1 STATE OF OKLAHOMA
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2 1st Session of the 59th Legislature (2023)
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3 SENATE BILL 557 By: Montgomery
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6 AS INTRODUCED
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7 An Act relating to the Unfair Claims Settlement
7 Practices Act; amending 36 O.S. 2021, Section 1250.5,
8 as amended by Section 1, Chapter 266, O.S.L. 2022 (36
8 O.S. Supp. 2022, Section 1250.5), which relates to
9 acts by an insurer; providing that denial of payment
9 to claimant for certain services by certain providers
10 shall constitute an unfair claim settlement practice;
10 requiring review of certain mental health and
11 substance use disorder claims by provider with
11 certain credentials; and providing an effective date.
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14 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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15 SECTION 1. AMENDATORY 36 O.S. 2021, Section 1250.5, as
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16 amended by Section 1, Chapter 266, O.S.L. 2022 (36 O.S. Supp. 2022,
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17 Section 1250.5), is amended to read as follows:
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18 Section 1250.5. Any of the following acts by an insurer, if
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19 committed in violation of Section 1250.3 of this title, constitutes
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20 an unfair claim settlement practice exclusive of paragraph 16 of
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21 this section which shall be applicable solely to health benefit
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22 plans:
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23 1. Failing to fully disclose to first-party claimants,
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24 benefits, coverages, or other provisions of any insurance policy or
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 1 insurance contract when the benefits, coverages or other provisions
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2 are pertinent to a claim;
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3 2. Knowingly misrepresenting to claimants pertinent facts or
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4 policy provisions relating to coverages at issue;
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5 3. Failing to adopt and implement reasonable standards for
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6 prompt investigations of claims arising under its insurance policies
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7 or insurance contracts;
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8 4. Not attempting in good faith to effectuate prompt, fair and
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9 equitable settlement of claims submitted in which liability has
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10 become reasonably clear;
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11 5. Failing to comply with the provisions of Section 1219 of
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12 this title;
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13 6. Denying a claim for failure to exhibit the property without
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14 proof of demand and unfounded refusal by a claimant to do so;
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15 7. Except where there is a time limit specified in the policy,
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16 making statements, written or otherwise, which require a claimant to
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17 give written notice of loss or proof of loss within a specified time
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18 limit and which seek to relieve the company of its obligations if
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19 the time limit is not complied with unless the failure to comply
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20 with the time limit prejudices the rights of an insurer. Any policy
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21 that specifies a time limit covering damage to a roof due to wind or
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22 hail must allow the filing of claims after the first anniversary but
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23 no later than twenty-four (24) months after the date of the loss, if
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24 the damage is not evident without inspection;
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 1 8. Requesting a claimant to sign a release that extends beyond
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2 the subject matter that gave rise to the claim payment;
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3 9. Issuing checks, drafts or electronic payment in partial
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4 settlement of a loss or claim under a specified coverage which
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5 contain language releasing an insurer or its insured from its total
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6 liability;
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7 10. Denying payment to a claimant on the grounds that services,
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8 procedures, or supplies provided by a treating physician, or a
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9 hospital, or person or entity licensed or otherwise authorized to
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10 provide health care services were not medically necessary unless the
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11 health insurer or administrator, as defined in Section 1442 of this
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12 title, first obtains an opinion from any provider of health care
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13 licensed by law and preceded by a medical examination or claim
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14 review, to the effect that the services, procedures or supplies for
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15 which payment is being denied were not medically necessary. In the
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16 event that claims for mental health or substance use disorder
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17 treatments and services are under review, the reviewing health care
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18 provider shall have appropriate, qualified, and specialized
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19 credentials with respect to the services and treatments. Upon
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20 written request of a claimant, treating physician, or hospital, or
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21 authorized person or entity, the opinion shall be set forth in a
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22 written report, prepared and signed by the reviewing physician. The
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23 report shall detail which specific services, procedures, or supplies
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24 were not medically necessary, in the opinion of the reviewing
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 1 physician, and an explanation of that conclusion. A copy of each
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2 report of a reviewing physician shall be mailed by the health
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3 insurer, or administrator, postage prepaid, to the claimant,
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4 treating physician, or hospital, or authorized person or entity
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5 requesting same within fifteen (15) days after receipt of the
