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2001 Insurance Legislation SummariesIntroductionThe Legislative Assembly enacted significant pieces of insurance legislation during this session. Two of the bills (SB 268 and 269) implement changes in insurance regulation occurring because of the federal Gramm-Leach-Bliley Act, which became law in November 1999. This federal legislation makes major changes in the regulation of banking, insurance and securities because the legislation authorizes joint participation in and ownership of banking, insurance and securities enterprises, which had been prohibited under Depression-era laws.
Insurance regulation generally
SB 267 strengthens and standardizes regulatory oversight of the financial condition of insurers, health care service contractors (including health maintenance organizations) and multiple employer welfare arrangements. The bill: Enrolled bill: HTML version; PDF version SB 268(ch 191) Licensing of insurance agents SB 268 facilitates interstate licensing of insurance agents and otherwise updates Oregon's laws governing the licensing of insurance agents, adjusters and consultants. This bill and SB 269 were enacted in response to the federal Gramm-Leach-Bliley Act. That federal legislation requires states to simplify their interstate licensing processes by which insurance agents are authorized to do business outside their states of residence. SB 268 standardizes and simplifies licensing procedures in response to the federal legislation. SB 268 also carries out another federal law (18 U.S.C. 1033), which permanently bars a person who has been convicted of a felony involving dishonesty or a breach of trust from involvement in the business of insurance unless the state insurance authority grants a consent to that person. This federal law authorizes the DCBS Director to establish standards for determining whether to issue a consent. SB 268 took effect July 1, 2001. The parts of the bill dealing with agent licensing become operative January 1, 2002, but the bill authorizes the DCBS Director to engage in rulemaking prior to that date. Enrolled bill: HTML version; PDF version SB 269 (ch 377) Privacy; sharing confidential information; financial holding companies SB 269 amends existing provisions of the Oregon Insurance Code that regulate privacy practices of insurance companies, agents and others licensed under the Insurance Code, in order to conform state insurance law to requirements of the Gramm-Leach-Bliley Act. These provisions apply to insurance used primarily for personal, family or household needs. The bill also amends statutes governing insurance, financial institutions and securities businesses to enable state regulators to share confidential information with state, federal and foreign regulators. Finally, the bill specifically recognizes the existence of financial holding companies, an entity established by the Gramm-Leach-Bliley Act. This bill took effect June 15, 2001.The Insurance Division adopted temporary rules to implement the privacy laws. The rules took effect July 1, 2001. Permanent rulemaking will follow. Enrolled bill: HTML version; PDF version HB 3126 (ch__) Group life and health insurance; use of policy forms; modification of health policies; notice of cancellation of health insurance for nonpayment of premium HB 3126: Enrolled bill: HTML version; PDF version SB 114 (ch 588) Genetic privacy SB 114 amends statutes governing the use of genetic testing and genetic privacy in research and in a number of other subject areas, including insurance. The changes affecting insurance prohibit the use of genetic information about a blood relative to reject, deny, limit, cancel or otherwise affect any policy of insurance. Currently, an insurer is prohibited from using genetic information for such purposes in connection with a policy for hospital or medical expenses. This prohibition continues. The bill also deletes duplicative rulemaking provisions regarding notice of genetic testing and use of genetic information for insurance purposes and transfers responsibility for the rulemaking from the Health Division to the Director of the Department of Consumer and Business Services (DCBS). SB 114 took effect June 25, 2001. Enrolled bill: HTML version; PDF version SB 609 (ch 329) Insurer self-evaluative audits SB 609 provides that an "insurance compliance self-evaluative audit document" is privileged information and is not discoverable or admissible as evidence in a civil, criminal or administrative proceeding, with exceptions. These self-evaluative audit documents are prepared by insurers in connection with voluntary internal evaluations and audits that insurers undertake to identify or prevent violations of insurance laws. The privilege does not apply in proceedings begun by the Attorney General relating to