Senate Bill No. 628
(By Senators Walker, Craigo, Kessler, Oliverio and McKenzie)
____________
[Introduced February 21, 2000; referred to the Committee
on Banking and Insurance.]
____________
A BILL to amend and reenact section four, article fifteen, chapter
thirty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; to further amend said article
by adding thereto a new section, designated section twenty-
two; to amend and reenact section three, article fifteen-b of
said chapter; and to amend and reenact section three, article
sixteen of said chapter, all relating to prompt payment for
claims under individual and group accident and sickness
insurance policies; uniform health care administration act;
and required policy provisions under these types of coverage,
including an explanation of benefits.
Be it enacted by the Legislature of West Virginia:
That section four, article fifteen, chapter thirty-three of
the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; that said article be further
amended by adding thereto a new section, designated section twenty-
two; that section three, article fifteen-b of said chapter be
amended and reenacted; and that section three, article sixteen of
said chapter be amended and reenacted, all to read as follows:
ARTICLE 15. ACCIDENT AND SICKNESS INSURANCE.
§33-15-4. Required policy provisions.
Except as provided in section six of this article, each such
policy delivered or issued for delivery to any person in this state
shall contain the provisions specified in this section in the words
in which the same they appear in this section: Provided, That the
insurer may, at its option, substitute for one or more of such the
provisions corresponding provisions of different wording approved
by the commissioner which are in each instance not less favorable
in any respect to the insured or the beneficiary. Such The
provisions shall be preceded individually by the caption appearing
in this section or, at the option of the insurer, by such the
appropriate individual or group captions or subcaptions as the
commissioner may approve.
(a) A provision as follows:
"Entire Contract; Changes: This policy, including the
endorsements and the attached papers, if any, constitutes the
entire contract of insurance. No change in this policy shall be
valid until approved by an executive officer of the insurer and
unless such approval be endorsed hereon or attached hereto. No
agent has authority to change this policy or to waive any of its
provisions."
(b) A provision as follows:
"Time Limit on Certain Defenses: (1) After two years from the
date of issue of this policy no misstatements, except fraudulent
misstatements, made by the applicant in the application for such
policy shall be used to void the policy or to deny a claim for loss
incurred or disability (as defined in the policy) commencing after
the expiration of such two-year period."
The foregoing policy provision shall not be so construed as to
affect any legal requirement for avoidance of a policy or denial of
a claim during such the initial two-year period, nor to limit the
application of subdivisions (a), (b), (c), (d) and (e) of section
five of this article in the event of misstatement with respect to
age or occupation or other insurance. A policy which the insured has the right to continue in force subject to its terms by the
timely payment of premium: (i) Until at least age fifty; or (ii)
in the case of a policy issued after age forty-four, for at least
five years from its date of issue, may contain in lieu of the
foregoing the following provision (from which the clause in
parentheses may be omitted at the insurer's option) under the
caption "Incontestable":
"After this policy has been in force for a period of two years
during the lifetime of the insured (excluding any period during
which the insured is disabled), it shall become incontestable as to
the statements contained in the application.
(2) No claim for loss incurred or disability (as defined in
the policy) commencing after two years from the date of issue of
this policy shall be reduced or denied on the ground that a disease
or physical condition not excluded from coverage by name or
specific description effective on the date of loss had existed
prior to the effective date of coverage of this policy."
(c) A provision as follows:
"Grace Period: A grace period of __________________ (insert
a number not less than '7' for weekly premium policies, '10' for
monthly premium policies and '31' for all other policies) days will be granted for the payment of each premium falling due after the
first premium, during which grace period the policy shall continue
in force."
(d) A provision as follows:
"Reinstatement: If any renewal premium be not paid within the
time granted the insured for payment, as subsequent acceptance of
premium by the insurer or by any agent duly authorized by the
insurer to accept such premium, without requiring in connection
therewith an application for reinstatement, shall reinstate the
policy: Provided, That if the insurer or such agent requires an
application for reinstatement and issues a conditional receipt for
the premium tendered, the policy will be reinstated upon approval
of such application by the insurer, or lacking such approval, upon
the forty-fifth day following the date of such conditional receipt
unless the insurer has previously notified the insured in writing
of its disapproval of such application. The reinstated policy
shall cover only loss resulting from such accidental injury as may
be sustained after the date of reinstatement and loss due to such
sickness as may begin more than ten days after such date. In all
other respects the insured and insurer shall have the same rights
thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed
hereon or attached hereto in connection with the reinstatement."
