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<ns0:Description>
<ns0:Id>20250AB__177099INT</ns0:Id>
<ns0:VersionNum>99</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-09</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>1770</ns0:MeasureNum>
<ns0:MeasureState>INT</ns0:MeasureState>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Garcia</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Garcia</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title> An act to amend Section 1363.1 of, to repeal Section 1373.19 of, and to repeal and add Sections 1373.20 and 1373.21 of, the Health and Safety Code, and to repeal and add Section 10123.19 of the Insurance Code, relating to arbitration. </ns0:Title>
<ns0:RelatingClause>arbitration</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Arbitration: health care service plans and health insurers. </ns0:Subject>
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<ns0:DigestText>
<html:p>Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care. Existing law provides that a willful violation of provisions regulating health care service plans is a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan contract and any disability insurance policy that includes terms requiring binding arbitration for dispute settlement to provide a specified disclosure to subscribers, enrollees, or insureds. Existing law, the California Arbitration Act, provides a statutory framework for the enforcement of contractual arbitration under California law. Existing law establishes standards for arbitration, and requires a court to vacate an arbitration award if it makes certain
findings.</html:p>
<html:p> The bill would require the disclosure provided to subscribers, enrollees, or insureds to include a statement that the parties are able to appeal the result of an arbitration on the basis of legal or factual error made by the arbitrator and would require the disclosure to be provided to a subscriber, enrollee, or insured annually.</html:p>
<html:p>This bill would also require, by no later than February 1, 2027, the Department of Managed Health Care to create a panel of qualified arbitrators, as defined, and would require any arbitration between a health care service plan and an enrollee or subscriber, or between a health care insurer and an insured, to be conducted by an arbitrator selected by the department. The bill would specify the process for selection of an arbitrator and would require a health care service plan or health insurer to be responsible for the costs of the arbitrator appointed pursuant to these provisions. The
bill would require that a court reporter be present for an arbitration proceeding and would make the health care service plan or health insurer responsible for the cost of the court reporter. The bill would require the arbitrator to complete a report within 30 days of the completion of arbitration, to include, among other things, the amount of an award, if any, and the reasons for any award rendered or denied. The bill would also require all documents relating to the arbitration to be preserved by the health care service plan or health insurer and would require a copy of the documents to be provided the Director of the Department of Managed Health Care and to be maintained by the department for 5 years. The bill would require that all records of arbitration pursuant to these provisions be available to the public, except as specified. Because a violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.</html:p>
<html:p>Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.</html:p>
<html:p>This bill would make legislative findings to that effect.</html:p>
<html:p>The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.</html:p>
<html:p>This bill would provide that no reimbursement is required by this act for a specified reason.</html:p>
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<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
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<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
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<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
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<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_ACB3FA0D-B847-4B9D-B17E-F989AD2B5D4A">
<ns0:Num>SECTION 1.</ns0:Num>
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Section 1363.1 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
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<ns0:Num>1363.1.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
Any health care service plan contract that includes terms that require binding arbitration to settle disputes and that restrict, or provide for a waiver of, the right to a jury trial shall include, in clear and understandable language, a disclosure that meets all of the following conditions:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The disclosure shall clearly state whether the
health care service plan uses binding arbitration to settle disputes, including specifically whether the plan uses binding arbitration to settle claims of medical malpractice, coverage, and utilization review disputes.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The disclosure shall appear as a separate article in the agreement issued to the employer group or individual subscriber and shall be prominently displayed on the enrollment form signed by each subscriber or
enrollee, and shall be provided to a subscriber or enrollee annually.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The disclosure shall clearly state whether the subscriber or enrollee is waiving their right to a jury trial for medical malpractice, other disputes relating to the delivery of service under the plan, or both, and shall be substantially expressed in the wording provided in subdivision (a) of Section 1295 of the Code of Civil Procedure.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
In any contract or enrollment agreement for a health care service plan, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative of the group contracting with a health care service plan and immediately before the signature line provided for the individual enrolling in the health care service plan.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The parties shall be permitted to appeal on the basis of legal or factual error made by the arbitrator.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The binding arbitration agreement shall be
signed by the individual enrollee, or, in appropriate cases, by the enrollee’s parent, guardian, or conservator. The enrollee shall not be bound by the signature of a representative of the group contracting with a plan nor by an agent of an employer.
</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 1373.19 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is repealed.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 1373.20 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is repealed.
