THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY HARPER, BARRAR, B. BOYLE, BRIGGS, DeLUCA, FABRIZIO, FARRY, FREEMAN, GINGRICH, GOODMAN, HENNESSEY, HORNAMAN, MUNDY, O'NEILL, PETRI, SCAVELLO, SCHRODER, SHAPIRO, VULAKOVICH, WAGNER, WATSON, YOUNGBLOOD AND JOSEPHS, JANUARY 19, 2011

REFERRED TO COMMITTEE ON INSURANCE, JANUARY 19, 2011  

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.  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."  A person who is a named insured, insured or

beneficiary of a policy of health insurance, including, but not

limited to, employers who purchase group insurance for

themselves and their employees, 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.

"Consumer advocate."  The Consumer Advocate for Health

Insurance established in this subarticle.

"Department."  The Insurance Department of the Commonwealth.

"Fund."  The Consumer Advocate for Health Insurance Fund

established in this subarticle.

"Health 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 that provides health insurance and is 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.

"Office."  The Office of Consumer Advocate for Health

Insurance established in this subarticle.

Section 922-A.  Office of Consumer Advocate for Health

Insurance.

(a)  Establishment of office.--The Office of Consumer

Advocate for Health Insurance is established within the Office

of Attorney General to represent the interests of consumers

before the department.

(b)  Consumer Advocate for Health Insurance.--

(1)  The office shall be headed by the Consumer Advocate

for Health Insurance appointed by the Governor with the

advice and consent of the Senate, who by reason of training,

experience and attainment is qualified to represent the

interests of consumers.

(2)  The term of the consumer advocate shall be for six

years.

(3)  Compensation of the consumer advocate shall be set

by the Attorney General.

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

consumer advocate 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 health 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)  Restriction.--Neither the consumer advocate nor an

employee of the consumer advocate shall be employed by or be

pecuniarily interested in any health insurance company,

association or exchange, or in any health insurance business,

other than as a policyholder.

(e)  Political office.--No individual who is appointed as

consumer advocate may seek election nor accept appointment to

any political office during the tenure as consumer advocate 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 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 Attorney General. 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.

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

any other authority conferred by this subarticle, the consumer

advocate shall, in carrying out the responsibilities under this

subarticle, represent the interests 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, 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.--

(1)  The consumer advocate may exercise discretion in

determining the interests of consumers that will be advocated

in any particular proceeding and in determining whether to

participate in or initiate any particular proceeding.

(2)  In making a determination, the consumer advocate

shall consider the public interest, the resources available

and the substantiality of the effect of the proceeding on the

interests of consumers.

(3)  The consumer advocate may refrain from intervening

when, in the judgment of the consumer advocate, intervention

is not necessary to represent adequately the interests of

consumers.

(c)  Action on petition.--

(1)  In addition to any other authority conferred by this

subarticle, the consumer advocate may represent an interest

of consumers that is presented for consideration upon

petition in writing by a substantial number of persons who

are consumers of a health insurer subject to regulation by

the department.

(2)  The consumer advocate 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 interests of consumers presented in

that petition.

(3)  If the consumer advocate declines or is unable to

represent the interests, written notification and the reasons

for the action shall be given to the sponsors.

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

(1)  Any action brought by the consumer advocate before a

court or an agency of this Commonwealth shall be brought in

the name of the consumer advocate.

(2)  The consumer advocate may designate 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 that the consumer advocate

determines, in accordance with applicable time limitations, to

initiate, intervene or otherwise participate in a department,

agency or court proceeding, the consumer advocate 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 interests of consumers to be

protected.

Section 925-A.  Duties of department.

In dealing with any proposed action that may substantially

affect the interests 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 when notice of the

proposed action is given to the public or at a time fixed by

agreement between the consumer advocate and the department in

a manner to assure the consumer advocate 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

interests of consumers.

Section 926-A.  Assessment upon insurance companies,

disposition, appropriation and disbursement of

assessments.

(a)  Estimate of expenditures.--

(1)  Before November 1 of each year, the office shall

estimate the total expenditures for the office and submit the

estimate to the Governor in accordance with section 610.

(2)  At the same time the consumer advocate submits the

estimate to the Governor, the consumer advocate shall also

submit that estimate to the General Assembly.

(3)  The estimate shall not exceed an amount equal to the

total assessments as provided in this section.

(b)  Budget procedures.--

(1)  The consumer advocate or designated representatives

shall be afforded an opportunity to appear before the

Governor, the Appropriations Committee of the Senate and the

Appropriations Committee of the House of Representatives

regarding the estimate.

(2)  If the General Assembly fails to approve the

consumer advocate'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.

(3)  At such time as the General Assembly approves the

proposed budget, the consumer advocate and the department

shall make an adjustment in the assessments to reflect the

approved budget.

(4)  The office 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 2011-2012 an assessment on

each health insurer who writes coverages for health and health

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

Commonwealth shall be made. Each health 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 health 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 health 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.

(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, related judicial

proceedings and other such matters within the jurisdiction of

the office, and shall be earmarked for the use of, and annually

appropriated to, the office 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 the appropriation

shall be signed by the consumer advocate or the deputies that

the consumer advocate may designate in writing to the State

Treasurer and shall be presented to the State Treasurer for

payment in the manner prescribed under 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 is abolished 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 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. The consumer advocate shall make

recommendations as may from time to time be necessary or

desirable to protect the interests of consumers.

Section 928-A.  Savings provision and construction.

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

shall limit the right of a 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 power or

duty of the department to regulate health insurers in the public

interest.

Section 3.  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

immediately.