Medicaid fraud. Disclosure may be required by a court under certain specified circumstances. The bill recognizes and preserves the authority of the DCBS Director to acquire any such audit document, to examine any person in connection with the document and to take enforcement actions. Enrolled bill: HTML version; PDF version SB 831 (ch 352) Internal governing of mutual insurers SB 831 requires a two-thirds supermajority voting requirement for a merger, sale or demutualization of a mutual insurer (an insurer that does not issue stock and is owned by its policyholders); authorizes the board of directors of a mutual insurer to condition submission of a proposed merger, acquisition, demutualization or other activity on any legal basis (such as an affirmative vote requirement exceeding a majority); and requires bylaws to be submitted to the DCBS Director, and specifies contents of bylaws. Enrolled bill: HTML version; PDF version SB 977 (ch __) Liquidation, default of insurers SB 977 authorizes the court overseeing the liquidation of an insurer in receivership to establish a deadline date for filing claims on the insurer; limits coverage of the Oregon Insurance Guaranty Association (OIGA) to exclude persons who have a net worth exceeding $25 million; changes the statutory priority of claims (ORS 734.360) in liquidations of insurers, placing claims of the federal government after administrative costs of receivership and claims of policyholders and the OIGA; and provides that the Workers' Benefit Fund may pay an injury claim to an injured worker when the insurer who is supposed to pay the claim defaults on it. Enrolled bill: HTML version; PDF version HB 2112 (ch 535) Electronic transactions HB 2112 adopts the Uniform Electronic Transactions Act for Oregon, to govern electronic records and electronic signatures relating to transactions relating to business, commercial or governmental affairs. The uniform act establishes definitions of terms and prescribes procedures for electronic transactions. Enrolled bill: HTML version; PDF version Health Insurance
HB 3040 provides the following consumer protections in connection with health insurance: HB 3040 takes effect Jan. 1, 2002, but does not become operative until July 1, 2002. The earlier date enables rulemaking and other administrative implementation to occur before the bill takes full
effect July 1, 2002. SB 894 (ch 747) Prompt payment SB 894 requires that when a claim under a health benefit plan is submitted to an insurer by a provider on behalf of an enrollee, the insurer must pay a clean claim or deny the claim not later than 30 days after the date on which the insurer receives the claim. The insurer may request additional information, but the time for doing so and then the time for acting on the information are similarly limited. An insurer who fails to pay a claim to a provider within the established timelines must pay simple interest of 12 percent per annum on the unpaid amount of the claim. SB 894 took effect July 5, 2001, in order to allow rulemaking and other administrative implementation, but does not become operative until Jan. 1, 2002. Enrolled bill: HTML version; PDF version HB 2763 (ch 549) Prescription drugs; identity card HB 2763 requires an insurer that provides coverage for prescription drugs on an outpatient basis or an administrator of a health benefit plan to issue its enrollees a prescription drug identification card or other technology for use in claims adjudication, or to use the insurer's or administrator's general identification card for prescription claims adjudication. This bill is intended to reduce or eliminate delay owing to insurers' requests for claims information and the resulting multiple phone calls between pharmacists and insurers.The requirement under this bill takes effect July 1, 2003. Enrolled bill: HTML version; PDF version SB 286 (ch 742) Coverage of diabetes services SB 286 requires group health benefit plans to cover costs of supplies, equipment and diabetes self-management programs associated with treatment of various types of diabetes. Enrolled bill: HTML version; PDF version HB 2519 (ch__) Oregon Health Plan HB 2519 governs access to basic health care services provided through Medicaid, children's health insurance program and subsidized private health insurance. The bill directs the Department of Human Services to apply to the federal government for waivers to obtain federal matching money for public subsidies for low income Oregonians, in order to make private health insurance more accessible. If the waiver is granted, the Office of Private Health Partnerships will expand availability of the group coverage it provides. Enrolled bill: HTML version; PDF version HB 2084 (ch 604) Coverage of retired local government employees HB 2084 prohibits a local government and a health care insurer