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<ns0:Fragment/>
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 1373.20 is added to the
<ns0:DocName>Health and Safety Code</ns0:DocName>
, to read:
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<ns0:Fragment>
<ns0:LawSection id="id_CEFBAFAD-A87D-4D1A-9EB7-5BC6F0DF7D09">
<ns0:Num>1373.20.</ns0:Num>
<ns0:LawSectionVersion id="id_26A8FB9D-DAE4-4A14-BDAA-CE828E6CA0ED">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The department, by no later than February 1, 2027, shall establish a panel of qualified arbitrators selected by the director.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For the purposes of this section, a “qualified arbitrator” means an individual that would be able to be impartial and who does not have a current arrangement concerning prospective employment or other compensated service as a dispute resolution neutral or who is participating in, or within the last two years, has participated in, discussions regarding prospective employment or service with a party to the arbitration. The qualified arbitrator shall comply with the ethics standards for arbitrators adopted by the Judicial Council pursuant to Section 1281.85 of the Code of Civil
Procedure.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
If a health care service plan, the subscriber, or the enrollee plan to use arbitration to settle a dispute, the health care service plan shall inform the department of the decision to proceed with arbitration and the department shall assign, within 15 working days, by a mechanical or electronic randomization procedure, one arbitrator from the panel described in subdivision (a) to hear the case.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The arbitrator selected pursuant to paragraph (1) may be challenged by the parties only as would be valid for disqualifying a judicial officer pursuant to Section 170.1 of the Code of Civil Procedure.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The arbitrator shall consider the professional requirements for health care providers in the California Code of Regulations and the Business and
Professions Code in their decision. The arbitrator shall have the authority to assess fines for health care providers for violations of statute or regulation governing licensing or certification of a health care provider.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For the purposes of this section, a “health care provider” means the same as subdivision (c) of Section 632.01 of the Penal Code.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The arbitrator shall provide a written decision following the completion of the arbitration proceeding and shall include all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The identification of the witnesses.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The evidence relied upon by the arbitrator in reaching the arbitrator’s decision.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Description of verbal discussions between the arbitrator with
any party during the arbitration proceeding and any written correspondence between the arbitrator and any party.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The decision and the rationale for the decision.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
If a case is withdrawn from arbitration, the arbitrator shall provide a written decision set forth in subdivision (d) that contains the rationale for withdrawal from arbitration.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The hourly fee for an arbitrator assigned by the department pursuant to this section shall be the current annual salary of a superior court judge divided by 2,000 plus reasonable travel expenses. No additional fee or gift may be given to any arbitrator by any party.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
All disputes between health care service plans and their enrollees arbitrated on or after February 1, 2027, shall comply with this section
and Section 1373.21.
</html:p>
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<ns0:Num>SEC. 5.</ns0:Num>
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Section 1373.21 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_664DEFB0-3273-4912-BDD8-4F9149BC5956">
<ns0:Num>SEC. 6.</ns0:Num>
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Section 1373.21 is added to the
<ns0:DocName>Health and Safety Code</ns0:DocName>
, to read:
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<ns0:LawSection id="id_5BE68633-EE2A-41B0-B533-355F9A0A0E78">
<ns0:Num>1373.21.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Arbitration proceedings to settle disputes between a health care service plan and subscribers or enrollees shall comply with all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A health care service plan shall be responsible for the costs of the arbitrator appointed pursuant to Section 1373.20 and all defense costs incurred by the health care service plan. A subscriber or an enrollee shall not be required to pay any portion of the arbitrator’s fees or defense costs incurred by the health care service plan.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A subscriber or an enrollee shall be responsible for their costs.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The arbitrator shall be responsible for cost control of
the arbitration, including, but not limited to, limiting expert witness utilization to a reasonable minimum.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Notwithstanding Section 1282.5 of the Code of Civil Procedure, a court reporter shall be present during an arbitration proceeding and the health care service plan shall incur the expense of a court reporter to capture the arbitration proceedings, including all exhibits and the arbitrator’s decision rational.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Subpoenas may be issued as provided in Section 1282.6 of the Code of Civil Procedure.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Both parties shall have the right to take depositions and to obtain discovery regarding the subject matter of the arbitration, pursuant to Section 1283.05 of the Code of Civil Procedure.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Nothing in this section shall be construed to supersede
Section 1295 of the Code of Civil Procedure as it relates to contracts with a health care provider for medical services.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Within 30 days of completion of arbitration, whether by decision, settlement, or closure, the assigned arbitrator shall provide the director with a complete report of all arbitrations between the health care service plan and the subscribers or enrollees. The report shall include all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The identity of the parties.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The amount of the award, if any, and the reasons for any award rendered or denied.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The name of the arbitrator.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The name of the health care provider, health plan employees, and health facilities involved.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The complete written decision by the arbitrator pursuant to Section 1373.20.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
A list of all evidence submitted to the arbitrator or judge, regardless of whether the evidence was admitted during arbitration.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
All documents relating to the arbitration, including, but not limited to, written decisions, deposition testimony, expert testimony, the record of the proceedings, and all documents provided in discovery shall be preserved by the health care service plan for five years and a copy of the documents shall be provided to the director within 30 days of case closure or case withdrawal. The director shall preserve the documents for five years.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The director and the department shall not make public any enrollee or
patient-identified medical information without the written consent of the enrollee or patient, except as otherwise permitted by law.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Except as otherwise prohibited by law, and as provided in subdivision (e), records of arbitration pursuant to this section are presumed to be available to the public.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Notwithstanding paragraph (3) of subdivision (c), a party may request that a court seal records obtained by the department pursuant to this section if the court expressly finds all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
There exists an overriding interest that overcomes the right of public access.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The overriding interest supports sealing the record.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A substantial probability exists that the
overriding interest will be prejudiced if the record is not sealed.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The proposed sealing is narrowly tailored.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
No less restrictive means exist to achieve the overriding interest.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The department may disclose the identity of the medical care provider involved in actions against health care service plans as required by Section 803.1 of the Business and Professions Code.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
Except as otherwise provided in this section or otherwise prohibited by law, the director shall make all records, including discovery materials used or submitted related to the dispute, publically available on the department’s internet website.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
All disputes between health care service plans and their
enrollees arbitrated on or after February 1, 2027, shall comply with this section and Section 1373.20.
