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SB1533 - 572R - I Ver
REFERENCE TITLE:
health insurance; claims; consumer assistance
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
SB 1533
Introduced by
Senator
Sundareshan
AN
ACT
amending
title 20, chapter 1, article 1, Arizona Revised Statutes, by adding section 20-128;
relating to the department of insurance and financial institutions.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 20, chapter 1, article 1,
Arizona Revised Statutes, is amended by adding section 20-128, to read:
START_STATUTE
20-128.
Health care claims consumer assistance program; educational
outreach; appeal process; civil penalty; data collection; reporting
requirements; public posting; rules; definitions
A. A health care claims consumer
assistance program is established in the department to provide support to
consumers who are enrolled in a health plan or who are seeking to enroll in a
health plan.
B. The health care claims consumer
assistance program shall:
1. Assist consumers with filing
complaints and appeals with a health insurer or with the utilization review
process as provided in chapter 15 of this title.
2. Assist consumers with settling
conflicts, disputed claims or claims denials with a health insurer.
3. Educate consumers on their rights
and responsibilities with respect to health insurance coverage.
4. Assist consumers with obtaining
health insurance coverage by providing information, referrals or other
assistance.
5. Assist consumers with obtaining
federal health insurance premium tax credits under Section 36B of the United
States Internal Revenue Code of 1986, as amended.
6. Collect, track and quantify
inquiries regarding health insurance and problems encountered by consumers.
7. Provide information to the public
about the services of the health care claims consumer assistance program
through a comprehensive outreach program and a toll-free telephone number.
C. A health insurer in this state
shall place a prominent, plain language notice about the health care claims
consumer assistance program on the front page of all health insurance
explanations of benefits, denials or other related health plan communications.
D. The department may contract with a
nonprofit, independent health insurance consumer assistance entity to serve as
the health care claims consumer assistance program.� The nonprofit, independent
health insurance consumer assistance entity may not be a health plan or health
insurer or an affiliate of a health plan or health insurer.
E. The health care claims consumer
assistance program shall consult with the department to fulfill the data
collection and reporting requirements prescribed in this section.
F. It is unlawful for a health
insurer in this state to wrongfully deny or insufficiently cover a valid
consumer insurance claim.� If the department determines a health insurer
committed an act or omission that constitutes grounds for disciplinary action,
the department may Suspend or revoke the health insurer's license and may
impose civil penalties. the department may refer the matter to the
attorney general's office for civil enforcement pursuant to title 44, chapter
10, article 7.
G. The department may impose
additional penalties if the department finds that the health insurer
continuously violates a health plan.� If the department provides proper notice
and an opportunity to the health insurer to remedy repeated violations and the
health insurer continues to violate a health plan, the department may impose a
civil penalty of not more than $25,000 for each violation for which the health
insurer wrongfully denied or insufficiently paid a valid consumer insurance
claim.
H. The department shall review the
following factors when determining whether a civil penalty is appropriate:
1. The nature, scope and gravity of
the violation.
2. The good faith or bad faith of the
health insurer.
3. The health insurer's history of
violations.
4. The wilfulness of the violation.
5. Whether the violation is an
isolated incident.
6. The nature and extent to which the
health insurer cooperated with the department.
7. The nature and extent to which the
health insurer aggravated or mitigated any injury or damage caused by the
violation.
8. The nature and extent to which the
health insurer has taken corrective action to ensure the violation will not
recur.
9. The financial status of the health
insurer on an evaluation of:
(
a
) The amount
of reserve capital.
(
b
) The
solvency of the health insurer.
(
c
) The amount
of excess revenues minus expenditures.
(
d
) Any other
related factor, including:
(
i
) The cost of
the health care service that was denied, delayed or modified, including whether
the penalty is commensurate with or exceeds the avoided cost based on the
number of insureds that are estimated to be affected.