(e) A provision as follows:
"Notice of Claim: Written notice of claim must be given to
the insurer within twenty days after the occurrence or commencement
of any loss covered by the policy, or as soon thereafter as is
reasonably possible. Notice given by or on behalf of the insured
or the beneficiary to the insurer at ____________________ (insert
the location of such office as the insurer may designate for the
purpose), or to any authorized agent of the insurer, with
information sufficient to identify the insured, shall be deemed
considered notice to the insurer."
In a policy providing a loss-of-time benefit which may be
payable for at least two years, an insurer may at its option insert
the following between the first and second sentences of the above
provision:
"Subject to the qualifications set forth below, if the insured
suffers loss of time on account of disability for which indemnity
may be payable for at least two years, he or she shall, at least
once in every six months after having given notice of claim give to
the insurer notice of continuance of said disability, except in the event of legal incapacity. The period of six months following any
filing of proof by the insured or any payment by the insurer on
account of such claim or any denial of liability, in whole or in
part, by the insurer shall be excluded in applying this provision.
Delay in the giving of such notice shall not impair the insured's
right to any indemnity which would otherwise have accrued during
the period of six months preceding the date on which such notice is
actually given."
(f) A provision as follows:
"Claim Forms: The insurer, upon receipt of a notice of claim,
will furnish to the claimant such forms as are usually furnished by
it for filing proofs of loss. If such forms are not furnished
within fifteen days after the giving of such notice the claimant
shall be deemed to have complied with the requirements of this
policy as to proof of loss upon submitting, within the time fixed
in the policy for filing proofs of loss, written proof covering the
occurrence, the character and the extent of the loss for which
claim is made."
(g) A provision as follows:
"Proof of Loss: Written proof of loss must be furnished to
the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon
continuing loss within ninety days after the termination of the
period for which the insurer is liable and in case of claim for any
other loss within ninety days after the date of such loss. Failure
to furnish such proof within the time required shall not invalidate
nor reduce any claim if it was not reasonably possible to give
proof within such time, provided such proof is furnished as soon as
reasonably possible and in no event, except in the absence of legal
capacity, later than one year from the time proof is otherwise
required."
(h) A provision as follows:
"Time of Payment of Claims: Indemnities payable under this
policy for any loss other than loss for which this policy provides
any periodic payment will be paid immediately upon receipt of due
written proof of such loss. Subject to due written proof of loss,
all accrued indemnities for loss for which this policy provides
periodic payment will be paid _____________ (insert period for
payment which must not be less frequently than monthly) and any
balance remaining unpaid upon the termination of liability will be
paid immediately upon receipt of due written proof."
(i) A provision as follows: "Payment of Claims: Indemnity for loss of life will be payable in accordance with the beneficiary
designation and the provisions respecting such payment which may be
prescribed herein and effective at the time of payment. If no such
designation or provision is then effective, such indemnity shall be
payable to the estate of the insured. Any other accrued
indemnities unpaid at the insured's death may, at the option of the
insurer, be paid either to such beneficiary or to such estate. All
other indemnities will be payable to the insured."
The following provisions, or either of them, may be included
with the foregoing provisions at the option of the insurer:
"If any indemnity of this policy shall be payable to the
estate of the insured, or to an insured or beneficiary who is a
minor or otherwise not competent to give a valid release, the
insurer may pay such indemnity, up to an amount not exceeding
$_________ (insert an amount which shall not exceed one thousand
dollars), to any relative by blood or connection by marriage of the
insured or beneficiary who is deemed by the insurer to be equitably
entitled thereto. Any payment made by the insurer in good faith
pursuant to this provision shall fully discharge the insurer to the
extent of such payment."
"Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities
provided by this policy on account of hospital nursing, medical, or
surgical services may, at the insurer's option and unless the
insured requests otherwise in writing not later than the time of
filing proofs of such loss, be paid directly to the hospital or
person rendering such services; but it is not required that the
service be rendered by a particular hospital or person."
(j) A provision as follows:
"Physical Examinations and Autopsy: The insurer at its own
expense shall have the right and opportunity to examine the person
of the insured when and as often as it may reasonably require
during the pendency of a claim hereunder and to make an autopsy in
case of death where it is not forbidden by law."
(k) A provision as follows:
"Legal Actions: No action at law or in equity shall be
brought to recover on this policy prior to the expiration of sixty
days after written proof of loss has been furnished in accordance
with the requirements of this policy. No such action shall be
brought after the expiration of three years after the time written
proof of loss is required to be furnished."
(l) A provision as follows:
"Change of Beneficiary: Unless the insured makes an
irrevocable designation of beneficiary, the right to change of
beneficiary is reserved to the insured and the consent of the
beneficiary or beneficiaries shall not be requisite to surrender or
assignment of this policy or to any change of beneficiary or
beneficiaries, or to any other changes in this policy."
