2017 -- S 0782

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LC001764

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO INSURANCE - FOREIGN INSURANCE COMPANIES

     Introduced By: Senator Roger Picard

     Date Introduced: April 25, 2017

     Referred To: Senate Commerce

     (Dept. of Business Regulation)

It is enacted by the General Assembly as follows:

     SECTION 1. Section 27-2-14 of the General Laws in Chapter 27-2 entitled "Foreign

Insurance Companies" is hereby amended to read as follows:

     27-2-14. Forwarding of process by commissioner.

     (a) Whenever lawful process against a foreign insurance company shall be served upon

the insurance commissioner, the commissioner shall forward a copy of the process served on him

or her, by mail, postpaid, and directed to the person appointed by the insurance company to

accept service of process on behalf of the company. The manner of forwarding shall be at the

discretion of the insurance commissioner.

     (b) Service upon the insurance commissioner shall be accomplished by regular mail or by

whatever alternative method is designated by the commissioner.

     (c) For each copy of process the insurance commissioner shall collect, for the use of the

state, the sum of twenty-five dollars ($25.00), which shall be paid by the plaintiff at the time of

the service; the fee is to be recovered by the plaintiff as part of the taxable costs, if he or she

prevails in the suit.

     SECTION 2. Section 27-9-4 of the General Laws in Chapter 27-9 entitled "Casualty

Insurance Rating" is hereby amended to read as follows:

     27-9-4. Considerations in making of rates -- Cancellation of policy.

     (a) All rates shall be made in accordance with the following provisions:

     (1) (i) Due consideration shall be given to past and prospective loss experience within

and outside this state, to catastrophe hazards, if any, to a reasonable margin for underwriting

profit and contingencies, to dividends, savings, or unabsorbed premium deposits allowed or

returned by insurers to their policyholders, members, or subscribers, to past and prospective

expenses both country wide and those specially applicable to this state, and to all other relevant

factors within and outside this state; provided, that no consideration shall be given to:

     (A) Any loss or incident involving a bus driver, while in the course of his or her

employment for the Rhode Island public transit authority or private or municipal school bus

companies, in establishing or maintaining that driver's rate respecting the operation of a personal

motor vehicle or vehicles;

     (B) Any loss or incident involving a law enforcement officer, while in the course of his or

her employment for the state, city, town police departments, or federal law enforcement agency,

in establishing or maintaining that driver's rate respecting the operation of a personal motor

vehicle or vehicles; and

     (C) Any loss or incident involving a commercial vehicle driver, while in the course of his

or her employment, in establishing or maintaining that driver's rate respecting the operation of a

personal motor vehicle(s);

     (ii) It shall be the responsibility of a commercial vehicle driver to provide his or her

insurance company with proof that the loss or incident took place in the course of employment

while operating a commercial vehicle. For the purposes of this section, a "commercial vehicle"

shall be a motor vehicle with a gross weight in excess of ten thousand (10,000) pounds or a motor

vehicle used for public livery;

     (2) The systems of expense provisions included in the rates for use by any insurer or

group insurers may differ from those of other insurers or groups of insurers to reflect the

requirements of the operating methods of any insurer or group with respect to any kind of

insurance, or with respect to any subdivision or combination of insurance for which subdivision

or combination separate expense provisions are applicable;

     (3) Risks may be grouped by classifications for the establishment of rates and minimum

premiums;

     (4) Rates shall not be excessive, inadequate, or unfairly discriminatory; and

     (5) In establishing or maintaining an insured's rate or classification respecting the

operation of a personal motor vehicle, any insured sixty-five (65) years of age or older, who

meets the criteria set forth in this section and has not had any chargeable accidents or moving

violations within three (3) years preceding the establishment of the rate of insurance or

classification, shall not be penalized solely by reason of their age.

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     (b) No insurance company shall fail to renew a private passenger automobile policy

because of a loss of occurrence only, unless a chargeable loss occurrence of one thousand five

hundred dollars ($1,500) or more than two (2) nonchargeable loss occurrences, involving the

insured, have taken place within the annual policy year.

     (c) (1) No insurance company shall fail to renew a private passenger automobile policy

solely because the insured has attained the age of sixty-five (65) years or older;

     (2) Whenever the commissioner of insurance shall have reason to believe that any

insurance company has refused to renew a private passenger automobile policy solely because the

applicant has reached the age of sixty-five (65) years or older, the commissioner shall notify the

company that it may be in violation of this section and in his or her discretion he or she may

require a hearing to determine whether or not the company has actually been engaged in the

practice stated in this subsection. Any hearing held under this section shall in all respects comply

with the hearing procedure provided in the Administrative Procedures Act, chapter 35 of title 42;

     (3) If after the hearing the commissioner shall determine that the company has engaged in

the practice of systematically failing to renew private passenger automobile policies because of

the advanced age of the insured, he or she shall reduce his or her findings to writing and shall

issue and cause to be served upon the company an order to cease and desist from engaging in

those practices. After the issuance of the cease and desist order, if the commissioner finds that the

company has continued to engage in those practices, he or she shall impose upon the company a

fine not to exceed the amount of one thousand dollars ($1,000) for each separate violation.

