after
the date of the notice required under subparagraph (A) and, for that
business of a plan that remains in force, any plan that ceases to
offer for sale new health benefit plans shall continue to be governed
by this section with respect to business conducted under this
section.
(C) Except as authorized under subdivision (b) of Section 1357.09
and Section 1357.10, a plan that ceases to write new health benefit
plans in the individual or group market, or all markets, in this
state shall be prohibited from offering for sale health benefit plans
in that market or markets in this state for a period of five years
from the date of the discontinuation of the last coverage not so
renewed.
(6) If the plan withdraws a health benefit plan from the market,
provided that all of the following conditions are satisfied:
(A) The plan notifies all affected subscribers, contractholders,
employers, and enrollees and the director at least 90 days prior to
the discontinuation of the plan.
(B) The plan makes available to the individual or group
contractholder or employer all health benefit plans that it makes
available to new individual or group business, respectively.
(C) In exercising the option to discontinue a health benefit plan
under this paragraph and in offering the option of coverage under
subparagraph (B), the plan acts uniformly without regard to the
claims experience of the individual or contractholder or employer, or
any health status-related factor relating to enrollees or potential
enrollees.
(D) For small employer health care service plan contracts offered
under Article 3.1 (commencing with Section 1357), the premium for the
new plan contract complies with the renewal increase requirements
set forth in Section 1357.12. This subparagraph shall not apply after
December 31, 2013.
(7) In the case of a group health benefit plan, if an individual
or employer ceases to be a member of a guaranteed association, as
defined in subdivision (n) of Section 1357, but only if that coverage
is terminated under this paragraph uniformly without regard to any
health status-related factor relating to any enrollee.
(b) (1) An enrollee or subscriber who alleges that an enrollment
or subscription has been or will be improperly canceled, rescinded,
or not renewed may request a review by the director pursuant to
Section 1368.
(2) If the director determines that a proper complaint exists, the
director shall notify the plan and the enrollee or subscriber who
requested the review.
(3) If, after review, the director determines that the
cancellation, rescission, or failure to renew is contrary to existing
law, the director shall order the plan to reinstate the enrollee or
subscriber. Within 15 days after receipt of that order, the health
care service plan shall request a hearing or reinstate the enrollee
or subscriber.
(4) If an enrollee or subscriber requests a review of the health
care service plan's determination to cancel or rescind or failure to
renew the enrollee's or subscriber's health care service plan
contract pursuant to this section, the health care service plan shall
continue to provide coverage to the enrollee or subscriber under the
terms of the contract until a final determination of the enrollee's
or subscriber's request for review has been made by the director.
This paragraph shall not apply if the health care service plan
cancels or does not renew the enrollee's or subscriber's health care
service plan contract for nonpayment of premiums pursuant to
paragraph (1) of subdivision (a).
(5) A reinstatement pursuant to this subdivision shall be
retroactive to the time of cancellation, rescission, or failure to
renew and the plan shall be liable for the expenses incurred by the
subscriber or enrollee for covered health care services from the date
of cancellation, rescission, or nonrenewal to and including the date
of reinstatement. The health care service plan shall reimburse the
enrollee or subscriber for any expenses incurred pursuant to this
paragraph within 30 days of receipt of the completed claim.
(c) This section shall not abrogate any preexisting contracts
entered into prior to the effective date of this chapter between a
subscriber or enrollee and a health care service plan or a
specialized health care service plan, including, but not limited to,
the financial liability of the plan, except that each plan shall, if
directed to do so by the director, exercise its authority, if any,
under those preexisting contracts to conform them to existing law.
(d) As used in this section, "health benefit plan" means any
individual or group insurance policy or health care service plan
contract that provides medical, hospital, and surgical benefits. The
term does not include accident only, credit, or disability income
coverage, coverage of Medicare services pursuant to contracts with
the United States government, Medicare supplement coverage, long-term
care insurance, dental or vision coverage, coverage issued as a
supplement to liability insurance, insurance arising out of workers'
compensation law or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(e) On or before July 1, 2011, the director may issue guidance to
health care service plans regarding compliance with this section and
that guidance shall not be subject to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code). Any guidance issued
pursuant to this subdivision shall only be effective through December
31, 2013, or until the director adopts and effects regulations
pursuant to the Administrative Procedure Act, whichever occurs first.