2013 -- S 0303 SUBSTITUTE A

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LC01243/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO INSURANCE

     Introduced By: Senator Michael J. McCaffrey

     Date Introduced: February 13, 2013

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 27-4 of the General Laws entitled "Life Insurance Policies and

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Reserves" is hereby amended by adding thereto the following section:

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     27-4-28. Discretionary clauses. -- (a) No new or existing policy or certificate may

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contain any provision:

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     (1) Purporting to reserve sole discretion to the insurance company to determine eligibility

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for benefits or interpret the terms of a policy or certificate; or

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     (2) Specifying or affecting a standard of review upon which a court may review denial of

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a claim or any other decision made by an insurance company with respect to a policyholder or

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certificate holder.

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     (b) Any such clause or language included in a contract, policy or certificate issued to or

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covering a resident of this state that is contrary to or inconsistent with the provisions of this

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section is void and unenforceable.

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     (c) Nothing in this section prohibits an insurer from including a provision in a contract

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that informs an insured that as part of its routine operations the insurer applies the terms of its

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contracts for making decisions, including making determinations regarding eligibility, receipt of

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benefits and claims, or explaining policies, procedures, and processes, so long as the provision

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could not give rise to a deferential standard of review by any reviewing court.

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     SECTION 2. Chapter 27-18 of the General Laws entitled "Accident and Sickness

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Insurance Policies" is hereby amended by adding thereto the following section:

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     27-18-79. Discretionary clauses. -- (a) No new or existing policy or certificate issued by

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an insurer or health care entity may contain any provision:

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     (1) Purporting to reserve sole discretion to the insurer or health care entity to determine

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eligibility for benefits or interpret the terms of a policy or certificate; or

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     (2) Specifying or affecting a standard of review upon which a court may review denial of

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a claim or any other decision made by an insurance company with respect to a policyholder or

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certificate holder.

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     (b) For purposes of this section, "health care entity" means a health insurance company or

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nonprofit hospital or medical or dental service corporation or plan or health maintenance

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organization which operates or administers a health plan in this state.

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     (c) Any such clause or language included in a contract, policy or certificate issued to or

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covering a resident of this state that is contrary to or inconsistent with the provisions of this

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section is void and unenforceable.

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     (d) Nothing in this section prohibits an insurer from including a provision in a contract

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that informs an insured that as part of its routine operations the insurer applies the terms of its

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contracts for making decisions, including making determinations regarding eligibility, receipt of

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benefits and claims, or explaining policies, procedures, and processes, so long as the provision

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could not give rise to a deferential standard of review by any reviewing court.

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     SECTION 3. Chapter 27-19 of the General Laws entitled "Nonprofit Hospital Service

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Corporations" is hereby amended by adding thereto the following section:

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     27-19-70. Discretionary clauses. -- (a) No new or existing policy or certificate may

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contain any provision:

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     (1) Purporting to reserve sole discretion to the insurer or health care entity to determine

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eligibility for benefits or interpret the terms of a policy or certificate; or

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     (2) Specifying or affecting a standard of review upon which a court may review denial of

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a claim or any other decision made by an insurance company with respect to a policyholder or

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certificate holder.

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     (b) Any such clause or language included in a contract, policy or certificate issued to or

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covering a resident of this state that is contrary to or inconsistent with the provisions of this

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section is void and unenforceable.

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     (c) Nothing in this section prohibits an insurer from including a provision in a contract

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that informs an insured that as part of its routine operations the insurer applies the terms of its

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contracts for making decisions, including making determinations regarding eligibility, receipt of

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benefits and claims, or explaining policies, procedures, and processes, so long as the provision

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could not give rise to a deferential standard of review by any reviewing court.

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     SECTION 4. Chapter 27-20 of the General Laws entitled "Nonprofit Medical Service

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Corporations" is hereby amended by adding thereto the following section:

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     27-20-66. Discretionary clauses. -- (a) No new or existing policy or certificate may

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contain any provision:

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     (1) Purporting to reserve sole discretion to the insurer or health care entity to determine

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eligibility for benefits or interpret the terms of a policy or certificate; or

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     (2) Specifying or affecting a standard of review upon which a court may review denial of

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a claim or any other decision made by an insurance company with respect to a policyholder or

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certificate holder.

