Trade groups representing disability insurers are contemplating legal action if the California Insurance Department decides to unilaterally change key provisions of existing disability insurance contracts.
Industry sources said such a suit would be contingent on what happens at a private meeting scheduled after press time on Nov. 17 between industry representatives and California Insurance Department officials.
If the department, as expected, notifies the industry at the meeting that it will go ahead with plans to rescind key components of existing disability contracts, such a suit will be filed, two industry officials said.
Industry support for such legal action was sought in a memo sent by America’s Health Insurance Plans to its members on Nov. 16.
“The Department has scheduled a meeting on the proposed changes for Thursday, Nov. 17,” the memo said. “While AHIP will appear at this meeting, along with members with disability business in California, the hearing appears to be pro forma and unlikely to result in any changes in the Department’s likely insistence that substantial changes be made in disability policies,” the memo said.
While details still are being worked out, such litigation could be filed in state court, seeking an injunction to prevent enforcement of the policy changes until a court can assess whether the department has complied with California law, including notification and comment requirements, the memo said.