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6 written request. As used in this paragraph, “physician” means a
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7 person holding a valid license to practice medicine and surgery,
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8 osteopathic medicine, podiatric medicine, dentistry, chiropractic,
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9 or optometry, pursuant to the state licensing provisions of Title 59
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10 of the Oklahoma Statutes;
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11 11. Compensating a reviewing physician, as defined in paragraph
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12 10 of this section, on the basis of a percentage of the amount by
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13 which a claim is reduced for payment;
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14 12. Violating the provisions of the Health Care Fraud
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15 Prevention Act;
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16 13. Compelling, without just cause, policyholders to institute
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17 suits to recover amounts due under its insurance policies or
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18 insurance contracts by offering substantially less than the amounts
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19 ultimately recovered in suits brought by them, when the
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20 policyholders have made claims for amounts reasonably similar to the
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21 amounts ultimately recovered;
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22 14. Failing to maintain a complete record of all complaints
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23 which it has received during the preceding three (3) years or since
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24 the date of its last financial examination conducted or accepted by
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 1 the Commissioner, whichever time is longer. This record shall
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2 indicate the total number of complaints, their classification by
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3 line of insurance, the nature of each complaint, the disposition of
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4 each complaint, and the time it took to process each complaint. For
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5 the purposes of this paragraph, “complaint” means any written
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6 communication primarily expressing a grievance;
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7 15. Requesting a refund of all or a portion of a payment of a
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8 claim made to a claimant more than twelve (12) months or a health
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9 care provider more than eighteen (18) months after the payment is
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10 made. This paragraph shall not apply:
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11 a. if the payment was made because of fraud committed by
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12 the claimant or health care provider, or
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13 b. if the claimant or health care provider has otherwise
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14 agreed to make a refund to the insurer for overpayment
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15 of a claim;
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16 16. Failing to pay, or requesting a refund of a payment, for
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17 health care services covered under the policy if a health benefit
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18 plan, or its agent, has provided a preauthorization or
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19 precertification and verification of eligibility for those health
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20 care services. This paragraph shall not apply if:
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21 a. the claim or payment was made because of fraud
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22 committed by the claimant or health care provider,
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23 b. the subscriber had a preexisting exclusion under the
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24 policy related to the service provided, or
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 1 c. the subscriber or employer failed to pay the
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2 applicable premium and all grace periods and
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3 extensions of coverage have expired;
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4 17. Denying or refusing to accept an application for life
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5 insurance, or refusing to renew, cancel, restrict or otherwise
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6 terminate a policy of life insurance, or charge a different rate
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7 based upon the lawful travel destination of an applicant or insured
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8 as provided in Section 4024 of this title; or
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9 18. As a health insurer that provides pharmacy benefits or a
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10 pharmacy benefits manager that administers pharmacy benefits for a
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11 health plan, failing to include any amount paid by an enrollee or on
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12 behalf of an enrollee by another person when calculating the
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13 enrollee’s total contribution to an out-of-pocket maximum,
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14 deductible, copayment, coinsurance or other cost-sharing
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15 requirement.
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16 However, if, under federal law, application of this paragraph
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17 would result in health savings account ineligibility under Section
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18 223 of the federal Internal Revenue Code, as amended, this
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19 requirement shall apply only for health savings accounts with
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20 qualified high-deductible health plans with respect to the
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21 deductible of such a plan after the enrollee has satisfied the
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22 minimum deductible, except with respect to items or services that
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23 are preventive care pursuant to Section 223(c)(2)(C) of the federal
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24 Internal Revenue Code, as amended, in which case the requirements of
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 1 this paragraph shall apply regardless of whether the minimum
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2 deductible has been satisfied.
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3 SECTION 2. This act shall become effective November 1, 2023.
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5 59-1-396 RD 1/17/2023 5:37:25 PM
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Statutes affected:
Introduced: 36-1250.5
Floor (House): 36-1250.5
Floor (Senate): 36-1250.5
Engrossed: 36-1250.5
Enrolled (final version): 36-1250.5