Current Status Introducing Body:House Bill Number:3531 Primary Sponsor:Rama Committee Number:26 Type of Legislation:GB Subject:Accident and health contested insurance claims Residing Body:House Current Committee:Labor, Commerce and Industry Computer Document Number:3531 Introduced Date:Feb 14, 1991 Last History Body:House Last History Date:Jan 14, 1992 Last History Type:Recommitted to Committee, retaining its place on the Calendar Scope of Legislation:Statewide All Sponsors:Rama J. Williams H. Brown G. Bailey Barber Whipper T.C. Alexander Klapman Gonzales R. Young Beasley Wofford Waites Rogers J. Bailey Keegan Wright Cork L. Elliott Houck Burriss M.O. Alexander Cato J.C. Johnson Corning McLeod Kirsh Wells McGinnis Rudnick Quinn Type of Legislation:General Bill
Bill Body Date Action Description CMN
---- ------ ------------ ------------------------------ ---
3531 House Jan 14, 1992 Recommitted to Committee, 26
retaining its place on the
Calendar
3531 House May 16, 1991 Continued
3531 House May 15, 1991 Committee Report: Favorable 26
with amendment
3531 House May 09, 1991 Recommitted to Committee, 26
retaining its place on the
Calendar
3531 House May 01, 1991 Committee Report: Favorable 26
with amendment
3531 House Feb 14, 1991 Introduced, read first time, 26
referred to Committee
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COMMITTEE REPORT
May 15, 1991
H. 3531
Introduced by REPS. Rama, J. Williams, H. Brown, G. Bailey, Barber, Whipper, T.C. Alexander, Klapman, Gonzales, R. Young, Beasley, Wofford, Waites, Rogers, J. Bailey, Keegan, Wright, Cork, L. Elliott, Houck, Burriss, M.O. Alexander, Cato, J.C. Johnson, Corning, McLeod, Kirsh, Wells, McGinnis, Rudnick and Quinn
S. Printed 5/15/91--H.
Read the first time February 14, 1991.
To whom was referred a Bill (H. 3531), to amend the Code of Laws of South Carolina, 1976, by adding Section 38-59-45, so as to provide for the timely payment of claims, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendments:
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/SECTION 1. Article 1, Chapter 55, Title 38 of the 1976 Code is amended by adding:
"Section 38-55-190. (A) As used in this section:
(1) `Due written proof of loss' means a claim submitted to the insurer at its designated office on a form approved by the insurer which contains all of the information required by the form, is plainly legible, and which has physically attached to it all of the documentation necessary to an evaluation of the claim by the insurer or a claim submitted in a form which the insurer has agreed with the provider to accept as due written proof of loss.
(2) `Insurer' means (a) an insurance company licensed to issue accident and health insurance as defined in Section 38-1-20(1) and an insurance company licensed to issue casualty insurance as defined in that section; (b) an employer or other person providing coverage for health benefits for its employees or members, whether administered by itself or others; (c) a health maintenance organization licensed pursuant to Chapter 33 of this title and (d) an administrator licensed under Chapter 51 of this title.
(3) `Payment' means the mailing by first class mail to the recipient of a check for the amount being paid or the crediting of an amount to an account of the recipient and prompt notification to the recipient of the crediting.
(4) `Premium' means the consideration paid to the insurer for the assumption of the obligation to pay claims for covered services or supplies or in the case of a self-insurer, the consideration paid to the administrator of the plan for the assumption of the obligation to process claims.
(5) `Provider' means a hospital providing services or supplies covered by the policy or plan involved.
(6) `Receipt' means actual physical possession by the recipient.
(7) `Holidays' means the holidays specified in Section 53-5-10.
(8) `Payment period' means thirty calendar days plus any holidays included in the period after the receipt of a due written proof of loss.
(9) `Discount period' means fifteen days plus any holidays included in the period after the receipt of a due written proof of loss.
(B) Except as otherwise provided in this section, all benefits payable by an insurer to a provider pursuant to a valid assignment, for services or supplies under any policy, plan, or arrangement for accident and health insurance or casualty insurance is payable within the payment period. If additional information is required, the insurer shall within the payment period notify the claimant that payment cannot be made within the period because additional information is required and specify the reason requiring an extension of the period in accordance with subsection (C) of this section.
(C) The payment period may be extended without penalty for an additional reasonable period as necessary, not to exceed an additional forty-five calendar days plus state holidays included in the period, to permit the insurer to determine its rights and obligations with respect to the coordination of benefits under the policy, plan, or arrangement; the existence of any pre-existing conditions provisions under the policy, plan, or arrangement; the existence of workers' compensation insurance; or any misrepresentation by or on behalf of claimant in the application for coverage.
(D) A portion of a grace period provided under the policy, plan, or arrangement during which any premium remains unpaid is not included in the payment period.
