THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY YUDICHAK, MANN, O'NEILL, BOYD, BELFANTI, BRENNAN, CALTAGIRONE, CARROLL, CASORIO, D. COSTA, DONATUCCI, FABRIZIO, FREEMAN, GEORGE, GIBBONS, GRUCELA, HORNAMAN, JOSEPHS, KIRKLAND, McILVAINE SMITH, MOUL, MUNDY, MURT, M. O'BRIEN, PALLONE, PASHINSKI, READSHAW, SCAVELLO, SIPTROTH, K. SMITH, SOLOBAY, STABACK, VULAKOVICH, WALKO AND WHITE, FEBRUARY 9, 2009

REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 9, 2009  

AN ACT

Amending the act of April 9, 1929 (P.L.177, No.175), entitled

"An act providing for and reorganizing the conduct of the

executive and administrative work of the Commonwealth by the

Executive Department thereof and the administrative

departments, boards, commissions, and officers thereof,

including the boards of trustees of State Normal Schools, or

Teachers Colleges; abolishing, creating, reorganizing or

authorizing the reorganization of certain administrative

departments, boards, and commissions; defining the powers and

duties of the Governor and other executive and administrative

officers, and of the several administrative departments,

boards, commissions, and officers; fixing the salaries of the

Governor, Lieutenant Governor, and certain other executive

and administrative officers; providing for the appointment of

certain administrative officers, and of all deputies and

other assistants and employes in certain departments, boards,

and commissions; and prescribing the manner in which the

number and compensation of the deputies and all other

assistants and employes of certain departments, boards and

commissions shall be determined," establishing the Office of

Consumer Advocate for Health Insurance as an office within

the Office of Consumer Advocate and prescribing its powers

and duties; establishing the Consumer Advocate for Health 

Insurance Fund; and making editorial changes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Article IX-A of the act of April 9, 1929 (P.L.

177, No.175), known as The Administrative Code of 1929, is

amended by adding a subarticle heading to read:

ARTICLE IX-A

OFFICE OF CONSUMER ADVOCATE

(a)  General Provisions

Section 2.  Section 901-A of the act, added July 9, 1976

(P.L.903, No.161), is amended to read:

Section 901-A.  Definitions.--As used in this [article] 

subarticle:

"Commission" means the Pennsylvania Public Utility

Commission.

"Consumer" means any person (i) who makes a direct use or is

the ultimate recipient of a product or a service supplied by any

person or public utility subject to the authority of the

commission or (ii) who may be a direct user or ultimate

recipient of a product or service supplied by any person or

public utility subject to the authority of the commission and

may be affected in any way by any action within the authority of

the commission. The term "consumer" includes any "person,"

"corporation" or "municipal corporation" as defined in [section

2 of the act of May 28, 1937 (P.L.1053, No.286), known as the

"Public Utility Law."] 66 Pa.C.S. § 102 (relating to

definitions).

"Public utility" means public utility as defined in [section

2(17), act of May 28, 1937 (P.L.1053, No.286), known as the

"Public Utility Law."] 66 Pa.C.S. § 102 (relating to

definitions).

Section 3.  Article IX-A of the act is amended by adding a

subarticle to read:

(b)  Office of Consumer Advocate

for Health Insurance

Section 921-A.  Definitions.

The following words and phrases when used in this subarticle 

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Consumer."  Any person who is a named insured, insured or

beneficiary of a policy of health insurance or any other person

who may be affected in any way by the Insurance Department's

exercise of or the failure to exercise its authority.

"Department."  The Insurance Department of the Commonwealth.

"Fund."  The Consumer Advocate for Health Insurance Fund

established pursuant to section 926-A.

"Insurer."  Any "company," "association" or "exchange" as

such terms are defined in section 101 of the act of May 17, 1921

(P.L.682, No.284), known as The Insurance Company Law of 1921 or

any entity subject to 40 Pa.C.S. Ch. 61 (relating to hospital

plan corporations) or 63 (relating to professional health

services plan corporations) or Article XXIV of The Insurance

Company Law of 1921 or the act of December 29, 1972 (P.L.1701,

No.364), known as the Health Maintenance Organization Act.

Section 922-A.  Office of Consumer Advocate for Health

Insurance.

(a)  Office established.--There is hereby established as an

office within the Office of Consumer Advocate an Office of

Consumer Advocate for Health Insurance to represent the interest

of consumers before the department.

(b)  Consumer Advocate for Health Insurance.--The Office of

Consumer Advocate for Health Insurance shall be headed by the

Consumer Advocate for Health Insurance appointed by the Attorney

General who by reason of training, experience and attainment is

qualified to represent the interest of consumers. Compensation

shall be set by the Executive Board.