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     (b) Any such clause or language included in a contract, policy or certificate issued to or

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covering a resident of this state that is contrary to or inconsistent with the provisions of this

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section is void and unenforceable.

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     (c) Nothing in this section prohibits an insurer from including a provision in a contract

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that informs an insured that as part of its routine operations the insurer applies the terms of its

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contracts for making decisions, including making determinations regarding eligibility, receipt of

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benefits and claims, or explaining policies, procedures, and processes, so long as the provision

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could not give rise to a deferential standard of review by any reviewing court.

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     SECTION 5. Chapter 27-20.1 of the General Laws entitled "Nonprofit Dental Service

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Corporations" is hereby amended by adding thereto the following section:

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     27-20.1-21. Discretionary clauses. -- (a) No new or existing policy or certificate may

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contain any provision:

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     (1) Purporting to reserve sole discretion to the insurance company to determine eligibility

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for benefits or interpret the terms of a policy or certificate; or

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     (2) Specifying or affecting a standard of review upon which a court may review denial of

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a claim or any other decision made by an insurance company with respect to a policyholder or

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certificate holder.

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     (b) Any such clause or language included in a contract, policy or certificate issued to or

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covering a resident of this state that is contrary to or inconsistent with the provisions of this

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section is void and unenforceable.

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     (c) Nothing in this section prohibits an insurer from including a provision in a contract

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that informs an insured that as part of its routine operations the insurer applies the terms of its

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contracts for making decisions, including making determinations regarding eligibility, receipt of

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benefits and claims, or explaining policies, procedures, and processes, so long as the provision

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could not give rise to a deferential standard of review by any reviewing court.

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     SECTION 6. Chapter 27-34.2 of the General Laws entitled "Long-Term Care Insurance"

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is hereby amended by adding thereto the following section:

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     27-34.2-22. Discretionary Clauses. -- (a) No new or existing policy or certificate may

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contain any provision:

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     (1) Purporting to reserve sole discretion to the insurance company to determine eligibility

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for benefits or interpret the terms of a policy or certificate; or

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     (2) Specifying or affecting a standard of review upon which a court may review denial of

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a claim or any other decision made by an insurance company with respect to a policyholder or

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certificate holder.

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     (b) Any such clause or language included in a contract, policy or certificate issued to or

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covering a resident of this state that is contrary to or inconsistent with the provisions of this

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section is void and unenforceable.

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     (c) Nothing in this section prohibits an insurer from including a provision in a contract

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that informs an insured that as part of its routine operations the insurer applies the terms of its

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contracts for making decisions, including making determinations regarding eligibility, receipt of

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benefits and claims, or explaining policies, procedures, and processes, so long as the provision

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could not give rise to a deferential standard of review by any reviewing court.

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     SECTION 7. Chapter 27-41 of the General Laws entitled "Health Maintenance

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Organizations" is hereby amended by adding thereto the following section:

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     27-41-83. Discretionary clauses. -- (a) No new or existing policy or certificate may

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contain any provision:

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     (1) Purporting to reserve sole discretion to the insurance company to determine eligibility

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for benefits or interpret the terms of a policy or certificate; or

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     (2) Specifying or affecting a standard of review upon which a court may review denial of

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a claim or any other decision made by an insurance company with respect to a policyholder or

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certificate holder.

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     (b) Any such clause or language included in a contract, policy or certificate issued to or

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covering a resident of this state that is contrary to or inconsistent with the provisions of this

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section is void and unenforceable.

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     (c) Nothing in this section prohibits an insurer from including a provision in a contract

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that informs an insured that as part of its routine operations the insurer applies the terms of its

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contracts for making decisions, including making determinations regarding eligibility, receipt of

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benefits and claims, or explaining policies, procedures, and processes, so long as the provision

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could not give rise to a deferential standard of review by any reviewing court.

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     SECTION 8. This act shall take effect upon passage.

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LC01243/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE

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     This act would prohibit certain types of discretionary clauses in insurance contracts and

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policies.

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     This act would take effect upon passage.

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LC01243/SUB A

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