Insurance Commissioner Jones Marks 100th Day In Office
News: 2011 Press Release
Insurance Commissioner Dave Jones marked his 100th day in office today by reflecting on important achievements in his term thus far and looking toward the challenges that lie ahead for his Administration as he ensures that the California Department of Insurance (CDI) remains the strongest consumer protection agency in the nation.
"One hundred days ago, I took the oath of office to serve as California's fourth elected Insurance Commissioner, and declared that my Administration could and would be characterized by a single word: action," Commissioner Jones said. "We have fully lived up to that declaration. We have secured a number of crucial victories for consumers. I ran for Insurance Commissioner because consumers need an advocate who shares their concerns, understands their problems, and is willing to fight for them. It is still early, but we have hit the ground running and I have no intention of slowing down."
Standing Up Against Excessive Premium Increases
Just three days into Commissioner Jones' term, news broke that Blue Shield of California was raising health insurance rates on over 200,000 policyholders in the individual market. In some instances, consumers would see their health insurance rates skyrocket by up to 86 percent. Commissioner Jones took immediate action by calling on Blue Shield, as well as three more of California's largest health insurance carriers - Anthem Blue Cross, PacifiCare, and Aetna - to refrain from implementing their pending rate increases for at least sixty days to allow the Commissioner to review the rate filings. Each insurer complied with the Commissioner's request. Although the Insurance Commissioner does not have the legal authority to reject excessive rate hikes, Commissioner Jones thoroughly reviewed the rates and was poised to announce his findings. Blue Shield withdrew its most recent rate increase and Anthem Blue Cross decided to delay its rate hike and reduced its average increase from 16.4 percent to 9.1 percent. These two actions alone saved policyholders $80 million.
These are important wins for consumers, but, ultimately, the Commissioner cannot stop excessive rate hikes, and that is why he again is leading the charge to secure that authority. As a member of the State Legislature, Commissioner Jones authored three bills over five years to give the Insurance Commissioner the authority to reject excessive rate hikes, an authority he has for auto, property and casualty insurance, under Proposition 103. The bill he introduced as a member of the State Legislature has been re-introduced as Assembly Bill 52 (Feuer), and Commissioner Jones has been working to build support for this critical legislation that will allow him to reject excessive rate increases.
Implementing Health Care Reform
In his inaugural speech, Commissioner Jones announced that implementation of healthcare reform is a top priority. At his swearing in ceremony, Commissioner Jones established the new senior leadership position of Deputy Commissioner for Health Care Policy and Reform, thereby elevating the importance of health care policy and reform efforts within the department.
Commissioner Jones also took immediate action to ensure that he has the legal authority to enforce the new federal health care reform law. At his inauguration, Jones issued emergency regulations giving him the legal authority to enforce the new 80 percent Medical Loss Ratio (MLR) for the individual health insurance market. Under the federal healthcare reform legislation, health insurers in the individual market are required to have a "medical loss ratio" (MLR) of 80 percent, which means that 80 percent of the health insurance premium dollar should go into actual health care, not insurer profits, marketing and overhead. Commissioner Jones' emergency regulation gives him the authority to enforce this important element of federal health care reform.
Commissioner Jones also is working closely with the Legislature to obtain the legal authority to enforce the 85 percent medical loss ratio for the group health insurance market established by the federal healthcare reform legislation.
In addition, Commissioner Jones issued new regulations to enforce the federal healthcare reform requirement that health insurers sell health insurance for children even if the child has a pre-existing condition. Commissioner Jones launched a public education campaign to make parents aware that health insurance is now available for children for whom insurers previously denied insurance.
Shortly after taking office, Commissioner Jones directed CDI to prepare and file "annuity suitability" regulations to protect California's seniors against efforts to sell them inappropriate and unsuitable annuities. The Commissioner recently released for public comment the new regulations, which protect seniors from financial abuse. The regulations will require insurers to establish a system to supervise recommendations by those selling annuities and set forth new standards and procedures for the sales of annuities to seniors.