(c)  Conflict of interest.--No individual who serves as a

Consumer Advocate for Health Insurance shall, while serving in

the position, engage in any business, vocation or other

employment, or have other interests, inconsistent with the

official responsibilities, nor shall the individual seek or

accept employment nor render beneficial services for

compensation with any insurer subject to the authority of the

office during the tenure of the appointment and for a period of

two years immediately after the appointment is served or

terminated.

(d)  Political office.--Any individual who is appointed to

the position of Consumer Advocate for Health Insurance shall not

seek election nor accept appointment to any political office

during the tenure as Consumer Advocate for Health Insurance and

for a period of two years after the appointment is served or

terminated.

Section 923-A.  Assistant consumer advocates for health

insurance; employees.

The Consumer Advocate for Health Insurance with the approval

of the Attorney General shall appoint attorneys as assistant

consumer advocates for health insurance and additional clerical,

technical and professional staff as may be appropriate, and may

contract for additional services as shall be necessary for the

performance of the duties imposed by this subarticle. The

compensation of assistant consumer advocates for health 

insurance and clerical, technical and professional staff shall

be set by the Executive Board. No assistant consumer advocate

for health insurance or other staff employee shall, while

serving in the position, engage in any business, vocation or

other employment, or have other interests, inconsistent with

official responsibilities.

Section 924-A.  Powers and duties of Consumer Advocate for

Health Insurance.

(a)  Representation of consumer interests.--In addition to

any other authority conferred by this subarticle, the Consumer

Advocate for Health Insurance is authorized to and shall, in

carrying out the responsibilities under this subarticle,

represent the interest of consumers as a party, or otherwise

participate for the purpose of representing an interest of

consumers, before the department in any matter properly before

the department, and before any court or agency, initiating

proceedings if, in the judgment of the Consumer Advocate for

Health Insurance, the representation may be necessary, in

connection with any matter involving regulation by the

department or the corresponding regulatory agency of the United

States, whether on appeal or otherwise initiated.

(b)  Exercise of discretion.--The Consumer Advocate for

Health Insurance may exercise discretion in determining the

interests of consumers which will be advocated in any particular

proceeding and in determining whether to participate in or

initiate any particular proceeding and, in so determining, shall

consider the public interest, the resources available and the

substantiality of the effect of the proceeding on the interest

of consumers. The Consumer Advocate for Health Insurance may

refrain from intervening when, in the judgment of the Consumer

Advocate for Health Insurance, intervention is not necessary to

represent adequately the interest of consumers.

(c)  Action on petition.--In addition to any other authority

conferred by this subarticle, the Consumer Advocate for Health 

Insurance is authorized to represent an interest of consumers

which is presented for consideration, upon petition in writing,

by a substantial number of persons who are consumers of an

insurer subject to regulation by the department. The Consumer

Advocate for Health Insurance shall notify the principal

sponsors of the petition within a reasonable time after receipt

of the petition of the action taken or intended to be taken with

respect to the interest of consumers presented in that petition.

If the Consumer Advocate for Health Insurance declines or is

unable to represent the interest, written notification and the

reasons for the action shall be given to the sponsors.

(d)  Name in which action is brought.--Any action brought by

the Consumer Advocate for Health Insurance before a court or an

agency of this Commonwealth shall be brought in the name of the

Consumer Advocate for Health Insurance. The Consumer Advocate

for Health Insurance may name a consumer or group of consumers

in whose name the action may be brought or may join with a

consumer or group of consumers in bringing the action.

(e)  Public statement.--At a time as the Consumer Advocate

for Health Insurance determines, in accordance with applicable

time limitations, to initiate, intervene or otherwise

participate in any department, agency or court proceeding, the

Consumer Advocate for Health Insurance shall issue publicly a

written statement, a copy of which shall be filed in the

proceeding in addition to any required entry of appearance,

stating concisely the specific interest of consumers to be

protected.

Section 925-A.  Duties of department.

In dealing with any proposed action which may substantially

affect the interest of consumers, including, but not limited to,

a proposed change of rates and the adoption of rules,

regulations, guidelines, orders, standards or final policy

decisions, the department shall:

(1)  Notify the Consumer Advocate for Health Insurance 

when notice of the proposed action is given to the public or

at a time fixed by agreement between the Consumer Advocate

for Health Insurance and the department in a manner to assure

the Consumer Advocate for Health Insurance reasonable notice

and adequate time to determine whether to intervene in the

matter.

(2)  Consistent with its other statutory

responsibilities, take action with due consideration to the

interest of consumers.

Section 926-A.  Assessment upon insurance companies,

disposition, appropriation and disbursement of

assessments.