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<ns0:Num>SEC. 7.</ns0:Num>
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Section 10123.19 of the
<ns0:DocName>Insurance Code</ns0:DocName>
is repealed.
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<ns0:BillSection id="id_2AC0A740-08D9-4822-8DF4-7AAE0F07084D">
<ns0:Num>SEC. 8.</ns0:Num>
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Section 10123.19 is added to the
<ns0:DocName>Insurance Code</ns0:DocName>
, to read:
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<ns0:Fragment>
<ns0:LawSection id="id_279A266A-F4BF-4FE5-822D-454582504676">
<ns0:Num>10123.19.</ns0:Num>
<ns0:LawSectionVersion id="id_CF23150B-5360-4629-A796-44BEA3D352B4">
<ns0:Content>
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(a)
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Any health insurance policy that includes terms that require binding arbitration to settle disputes and that restrict, or provide for a waiver of, the right to a jury trial shall include, in clear and understandable language, a disclosure that meets all of the following conditions:
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(1)
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The disclosure shall clearly state whether the health insurer uses binding arbitration to settle disputes, including specifically whether the insurer uses binding arbitration to settle claims of medical malpractice, coverage, and utilization review disputes.
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(2)
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The disclosure shall appear as a separate article in the agreement issued to the employer group or individual insured and shall be
prominently displayed on the enrollment form signed by each insured, and shall be provided to an insured annually.
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(3)
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The disclosure shall clearly state whether the insured is waiving their right to a jury trial for medical malpractice, other disputes relating to the delivery of service under the plan, or both, and shall be substantially expressed in the wording provided in subdivision (a) of Section 1295 of the Code of Civil Procedure.
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(4)
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In any contract or policy agreement for an insurer, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative of the group contracting with an insurer and immediately before the signature line provided for the individual seeking coverage by the health insurer.
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(5)
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The parties shall be permitted to appeal on
the basis of legal or factual error made by the arbitrator.
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<html:p>
(b)
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The binding arbitration agreement shall be signed by the individual insured, or, in appropriate cases, by the insured’s parent, guardian, or conservator. The insured shall not be bound by the signature of a representative of the group contracting with an insurer nor by an agent of an employer.
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<html:p>
(c)
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Arbitration proceedings between a health insurer and insured shall use an arbitrator selected by the Department of Managed Health Care pursuant to Section 1373.20 of the Health and Safety Code and shall comply with the requirements of Section 1373.21 of the Health and Safety Code.
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(d)
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A health insurer shall provide the Director of the Department of Managed Health Care with the documents required pursuant to Section 1373.21 of the Health and Safety
Code.
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</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_00626792-743E-415E-AE20-E7ADA8608E10">
<ns0:Num>SEC. 9.</ns0:Num>
<ns0:Content>
<html:p>The Legislature finds and declares that Section 6 of this act, which adds Section 1373.21 to the Health and Safety Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:</html:p>
<html:p>In order to protect the privacy of California residents involved in arbitration with a health care service plan or health insurer, it is necessary to provide statutory authority to enable individuals to maintain confidentiality of the
records and information described in Section 6 of this act.</html:p>
</ns0:Content>
</ns0:BillSection>
<ns0:BillSection id="id_268FEE91-FBF6-41D1-9689-015ED27A72D7">
<ns0:Num>SEC. 10.</ns0:Num>
<ns0:Content>
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No reimbursement is required by this act pursuant to Section 6 of Article XIII
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B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII
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B of the California Constitution.
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</ns0:Content>
</ns0:BillSection>
</ns0:Bill>
</ns0:MeasureDoc>