Senator Wiener’s Health Plan Accountability Act — Increasing Fines Tenfold for Illegally Denying Coverage — Signed into Law

October 6, 2022

SACRAMENTO - Today, Governor Gavin Newsom signed into law Senator Scott Wiener’s (D-San Francisco) legislation to impose stronger accountability on health plans by significantly increasing fines for illegal denial of health insurance coverage. Senate Bill 858, the Health Plan Accountability Act, updates and increases the penalty amount tenfold for health plans that violate state law in denying or delaying timely access to care. This law will take effect on January 1, 2023.

Health plan accountability is critically important: current fine levels were set in the 1970s and are so low they can be viewed as a cost of doing business. As a result, health plans, at times, illegally deny or delay coverage. For example, Kaiser Permanente has yet to come into compliance with a previous law authored by Senator Wiener (Senate Bill 221) — requiring timely access to mental health treatment — resulting in a strike by Kaiser mental health professionals.

“Californians rely on their health insurance to cover critical, even life-saving, care, and we must hold health plans accountable for following the rules and providing timely and adequate coverage,” said Senator Wiener. “California’s low, outdated fine levels allow health plans to view these fines as a mere cost of doing business. SB 858 makes clear that when we pass a law requiring coverage, we mean it.”

"For years health care corporations have been skirting consumer protection laws with minimal consequences. This new law will change the behavior of these health plans and ensure access to needed care for Californians," said Diana Douglas, Health Access California’s director of policy and legislative advocacy.  

Health plan premiums have quadrupled in the past 20 years, while fine amounts for health plan violations haven’t changed since 1975. This allows plans to skirt responsibility and withhold care if they deem the fine amount inconsequential or just a cost of doing business.

This legislation comes at a critical time, as California’s Department of Managed Health Care (DMHC) recently announced a non-routine investigation to address Kaiser Permanente’s deficiencies in providing patients timely access to behavioral health services. As required by Senator Wiener’s SB 221, which went into effect this July, health care providers must ensure that patients being treated for mental health or substance use disorder conditions are being scheduled for a follow-up within 10 business days of their prior appointment. As Kaiser faces the seventh week of a strike by hundreds of behavioral health workers fed up with insufficient staffing and working conditions, it’s clear that the health care provider is currently unable – and unwilling – to deliver adequate, timely care. SB 858 will incentivize non-compliant providers like Kaiser Permanente to fix the systemic issues that bar behavioral health patients from accessing care in a timely manner.

SB 858 increases the penalty amounts for civil penalties from a maximum of $2,500 to a maximum of $25,000 when health plans violate standards including: failing to provide coverage for medically-necessary care, behavioral health care services, gender-affirming care, timely access to care, or other critical consumer protections. When health plans fail to comply with state law, their actions can pose significant – and even life-threatening – health challenges. By strengthening California’s ability to levy behavior-changing fines on non-compliant health plans, access to health care will improve.

SB 858 gives the Department of Managed Health Care the additional authority to levy higher fines and impose corrective action plans when necessary. SB 858 will modernize penalty amounts every 5 years, and updates the methodology to ensure the penalty amounts reflect the true harm caused to enrollees. Effective civil and administrative penalties are enforcement actions that give regulators more tools to enforce the consumer protections we all support.

SB 858 is sponsored by Health Access California.