(a)  Estimate of expenditures.--Before November 1, 2009, for

fiscal year 2010-2011, and before November 1 of each year

thereafter, the Office of Consumer Advocate for Health Insurance

shall estimate the total expenditures for the Office of Consumer

Advocate for Health Insurance and submit the estimate to the

Governor in accordance with section 610. At the same time the

Consumer Advocate for Health Insurance submits the estimate to

the Governor, the Consumer Advocate for Health Insurance shall

also submit that estimate to the General Assembly. The estimate

shall not exceed an amount equal to the total assessments as

provided in this section.

(b)  Budget procedures.--The Consumer Advocate for Health

Insurance or designated representatives shall be afforded an

opportunity to appear before the Governor and the Appropriations

Committee of the Senate and the Appropriations Committee of the

House of Representatives regarding the estimate. If the General

Assembly fails to approve the Consumer Advocate for Health

Insurance's budget for the purposes of this section by March 30,

the department shall assess insurers on the basis of the

assessment provided in this section. At such time as the General

Assembly approves the proposed budget, the Consumer Advocate for

Health Insurance and the department shall make an adjustment in

the assessments to reflect the approved budget. The Office of

Consumer Advocate shall subtract from the budget finally

approved by the General Assembly any balance of the

appropriation to be carried over into the fiscal year from the

preceding fiscal year.

(c)  Assessment.--For fiscal year 2010-2011 an assessment on

each insurer who writes coverages for health and health under

life/annuity/accident, including annuities, in this Commonwealth

shall be made. Each insurer shall be assessed an amount equal to

the product obtained by multiplying $2,000,000 by a fraction,

the numerator of which is the direct premium collected for all

coverages by that insurer in this Commonwealth during the

preceding calendar year and the denominator of which is the

direct premium written on such coverages in this Commonwealth by

all insurers in the same period.

(d)  Adjustment.--In succeeding years the General Assembly

may vary the base amount of $2,000,000 based upon the actual

funding experience and requirements of the Office of Consumer

Advocate for Health Insurance.

(e)  Fund.--All assessments received, collected or recovered

under this subarticle shall be paid by the department into a

separate account in the State Treasury, to be known as the

Consumer Advocate for Health Insurance Fund through the

Department of Revenue.

(f)  Use of fund.--All assessments paid into the Consumer

Advocate for Health Insurance Fund shall be held in trust solely

for the purpose of defraying the cost of the administration and

performance of the duties of the Office of Consumer Advocate for

Health Insurance, related judicial proceedings and other such

matters within the jurisdiction of the Office of Consumer

Advocate for Health Insurance, and shall be earmarked for the

use of, and annually appropriated to, the Office of Consumer

Advocate for disbursement solely for that purpose. The fund

shall be subject to audit by the Auditor General.

(g)  Construction.--Assessments made under this section shall

not be considered burdens and prohibitions under section 212 of

the act of May 17, 1921 (P.L.789, No.285), known as The

Insurance Department Act of 1921.

(h)  Requisitions.--All requisitions upon such appropriation

shall be signed by the Consumer Advocate for Health Insurance or

such deputies as the Consumer Advocate for Health Insurance may

designate in writing to the State Treasurer and shall be

presented to the State Treasurer and dealt with by the State

Treasurer and the Treasury Department in the manner prescribed

by the act of April 9, 1929 (P.L.343, No.176), known as The

Fiscal Code.

(i)  Balance.--In the event that the fund is dissolved or the

Office of Consumer Advocate for Health Insurance is terminated

by operation of law, any balance remaining in the fund, after

deducting administrative costs for liquidation, shall be

returned to insurers in proportion to their financial

contributions to the fund in the preceding calendar year.

Section 927-A.  Reports.

The Consumer Advocate for Health Insurance shall annually

transmit to the Governor, to the Attorney General and to the

General Assembly, and shall make available to the public, an

annual report on the conduct of the Office of Consumer Advocate

for Health Insurance. The Consumer Advocate for Health Insurance

shall make recommendations as may from time to time be necessary

or desirable to protect the interest of consumers.

Section 928-A.  Savings provision and construction.

(a)  No bar to action.--Nothing contained in this subarticle 

shall in any way limit the right of any consumer to bring a

proceeding before either the department or a court.

(b)  No impairment to department.--Nothing contained in this

subarticle shall be construed to impair the statutory authority

or responsibility of the department to regulate insurers in the

public interest.

Section 4.  This act shall take effect as follows:

(1)  The addition of section 926-A of the act shall take

effect in 90 days.

(2)  This section shall take effect immediately.

(3)  The remainder of this act shall take effect July 1,

2009, or immediately, whichever is later.