The first clause of this provision, relating to the
irrevocable designation of beneficiary, may be omitted at the
insurer's option.
(m) Notwithstanding any other provision of law, all policies
of health insurance or a health care services plan, managed care
contract or any other contract providing for the payment of medical
services and goods shall include a provision as follows: "All
benefits are payable upon the insurer's receipt of written proof of
loss or claim for payment for health care goods or services
provided. The insurer shall within thirty working days after
receipt of written proof of loss or claim for payment for health
care goods or services provided mail to the insured or other person
claiming payments under the policy, payment for the benefits or a
letter or notice which states the reasons the insurer may have for
failing to pay the claim, either in whole or in part, and which also gives the person notified a written itemization of any
documents or other information needed to process the claim or any
portions thereof of the claim which are not being paid. When all
of the listed documents or other information needed to process the
claim have been received by the insurer, the insurer then has
thirty working days within which to process and either mail payment
for the claim or a letter or notice denying it, in whole or in
part, giving the insured or other person claiming payments under
the plan the insurer's reasons for the denial. Where the insurer
disputes a portion of the claim, any undisputed portion of the
claim shall be paid by the insurer within thirty working days.
Receipt for any proof, claim or documentation by an entity which
administers or processes claims on behalf of an insurer is
considered a receipt by the insurer. Each insurer shall pay to the
insured or other person claiming payments under the policy for
health care service, goods or benefits interest equal to eighteen
percent per annum on the proceeds or benefits due under the terms
of the plan for failure to comply with this thirty day payment or
explanation provision."
§33-15-22. Explanation of benefits.
All policies of health insurance or a health services plan, managed care contract or any other contract providing for the
payment of medical services and goods shall include with payment to
the insured or other person claiming payment under the plan or
contract an explanation of benefits paid using the format
prescribed by the federal government for medicare and identified as
the medicare explanation of benefits.
ARTICLE 15B. UNIFORM HEALTH CARE ADMINISTRATION ACT.
§33-15B-3. Insurance commissioner to promulgate rules; use of
standardized forms and classifications; advisory
panel and appointments.
(a) The insurance commissioner shall promulgate legislative
rules in accordance with the provisions of chapter twenty-nine-a of
this code regarding the implementation and use of uniform health
care administrative forms.
Such The rules shall be developed no later than the first day
of December, one thousand nine hundred ninety-two, and shall
establish, where practicable, the acceptance and use throughout the
health care system of standard administrative forms, terms or
procedures, including, but not limited to, the following: (1) The
Require that the standard health care financing administration
fifteen hundred (HCFA 1500) health insurance claim form, or other similar forms, and terms and definitions to be used therewith which
are consistent with insurance industry standards.
(2) International classification of disease, ninth clinical
modifications (ICD-9-CM) and common procedural terminology (CPT)
codes, as amended, or another similar standard code;
(3) Consideration of current practices involving reimbursement
of claims and explanation of benefits, and the implementation of
standards and guidelines regarding explanation of benefits,
including, but not limited to, consideration of line item
explanations of payments or denial of payments. Require that
insurers, within thirty working days after receiving notice of a
claim for health care benefits under the policy, mail to the
insured or other person claiming payments under the policy payment
for the benefits or a letter or notice which states the reasons the
insurer may have for failing to pay the claim, either in whole or
in part, and which also gives the person notified a written
itemization of any documents or other information needed to process
the claim or any portions of the claim which are not being paid.
Where documents or other information is requested by an insurer as
needed to process the claim, the insurer shall then have thirty
working days from the receipt of the listed documents or other information, within which to process and either mail payment for
the claim or a letter or notice denying it, in whole or in part,
giving the insured or other person claiming payments under the plan
the insurer's reasons for the denial;
(4) Require that where an insurer disputes a portion of a
claim, any undisputed portion of the claim shall be paid by the
insurer in accordance with this section;
(5) Provide that receipt of any proof, claim, or documentation
by an entity which administrates or processes claims on behalf of
an insurer is considered a receipt by the insurer for purposes of
this section;
(6) Require each insurer to pay to the insured or other person
claiming payments under the policy for health care service, goods
or benefits interest equal to eighteen percent per annum on the
proceeds or benefits due under the terms of the plan for failure to
pay undisputed claims within thirty working days or for failure to
pay disputed claims within thirty working days of receipt of proof
of coverage;
(7) Require explanation of benefits to be provided to insureds
and health care providers in the format prescribed by the federal
government for medicare explanation of benefits (EOB's);
(8) Require insurance information cards provided to insureds
to clearly indicate the dates of eligibility, required copayments
and deductibles;
(9) Limit the time period during which an insurer may recover
erroneously paid benefits to twelve months after the initial claim
was paid; and
(10) In the event of an overpayment, require the insurer to
offer the insured or health care provider the option of making
reimbursement to the insurer of the overpayment or allowing an
offset against future payments due from the insurer.
