California Backs Off On Disability Procedure (Updated)

The California Department of Insurance has agreed to go through a formal implementation process before trying to withdraw approval for disability insurance policies.

California regulators accepted that restriction Monday to settle a legal dispute with a group of plaintiffs led by America’s Health Insurance Plans, Washington, and the Association of California Life & Health Insurance Companies, Sacramento, Calif.

The parties agreed that the insurers would comply with California’s tough new disability policy standards, but that they will do so by submitting revised policies through a new, streamlined approval process.

Regulators have agreed to require changes only the disability policy provisions that must be updated as a result of the adoption of the settlement agreement, according to the text of the proposed settlement agreement.

Regulators also have agreed to delay withdrawing support for any disability policy because it violates the provisions of the settlement while waiting for a similar court case, Hartford Life Insurance Company vs. State of California, which was filed in a state court in San Francisco, to be resolved.

The judge at the trial court level in the Hartford Life case has proposed ruling in favor of the California Department of Insurance, but Hartford Life, Hartford, has filed objections to the proposed decision, and the matter remains with the trial court, according to the proposed settlement agreement.

California regulators will not withdraw approval for disability policies if the Hartford Life trial court decision is appealed and a court issues a stay of the trial court decision pending appeal, according to the proposed settlement agreement.

The effective date of the agreement could be Friday, according to the proposed settlement agreement.