     (4) Any company aggrieved by any order or decision of the commissioner of insurance

may appeal the order and decision to the superior court of Providence in accordance with the

Administrative Procedures Act, chapter 35 of title 42.

     (d) No insurance group, carrier or company in establishing any premium surcharge or

penalty relative to a specific motor vehicle policy, shall consider any accident or any claim where

any insured covered by that policy is fifty percent (50%) or less at fault.

     (e) No insurance group, carrier or company shall assess any premium surcharge against

any insured covered by a motor vehicle policy where a property damage claim payment is less

than one thousand five hundred dollars ($1,500).

     (f) No insurance group, carrier or company shall refuse to issue motor vehicle liability

insurance, impose a surcharge or otherwise increase the rate for a motor vehicle policy solely

because the applicant is a volunteer driver. Volunteer driver is defined as a person who provides

services without compensation to a nonprofit agency or charitable organization.

     SECTION 3. Section 27-9.1-4 of the General Laws in Chapter 27-9.1 entitled "Unfair

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Claims Settlement Practices Act" is hereby amended to read as follows:

     27-9.1-4. "Unfair claims practices" defined.

     (a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3,

constitutes an unfair claims practice:

     (1) Misrepresenting to claimants and insured relevant facts or policy provisions relating

to coverage at issue;

     (2) Failing to acknowledge and act with reasonable promptness upon pertinent

communications with respect to claims arising under its policies;

     (3) Failing to adopt and implement reasonable standards for the prompt investigation and

settlement of claims arising under its policies;

     (4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of

claims submitted in which liability has become reasonably clear;

     (5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts

due under its policies by offering substantially less than the amounts ultimately recovered in suits

brought by them;

     (6) Refusing to pay claims without conducting a reasonable investigation;

     (7) Failing to affirm or deny coverage of claims within a reasonable time after having

completed its investigation related to the claim or claims;

     (8) Attempting to settle or settling claims for less than the amount that a reasonable

person would believe the insured or beneficiary was entitled by reference to written or printed

advertising material accompanying or made part of an application;

     (9) Attempting to settle or settling claims on the basis of an application that was

materially altered without notice to, or knowledge or consent of, the insured;

     (10) Making claims payments to an insured or beneficiary without indicating the

coverage under which each payment is being made;

     (11) Unreasonably delaying the investigation or payment of claims by requiring both a

formal proof of loss form and subsequent verification that would result in duplication of

information and verification appearing in the formal proof of loss form;

     (12) Failing in the case of claims denials or offers of compromise settlement to promptly

provide a reasonable and accurate explanation of the basis of those actions;

     (13) Failing to provide forms necessary to present claims within ten (10) calendar days of

a request with reasonable explanations regarding their use;

     (14) Failing to adopt and implement reasonable standards to assure that the repairs of a

repairer owned by or required to be used by the insurer are performed in a workmanlike manner;

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     (15) Misleading a claimant as to the applicable statute of limitations;

     (16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree to

a longer period;

     (17) Engaging in any act or practice of intimidation, coercion, threat or misrepresentation

of consumers rights, for or against any insured person, claimant, or entity to use a particular rental

car company for motor vehicle replacement services or products; provided, however, nothing

shall prohibit any insurance company, agent or adjuster from providing to such insured person,

claimant or entity the names of a rental car company with which arrangements have been made

with respect to motor vehicle replacement services; provided, that the rental car company is

licensed pursuant to Rhode Island general laws § 31-5-33; or

     (18) Refusing to honor a "direction to pay" executed by an insured, claimant, indicating

that the insured or claimant, wishes to have the insurance company directly pay his or her motor

vehicle replacement vehicle rental benefit to the rental car company of the consumer's choice;

provided, that the rental car company is licensed pursuant to Rhode Island general laws § 31-5-

33. Nothing in this section shall be construed to prevent the insurance company's ability to

question or challenge the amount charged, in accordance with its policy provisions, and the

requirements of the department of business regulation;

     (19) Modifying any published manual (i.e. motors, mitchells, or any automated appraisal

system) relating to auto body repair without prior agreement between the parties;

     (20) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle;

     (21) Refusing to compensate an auto body shop for documented charges as identified

through industry recognized software programs or systems for paint and refinishing materials in

auto body repair claims; and/or

     (22) Failing to comply with the requirements of Rhode Island General Laws § 31-47-

12.1.