(
ii
) The
frequency of the violations based on the number of days for a continuous
violation or the estimated number of incidents with potential harm to insureds.
(
iii
) The
severity of the potential harm in terms of loss of life, loss of health,
emotional distress or financial harm to insureds.
(
iv
) The amount
of the penalty that is necessary to deter similar violations in the future.
I. If the court finds that a health
insurer has wrongfully denied or insufficiently covered a valid consumer
insurance claim, the court may award damages to an injured consumer.
J. If
the department or a court finds that a health insurer has wrongfully denied or
insufficiently covered a valid consumer insurance claim, the health insurer is
automatically liable to pay double the amount that was wrongfully denied or insufficiently
covered, including attorney fees.
K. The department or the court may
assess additional damages to be paid to an insured on review of the following
factors, as appropriate, if the harm was severe:
1. The nature, scope and gravity of
the violation.
2. The severity of the potential harm
to the policyholder, including:
(
a
) Loss of
life.
(
b
) Loss of
health.
(
c
) Emotional
distress.
(
d
) Financial
harm.
3. The nature and extent to which the
health insurer cooperated with the department.
4. The nature and extent to which the
health insurer aggravated or mitigated any injury or damage caused by the
violation.
5. The nature and extent to which the
health insurer has taken corrective action to ensure the violation will not
recur.
L. On or before December 31, 2026 and
every year thereafter, the department shall adjust the penalty amount
prescribed in subsection G of this section based on whichever is the higher of:
1. The average rate of change in
premium rates for insureds in a group market that is weighted by enrollment
since the previous adjustment.
2. Any Adjustment based on inflation.
M. The department shall keep records
of wrongful claims denials that are brought to the health care claims consumer
assistance program.
N. A health insurer shall disclose
data on wrongful claims denials to the department on request and in a readable
format that includes:
1. The number, percentage and types
of denied claims.
2. The number, percentage and types
of wrongfully denied claims.
O. The department may investigate
health insurers for violations of this section.
P. If a health insurer is found to
have violated this section more than the median percentage of wrongful denials
since the previous year, the department shall review each violation in the
current year to determine whether penalties should be imposed.
Q. One year after the effective date
of this section and every year thereafter, the department shall:
1. Compile a report that contains all
of the following:
(
a
) The number
and type of denied claims, including raw numbers and numbers as a percentage of
the total claims.
(
b
) The number
and type of wrongfully denied claims, including raw numbers and numbers as a
percentage of the total claims.
(
c
) The number
and type of denied claims that were appealed and reported to the health care
claims consumer assistance program.
(
d
) The number
of denied claims that were appealed and brought to the health care claims
consumer assistance program.
(
e
) The number,
type and percentage of wrongfully denied claims by each insurer for each health
plan.
(
f
) The outcome
of any investigation for each health insurer that was conducted by the
department for a violation of this section.
2. Post the report on the
department's publicly accessible website and provide a copy to:
(
a
) The
governor's office.
(
b
) The
president of the senate.
(
c
) The speaker
of the house of representatives.
(
d
) The
minority leader in the senate.
(
e
) The
minority leader in the house of representatives.
(
f
) The secretary
of state.
R. The department shall adopt rules
to implement this section.
S. For the purposes of this section:
1. "Consumer" means
customers or potential customers of a health plan.
2. "Enrolled" means an
individual or person who is under a health care plan.
3. "Health care plan" means
any contract for coverage between an insured and a health plan that includes:
(
a
) A
subscription contract.
(
b
) An evidence
of coverage.
(
c
) A policy.
4. "Insured" means any
individual or person who has an active health care plan.
5. "Insurer" means any of
the following:
(
a
) A hospital
service corporation or medical service corporation.
(
b
) A health
care services organization.
(
c
) A
disability insurer.
(
d
) A group or
blanket disability insurer.
Sec. 2.
Short title
This act may be cited as "The
Fair Claims Accountability Act".
END_STATUTE