from creating for health insurance coverage a group of retired employees and their dependents that is separate from the covered group of current officers and employees of the local government. The bill also prohibits a health insurer from establishing a higher premium for retired employees and their dependents than for officers and employees of the local government, and requires that the retired employees be charged a premium according to an appropriate membership category. Enrolled bill: HTML version; PDF version SB 103 (ch__) Oregon Medical Insurance Pool; regulation; portability coverage SB 103 deletes the examination and regulatory authority of the DCBS Director with respect to the Oregon Medical Insurance Pool (OMIP), the applicability of statutorily-mandated health benefits to OMIP coverages and the Director's authority to approve plans and rating and renewability requirements, and similar limitations on coverage. The bill also establishes the methods by which the OMIP board of directors must determine medical and portability risk rates, replacing current requirements. The bill limits the application of the Insurance Code section (ORS 743.760) governing health insurance portability policies to policies issued by OMIP. Enrolled bill: HTML version; PDF version Casualty Insurance
SB 325 authorizes institutions of higher education to provide liability insurance coverage for students involved in off-campus experiential activities, such as student teaching and internships. SB 325 took effect July 1, 2001. Enrolled bill: HTML version; PDF version SB 440 (ch 85) Fire and homeowner policies; notice of coverage limitations SB 440 limits the scope of the decision in Fleming v. United States Automobile Assn., 329 Or 449, 988 P2d 378 (1999), in which the Oregon Supreme Court held that a statutory requirement that coverage limitations be marked prominently in a fire insurance policy made a provision in a policy ineffective because it was without the prominent marking. Fleming applied the requirement to a package insurance policy that included fire and other coverages. SB 440 specifically limits the statutory requirement to policies that cover fire only. NOTE: Neither Fleming nor SB 440 changes the principle that insurers are responsible for ensuring that their policy forms comply with Oregon statutes. SB 440 does not require an insurer to refile forms that were filed and approved after the Fleming decision. At the same time, however, an insurer may not withdraw a filing made after the Fleming decision and begin using forms that were approved prior to Fleming unless the Insurance Division once again reviews and approves the forms according to the standards in ORS 742.005 as specified in SB 440. Enrolled bill: HTML version; PDF version SB 441 (ch 327) Use of driving record abstracts by insurers SB 441 authorizes insurers, for the purpose of offering and determining premium discounts to good drivers, to use abstracts of Driver and Motor Vehicle Services nonemployment driving records containing information about accidents, tickets, suspensions and other matters that are older than three years. Enrolled bill: HTML version; PDF version SB 485 (ch__) Workers' compensation SB 485 makes a number of changes in workers' compensation law, indirectly affecting insurance law. The bill redefines the term "preexisting condition," authorizes expenditure of moneys from the Workers' Benefit Fund for payment of supplemental temporary disability benefits for workers employed in more than one job and authorizes the DCBS Director to resolve disputes whether medical services that are provided to a person should be paid by the person's health insurance coverage or workers' compensation insurance. Enrolled bill: HTML version; PDF version SB 597 (ch 291) Liability for use of motor vehicles SB 597 provides that a person who makes a motor vehicle available to another person for a test drive is not liable for injury, death or damage arising from the use of the motor vehicle unless the person providing the vehicle is negligent in maintaining the vehicle or in making it available and the harm results from the negligence. This bill does not amend the Insurance Code but affects liability and insurance coverage for that liability. Enrolled bill: HTML version; PDF version HB 2972 (ch 556) Health care payment fraud; casualty insurance HB 2972 establishes that an insurer of a casualty insurance policy may be a victim of a false claim for a health care payment for the purpose of ORS 165.690, 165.692 and 165.694, which make a false claim for health care payment a crime. The crime currently applies to claims made in connection with health insurance, self-insured health benefit plans, state or federal medical assistance programs and workers' compensation insurance. Enrolled bill: HTML version; PDF version |