     (23) Failure to have an appraisal performed by a licensed appraiser where the motor

vehicle has sustained damage estimated to exceed two thousand five hundred dollars ($2,500).

Said licensed appraiser referred to herein must be unaffiliated with the repair facility repairing the

subject motor vehicle.

     (24) Failure to perform a supplemental appraisal inspection of a vehicle within four (4)

business days after a request is received from an auto body repair shop.

     (25) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor

vehicle to its pre-accident condition is less than seventy-five percent (75%) of the "fair market

value" of the motor vehicle immediately preceding the time it was damaged:

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     (i) For the purposes of this subdivision, "fair market value" means the retail value of a

motor vehicle as set forth in a current edition of a nationally recognized compilation of retail

values commonly used by the automotive industry to establish values of motor vehicles;

     (ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the

total cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than

seventy- five percent (75%) of the fair market value of the motor vehicle immediately preceding

the time it was damaged; and

     (iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle

a total loss at the vehicle owner's request and with the vehicle owner's express written

authorization, if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is

less than seventy-five percent (75%) of the "fair market value" of the motor vehicle immediately

preceding the time it was damaged.

     (b) (1) Nothing contained in subsections 27-9.1-4(a)(19), (20), & (21) of this chapter

shall be construed to interfere with an auto body repair facility's contract with an insurance

company.

     (2) If an insurance company and auto body repair facility have contracted under a direct

repair program or any similar program thereto the provisions of subsections 27-9.1-4(a)(19), (20)

& (21) shall not apply.

     (3) If the insured or claimant elects to have the vehicle repaired at a shop of his or her

choice, the insurer shall not limit or discount the reasonable repair costs based upon the charges

that would have been incurred had the vehicle been repaired by the insurer's chosen shop(s).

     (26) Negotiating, or effecting the settlement of, a claim for loss or damage covered by an

insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing

contained in this section shall be construed to preclude an insurer from dealing with any

individual or entity that is not required to be licensed under chapter 10 of title 27.

     SECTION 4. Sections 27-18-19 and 27-18-67 of the General Laws in Chapter 27-18

entitled "Accident and Sickness Insurance Policies" are hereby amended to read as follows:

     27-18-19. Insurance exempt from chapter.

     Nothing in the chapter shall apply to or affect:

     (1) Any policy of workers' compensation insurance or any policy of liability insurance

with or without supplementary expense coverage in the policy;

     (2) Any policy or contract of reinsurance; or

     (3) Any blanket or group policy of insurance; or

     (4) Life insurance, endowment, or annuity contracts, or contracts supplemental to those

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contracts, which contain only those provisions relating to accident and sickness insurance as: (i)

provide additional benefits in case of death or dismemberment or loss of sight by accident, or (ii)

operate to safeguard those contracts against lapse, or to give a special surrender value or special

benefit or an annuity in the event that the insured or annuitant shall become totally and

permanently disabled, as defined by the contract or supplemental contract.

     27-18-67. Reimbursement for orthotic and prosthetic services.

     (a) As used in this section:

     (1) "Federal reimbursement rates" means the current listed fee schedule from the Centers

for Medicare and Medicaid Services, listing the current Healthcare Common Procedure Coding

system (HCPCS) and the corresponding reimbursement rates.

     (2) "Orthosis" means a custom fabricated brace or support that is designed based on

medical necessity. Orthosis does not include prefabricated or direct-formed orthotic devices, as

defined in this section, or any of the following assistive technology devices: commercially

available knee orthoses used following injury or surgery; spastic muscle-tone inhibiting orthoses;

upper extremity adaptive equipment; finger splints; hand splints; wrist gauntlets; face masks used

following burns; wheelchair seating that is an integral part of the wheelchair and not worn by the

patient independent of the wheelchair; fabric or elastic supports; corsets; low-temperature formed

plastic splints; trusses; elastic hose; canes; crutches; cervical collars; dental appliances; and other

similar devices as determined by the director of the department of health, such as those

commonly carried in stock by a pharmacy, department store, corset shop, or surgical supply

facility.

     (3) "Orthotics" means the science and practice of evaluating measuring, designing,

fabricating, assembling, fitting, adjusting or servicing, as well as providing the initial training

necessary to accomplish the fitting of, an orthosis for the support, correction, or alleviation of

neuromuscular or musculoskeletal dysfunction, disease, injury or deformity. The practice of

orthotics encompasses evaluation, treatment, and consultation; with basic observational gait and

postural analysis, orthotists assess and design orthoses to maximize function and provide not only

the support but the alignment necessary to either prevent or correct a deformity or to improve the

safety and efficiency of mobility or locomotion or both. Orthotic practice includes providing

continuing patient care in order to assess its effect on the patient's tissues and to assure proper fit

and function of the orthotic device by periodic evaluation.

