1. (a) In addition to applicable provisions of the Insurance Code, the general and formal administrative adjudication procedures of the Administrative Procedure Act (Chapters 4.5 and 5 of Part 1 of Division 3 of Title 2 of the Government Code) apply to enforcement actions that are brought under this article as provided in this section.

   1. (1) An adjudicative proceeding that is brought under this article may be conducted before a presiding officer who is an administrative law judge of the Administrative Hearing Bureau of the Department.
   2. (2) The Department may serve notice of an investigation or enforcement action by electronic means to an insurer's attorney. The insurer's responses or portions thereof may be included in the record of a proceeding under this article, except as prohibited by Government Code Section 11415.60 or any applicable provision of the Insurance Code.
2. (b) If a civil penalty is sought in an adjudicative proceeding under this article, such proceeding shall be conducted in accordance with Chapter 5 of the Administrative Procedure Act (commencing with Section 11500 of the Government Code).

3. (c) The Department may elect the Administrative Procedure Act's informal hearing procedure (Article 10 of Chapter 4.5 (commencing with Section 11445.10 of the Government Code)) to seek a decision to compel an insurer to comply with, or cease and desist from violating, Insurance Code section 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, or 10144.57, or this article.

   1. (1) If interpretation of law or material facts are in dispute, the Department and insurer shall submit a pleading or motion on the law, facts, and application of law to such facts to the presiding officer at least 15 days in advance of the proceeding, or at least 5 days in advance if the Department considers the matter urgent.
   2. (2) The Department or presiding officer may convert the proceeding to a formal hearing that is subject to Chapter 5 of the Administrative Procedure Act (commencing with Section 11500 of the Government Code) at any time.
   3. (3) A proposed decision, or portion thereof, that is adopted by the Commissioner constitutes a final order. This subdivision (c)(3) does not limit the Commissioner's or Department's authority under Government Code section 11440.10 or 11517.
   4. (4) A decision that is sought pursuant to an informal hearing under this subdivision, and any other remedy that is available to the Commissioner, may be pursued while the Department is investigating or otherwise pursuing any other available remedies that may relate to an insurer's alleged conduct without prejudicing, to the full extent permitted by law, such other available remedies.
4. (d) To prevent or avoid an immediate danger to the public health, safety, or welfare of an insured person, the Department may elect to issue an emergency decision for temporary, interim relief under the procedure set forth in Article 13 of Chapter 4.5 (commencing with Section 11460.10 of the Government Code) when it has a reasonable basis to believe that an ongoing violation of Insurance Code section 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, or 10144.57, or this article, or a pattern or practice of past ongoing noncompliance therewith, may exist. An emergency decision may be issued to compel an insurer to comply at the time and in the manner prescribed therein. The Department shall demand of the insurer in advance that it comply and may, if practicable, afford the insurer an informal opportunity to be heard before issuing an emergency decision. After issuing an emergency decision, the Department shall conduct an informal or formal adjudicative proceeding as prescribed by Section 11460.60 of the Government Code.

5. (e) If the Commissioner determines that an insurer has violated Insurance Code section 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, or 10144.57, or this article, the Commissioner may, after appropriate notice and opportunity for hearing in accordance with the Administrative Procedure Act (Chapter 5 of Part 1 of Division 3 of Title 2 of the Government Code), by order, assess a civil penalty not to exceed five thousand dollars ($5,000) for each violation, or, if a violation was willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each violation.

   1. (1) A single act may constitute violations of both Sections 10144.5 and 10144.52, in which case penalties shall accrue for each such violation.
   2. (2) An ongoing violation shall be subject to civil penalties for each day that the violation continues.
   3. (3) If a violation affected one or more insureds, penalties shall accrue for each insured who was affected by each such violation.
6. (f) If the Department notifies an insurer in writing that a gap-filling clinical policy or the documentation maintained pursuant to section 2562.04 is not compliant with Insurance Code sections 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, or 10144.57, or this article, failing to discontinue use of the clinical policy in utilization review shall constitute a violation of Section 10144.52 for each day that the clinical policy remains in effect, following a 15-day grace period beginning on the date the insurer was notified. This subdivision does not preclude the Commissioner from assessing civil penalties for other violations of Section 10144.52.

7. (g) In assessing a civil penalty, the Commissioner shall consider, to the extent applicable or practicable, but shall not be limited to considering, the following factors:

   1. (1) The nature, scope, and gravity of the violation.
   2. (2) The degree of actual or potential harm to insureds, and detriment to the public, that resulted or could have resulted from the violation.
   3. (3) Whether, under the totality of the circumstances, the insurer made a good faith attempt to comply with Insurance Code sections 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, 10144.57, and this article.
   4. (4) The extent to which the insurer cooperated with the Department's investigation, and the nature of the cooperation.
   5. (5) The extent to which the insurer aggravated or mitigated any damage caused by the violation, and the nature of the damage.
   6. (6) The extent to which the insurer voluntarily took remedial action for past noncompliance and corrective action to assure prospective compliance, and the nature of the remedial or corrective action.
   7. (7) The insurer's history of noncompliance with the Insurance Code and regulations promulgated thereunder.
   8. (8) The amount of penalty that is necessary to deter similar violations in the future.
8. (h) An insurer shall be responsible for ensuring compliance with this article regardless of contracting arrangements and shall be subject to the assessment of civil penalties for violations of Insurance Code sections 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, or 10144.57, or this article, that are committed by any specialized behavioral health insurer, third-party administrator, contracting provider, or other entity that was acting on its behalf.
9. (i) A civil penalty under Insurance Code section 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, or 10144.57, or this article, shall not constitute an exclusive remedy. This section does not preclude the Department from pursuing any other remedies that are available by law or limit the Department's procedural or substantive authority under the Insurance Code or the Administrative Procedure Act. Omission from this section of any procedures that may be elected pursuant to Chapter 4.5 of the Administrative Procedure Act does not indicate that such procedures are unavailable, or that the Department may not elect such procedures.

Note: Authority cited: Sections 10144.4, 10144.5, 10144.52, 10144.53 and 10144.57, Insurance Code; and Sections 11400.20, 11425.50, 11445.20 and 11460.20, Government Code. Reference: Sections 790.035, 1065.1, 10144.4, 10144.5, 10144.51, 10144.52, 10144.53, 10144.57, 12919, 12921, 12921.1, 12921.2, 12921.3, 12921.4, 12921.5, 12924 and 12926, Insurance Code; and Sections 11400, 11400.20, 11410.10, 11415.10, 11415.60, 11425.50, 11440.10, 11440.20, 11445.20, 11445.50, 11460.20, 11460.40, 1146.60, 11470.10, 11501 and 11517, Government Code.

History

1. New section filed 6-26-2025; operative 6-26-2025 pursuant to Government Code section 11343.4(b)(3) (Register 2025, No. 26).