On the legislative front, Commissioner Jones is sponsoring legislation to stem the tide of a growing and disturbing trend of long term care rate increases. AB 999 (Yamada) confronts this issue by protecting consumers from excessive premium rate volatility and allowing consumers to make a more informed decision by reviewing policy language prior to the policy being purchased.
Investing in Underserved Communities
On the night of his inauguration, Commissioner Jones also re-established CDI's Community Programs Branch, which administers the California Organized Investment Network (COIN) program. COIN encourages insurers to invest in under-served communities. Commissioner Jones urged all insurance companies selling in California to examine their investment portfolios and invest in low and moderate income communities a portion of the $4 trillion in investments they hold. Eligible investments under COIN include important community enhancements such as a mortgage loan for a nonprofit residential alcohol treatment facility; micro-loans of $500 to $5,000 to self-employed business owners; pre-development loans to Habitat for Humanity to construct affordable homes; a loan for 953 water hook-ups in two small, rural communities; and a short-term loan to close escrow on housing for low-income foster youth.
Commissioner Jones is poised to make a major announcement regarding new COIN investments in the coming weeks.
Rooting Out Fraud
Since Commissioner Jones took office, CDI's Enforcement Branch has racked up 190 arrests for crimes that included auto insurance fraud, fiduciary theft, embezzlement, identity theft, and workers' compensation fraud. All told, the arrests have resulted in fines and restitution totaling more than $3 million.
Last month, Commissioner Dave Jones also joined in a whistleblower lawsuit against Bristol Myers-Squibb, one of the largest pharmaceutical companies in the U.S. The lawsuit, the largest health insurance fraud case ever pursued by a California state agency, alleges that the company showered doctors with gifts and paid illegal kickbacks to them to increase the company's pharmaceutical sales in California. The Commissioner is seeking monetary penalties and the disgorgement of millions of dollars in unlawful profits the company made as a result of kickbacks, plus treble damages. The kickback scheme ultimately came at the expense of the private health insurance industry, which paid for the drugs, and California consumers.
Other Notable Achievements
During the first 100 days of his term, Commissioner Jones also:
- Sponsored legislation to protect consumers from being unwittingly enrolled in life insurance "retained asset accounts";
- Sponsored legislation that would give the Insurance Commissioner the authority to obtain restitution for consumers;
- Initiated review of medical malpractice rates paid by doctors, nurses, hospitals and clinics;
- Issued guidance requiring health insurers to provide all financial documentation related to rate filings for review by CDI;
- Began a review of a recent earthquake insurance rate filing, by the California Earthquake Authority, that would reduce premiums by an average of 12 percent;
- Sponsored legislation to prohibit clauses in disability insurance policies that give the insurer the sole discretion to determine when a person is disabled;
- Submitted comments to the federal Health and Human Services Agency regarding the implementation of federal healthcare reform;
- Filed new regulations that add the category of "spouse" to the application form for CDI's Low Cost Auto Insurance Program, to better-reflect same-sex marriages recognized in California and elsewhere;
- Stood in opposition to efforts at meetings of the National Association of Insurance Commissioners (NAIC) to water down federal healthcare reform;
- Worked with the NAIC "Green Insurance" working group to develop a plan for green insurance efforts;
- Initiated a pilot project in cooperation with the California Department of Child Support Services asking California insurers to help make a significant difference in the lives of children by voluntarily agreeing to offset insurance benefit payments against delinquent child support obligations;
- Sponsored legislation to protect California businesses from being forced to travel to other states to resolve disputes with insurers;
- Sponsored legislation to prohibit unscrupulous insurance professionals from participating with, employing, or making referrals to an individual involved in the sale of reverse mortgages with the sole purpose of selling insurance policies and annuities.
- Launched a public education campaign to increase awareness of the California Low Cost Auto Insurance Program; and
- Met with consumer organizations to solicit pro-consumer ideas and suggestions.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.