(b) The legislative rules required herein under this section
shall be developed by the insurance commissioner with the advice of
a thirteen-member panel to be appointed by the commissioner. Such
The panel shall consist of the insurance commissioner; one allopath
and one osteopath who shall be recommended by the West Virginia
state medical association; a representative of the hospital
industry who shall be recommended by the West Virginia hospital
association; one dentist recommended by the West Virginia dental
association and one pharmacist recommended by the West Virginia
pharmacists association; two members representing commercial health
insurers who shall be recommended by the association representing accident and sickness insurance; a representative of third-party
administrators; a representative of the public employees insurance
agency; a representative from the workers' compensation commission;
and two members representing consumers. The insurance commissioner
shall make such the appointments thirty days after the effective
date of this section.
(c) The insurance commissioner and the advisory panel shall
review the legislative rules effected pursuant to this section as
necessary on at least an annual basis and update the same rules in
a timely manner in order to conform to current legislation and
health care administrative trends.
ARTICLE 16. GROUP ACCIDENT AND SICKNESS INSURANCE.
§33-16-3. Required policy provisions.
Each such policy hereafter delivered or issued for delivery in
this state shall contain in substance the following provisions:
(a) A provision that the policy, the application of the
policyholder, a copy of which shall be attached to such the policy,
and the individual applications, if any, submitted in connection
with such the policy by the employees or members, shall constitute
constitutes the entire contract between the parties, and that all
statements made by any applicant or applicants shall be deemed considered representations and not warranties, and that no such
statement shall may void the insurance or reduce benefits
thereunder under the insurance coverage unless contained in a
written application.
(b) A provision that the insurer will furnish to the
policyholder, for delivery to each employee or member of the
insured group, an individual certificate setting forth in substance
the essential features of the insurance coverage of such the
employee or member and to whom benefits thereunder under the
insurance coverage are payable. If dependents are included in the
coverage, only one certificate need be issued for each family unit.
(c) A provision that all new employees or members, as the case
may be, in the groups or classes eligible for insurance, shall from
time to time be added to such these groups or classes eligible to
obtain such the insurance in accordance with the terms of the
policy.
(d) No provision relative to notice or proof of loss or the
time for paying benefits or the time within which suit may be
brought upon the policy shall may be less favorable to the insured
than would be permitted in the case of an individual policy by the
provisions set forth in article fifteen of this chapter.
(e) A provision that all members in groups or classes eligible
for insurance provided through an employee's group plan shall be
permitted to pay the premiums at the same group rate and receive
the same coverages for a period not to exceed eighteen months when
they are involuntarily laid off from work.
(f) Notwithstanding any other provision of law, all policies
of health insurance or a health care services plan, managed care
contract or any other contract providing for the payment of medical
services and goods shall include a provision as follows: "All
benefits are payable upon the insurer's receipt of written proof of
loss or claim for payment for health care goods or services
provided. The insurer shall within thirty working days after
receipt mail to the insured or other person claiming payments under
the policy, payment for the benefits or a letter or notice which
states the reasons the insurer may have for failing to pay the
claim, either in whole or in part, and which also gives the person
notified a written itemization of any documents or other
information needed to process the claim or any portions of the
claim which are not being paid. When all of the listed documents
or other information needed to process the claim have been received
by the insurer, the insurer shall then have thirty working days within which to process and either mail payment for the claim or a
letter or notice denying it, in whole or in part, giving the
insured or other person claiming payments under the plan the
insurer's reasons for the denial. Where the insurer disputes a
portion of the claim, any undisputed portion of the claim shall be
paid by the insurer within thirty working days. Receipt for any
proof, claim or documentation by an entity which administers or
processes claims on behalf of an insurer is receipt of the same by
the insurer. Each insurer shall pay to the insured or other person
claiming payments under the policy for health care services, goods
or benefits interest equal to eighteen percent per annum on the
proceeds or benefits due under the terms of the plan for failure to
comply with this thirty day payment or explanation provision."
(f) (g) Such Any further provisions establishing group
accident and sickness minimum policy coverage standards as the
commissioner shall promulgate by rule pursuant to chapter twenty-
nine-a of this code.
NOTE: The purpose of this bill is to require prompt payment
for claims under individual and group accident and sickness
insurance policies and requiring these policies to include an explanation of benefits.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§33-15-22 is new; therefore, strike-throughs and underscoring
have been omitted.