     (4) "Prosthesis" means an artificial limb that is alignable or, in lower-extremity

applications capable of weight bearing. Prosthesis means an artificial medical device that is not

surgically implanted and that is used to replace a missing limb, appendage, or other external

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human body part including an artificial limb, hand, or foot. The term does not include artificial

eyes, ears, noses, dental appliances, osotmy products, or devices such as eyelashes or wigs.

     (5) "Prosthetics" means the science and practice of evaluation, measuring, designing,

fabricating, assembling, fitting, aligning, adjusting or servicing, as well as providing the initial

training necessary to accomplish the fitting of, a prosthesis through the replacement of external

parts of a human body lost due to amputation or congenital deformities or absences. The practice

of prosthetics also includes the generation of an image, form, or mold that replicates the patient's

body or body segment and that requires rectification of dimensions, contours and volumes for use

in the design and fabrication of a socket to accept a residual anatomic limb to, in turn, create an

artificial appendage that is designed either to support body weight or to improve or restore

function or cosmesis, or both. Involved in the practice of prosthetics is observational gait analysis

and clinical assessment of the requirements necessary to refine and mechanically fix the relative

position of various parts of the prosthesis to maximize function, stability, and safety of the

patient. The practice of prosthetics includes providing and continuing patient care in order to

assess the prosthetic device's effect on the patient's tissues and to assure proper fit and function of

the prosthetic device by periodic evaluation.

     (6) "Private insurance company" means any insurance company, or management

company hired by an insurance company, who is any of the following:

     (i) based in the state of Rhode Island; or

     (ii) provides coverage for citizens for the state of Rhode Island; or

     (iii) allows subscribing patients to seek prosthetic or orthotic services in the state of

Rhode Island.

     (b) Every individual or group health insurance contract, plan or policy delivered, issued

for delivery or renewed in this state on or after January 1, 2006, which provides medical coverage

that includes coverage for physician services in a physician's office and every policy, which

provides major medical or similar comprehensive type coverage shall provide coverage for

benefits for orthotic and prosthetic devices that equal those benefits provided for under federal

laws for health insurance for the aged and disabled pursuant to 42 U.S.C. sections 1395K, 13951

and 1395M and 42 CFR 414.202, 414.210, 414.228, and 410.100 as applicable to this section.

     (c) A health insurance contract, plan or policy may require prior authorization for orthotic

and prosthetic devices in the same manner that prior authorization is required for any other

covered benefit.

     (d) Covered benefits for orthotic or prosthetic devices shall be limited to the most

appropriate model that adequately meets the medical needs of the patient as determined by the

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insured's treating physician.

     (e) The repair and replacement of orthotic or prosthetic devices also shall be covered

subject to co-payments and deductibles, unless necessitated by misuse or loss.

     (f) An insurer may require, if coverage is provided through a managed care plan, that

benefits mandated pursuant to this section be covered benefits only if the orthotic or prosthetic

devices are provided by a vendor and orthotic or prosthetic services are rendered by a provider

who is licensed by the state of Rhode Island to provide orthotics and prosthetics.

     (g) This chapter section shall not apply to insurance coverage providing benefits for: (1)

Hospital confinement indemnity; (2) Disability income; (3) Accident only; (4) Long-term care;

(5) Medicare supplement; (6) Limited benefit health; (7) Specified disease indemnity; (8)

Sickness or bodily injury or death by accident or both; and (9) Other limited benefit policies.

     SECTION 5. Section 27-3.2-5 of the General Laws in Chapter 27-3.2 entitled

"Continuing Education Requirements" is hereby repealed.

     27-3.2-5. Continuing education advisory board.

     There is established the continuing education advisory board. This board shall consist of

two (2) representatives of the Rhode Island Life Underwriters Association, three (3)

representatives of the Independent Insurance Agents of Rhode Island, two (2) representatives of

the Chartered Life Underwriters, and two (2) representatives of the Chartered Property and

Casualty Underwriters. The board members shall be appointed by the commissioner and shall

serve two (2) year terms. The board shall meet at least once a year and additionally as required.

This board shall advise the insurance commissioner on the plans and operations of the continuing

education program for any person licensed pursuant to this title and not exempt under § 27-3.2-3.

     SECTION 6. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE - FOREIGN INSURANCE COMPANIES

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     This act would: (1) eliminate the continuing education board (CEB) for insurance

providers; (2) eliminate the requirement that service of process be forwarded to insurance

companies by certified mail; (3) prohibit the negotiation of insurance claims with unlicensed

public adjusters; (4) prohibit insurer from excluding coverage to volunteer drivers and (5) remove

an exemption for blanket and group policies from the accident and sickness laws.

     This act would take effect upon passage.

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