(E) An insurer when acting as an agent in the administration of programs of health, hospital, and medical insurance sponsored or financed by an agency of the United States government is not subject to the requirements of this section.
(F) An insurer is not under an obligation to process or pay a claim submitted by a provider if the assignment to the provider of the claim is invalid for any reason or is contrary to the terms of the policy, plan, or arrangement pursuant to which the supplies or services were provided.
(G) An insurer which makes payment of hospital charges of a provider within the discount period which has made the election specified in Subsection (J) of this section is entitled to a two percent discount from the hospital charges, but this discount may not be charged by the hospital against the patient or other person responsible for the charges.
(H) An insurer which does not make payment of a claim of a provider which has made the election specified in subsection (J) of this section within the payment period or any extension pursuant to subsection (C) of this section must pay interest to the provider from the last date of the payment period at the rate of eighteen percent a year until paid.
(I) A provider which receives excess payment from an insurer shall pay interest for a period not to exceed one year on the excess from the date of the payment of the excess by the insurer until repaid by the provider at the rate of eighteen percent a year.
(J) Each provider may elect to be bound as to each insurer by the benefits and burden of both subsections (G) and (H) of this section. The election must be made for a period of not less than two years and notice of the election must be given to each insurer with respect to which it is made not less than sixty days before the date it is to be effective and is effective only with respect to claims attributable to services provided after the giving of the notice."
SECTION 2. Section 38-71-120 of the 1976 Code is repealed.
SECTION 3. This act takes effect on the first day of the sixth month following approval by the Governor./
Amend title to conform.
Amend the report of the Committee on Labor, Commerce and Industry, as and if amended, in Section 38-59-45 of the 1976 Code by inserting immediately after /hospital/ on line 23 of page [3531-2] /, physician, or osteopath/ and by striking subsection (G) of Section 38-59-45 and inserting:
/(G) Except with respect to the claims of a provider which has made the election specified in subsection (J) of this section, an insurer which makes payment of hospital or medical charges within the discount period is entitled to a two percent discount from the hospital or medical charges, but this discount may not be charged by the hospital, physician, or osteopath against the patient or other person responsible for the charges./
Amend title to conform.
THOMAS C. ALEXANDER, for Committee.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-59-45, SO AS TO PROVIDE FOR THE TIMELY PAYMENT OF CLAIMS DUE A LICENSED HEALTH CARE PROVIDER FROM ACCIDENT AND HEALTH INSURERS, TO PROVIDE FOR CONTESTED CLAIMS INCLUDING NOTICE REQUIREMENTS FOR TIMELY ACTION ON DISPUTED CLAIMS, TO PROVIDE THAT FAILURE OF AN INSURER TO PAY CONTESTED CLAIMS IN A TIMELY MANNER IS A BAD FAITH DENIAL UNLESS THE INSURER CAN PROVE ITS FAILURE TO PAY WAS IN GOOD FAITH, TO PROVIDE FOR LIABILITY FOR BAD FAITH DENIAL, TO PROVIDE FOR INTEREST ON DELAYED CLAIMS UNLESS THE INSURER PROVES ITS TIMELY FAILURE TO PAY WAS IN GOOD FAITH, AND TO PROVIDE FOR REFUNDS OF IMPROPER OR EXCESSIVE PAYMENTS, INCLUDING INTEREST ON REFUNDS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 59, Title 38 of the 1976 Code is amended by adding:
"Section 38-59-45. (A) No insurer of accident or health insurance, including self-insured providers, to which the insurance laws of this State apply, may delay payment to a licensed health care provider of a valid and properly completed claim more than fifteen days after receipt of the claim by the insurer. If the claim or portion of a claim is contested by the insurer, the insured or the insured's assignee must be notified in writing that the claim is contested or denied within fifteen days after receipt of claim by the health insurer. The notice that a claim is contested or denied must identify the portion of the claim contested or denied and request any additional information pertaining to the contest or denial. A health insurer, upon receipt of additional information requested shall pay or deny the contested claim or portion of the contested claim within fifteen days. If the insurer does not prove that its failure to pay the claim in a timely manner was in good faith, the nonpayment is a bad faith denial, and the provisions of Section 38-59-40 on the amount of liability allowed apply. Payments made after fifteen days accrue interest at the rate of one and one-half percent a month unless the insurer proves that its failure to pay the claim in a timely manner was in good faith.
(B) If the insurer determines after the payment of a claim to a licensed health care provider that it was excessive or improperly paid, it shall notify the provider in writing detailing the error and the amount of the requested refund. If the provider determines that the payment was excessive or improperly paid, it shall refund the excessive or improperly paid amount. Refunds made after fifteen days of the notification accrue interest at the rate of one and one-half percent a month."
SECTION 2. This act takes effect upon approval by the Governor.