An Act
ENROLLED SENATE
BILL NO. 557 By: Montgomery of the Senate
and
Sneed and Waldron of the
House
An Act relating to the Unfair Claims Settlement
Practices Act; amending 36 O.S. 2021, Section 1250.5,
as amended by Section 1, Chapte r 266, O.S.L. 2022 ( 36
O.S. Supp. 2022, Section 1250.5) , which relates to
acts by an insurer; providing that denial of payment
to claimant for certain services by certain providers
shall constitute an un fair claim settlement practice;
requiring review of certain mental health and
substance use disorder claims by provider with
certain credentials; and providing an effective date.
SUBJECT: Unfair Claims Settlement Practices Act
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 36 O.S. 2021, Section 1250.5, as
amended by Section 1, Chapter 266, O.S.L. 2022 (36 O.S. Supp. 2022,
Section 1250.5), is amended to read as follows:
Section 1250.5. Any of the following acts by an insurer, i f
committed in violation of Section 1250. 3 of this title, constitutes
an unfair claim settlement practice exclusive of paragraph 16 of
this section which shall be applic able solely to health benefit
plans:
1. Failing to fully disc lose to first-party claimants,
benefits, coverages, or other prov isions of any insurance policy or
insurance contract when the benefits, coverages or other provisions
are pertinent to a claim;
ENR. S. B. NO. 557 Page 2
2. Knowingly misrepresenting to claimants pertinent facts or
policy provisions relating to coverages at issue;
3. Failing to adopt and implement reasonable standards for
prompt investigations of claims arising under i ts insurance policies
or insurance contracts;
4. Not attempting in good faith to effectuate prompt, fair and
equitable settlement of claims submitted in which liability has
become reasonably clear;
5. Failing to comply with the provisions of Section 1219 of
this title;
6. Denying a claim for failure to exhibit the property without
proof of demand and unfounded refusal by a cl aimant to do so;
7. Except where there is a time limit specified in the policy,
making statements, written or otherwise, which req uire a claimant to
give written notice of loss or proof of loss within a specified time
limit and which seek to relieve the c ompany of its obligations if
the time limit is not complied with unless the failure t o comply
with the time limit prejudices the ri ghts of an insurer. Any policy
that specifies a time limit covering damage to a roof due to wind or
hail must allow the filing of claims after the first anniv ersary but
no later than twenty-four (24) months after the date of the loss, if
the damage is not evident without inspection;
8. Requesting a claimant to sign a release that extends beyond
the subject matter that gav e rise to the claim payment;
9. Issuing checks, drafts or electronic payment in partial
settlement of a loss or claim under a specified coverage which
contain language releasing an insurer or its insured from its total
liability;
10. Denying payment to a claimant on the grounds that services,
procedures, or supplies provided by a treating phy sician, or a
hospital, or person or entity licensed or otherwise authorized to
provide health care services were not medically necess ary unless the
health insurer or administrator, as defined in Section 1442 of this
title, first obtains an opinion from any provider of health care
ENR. S. B. NO. 557 Page 3
licensed by law and prece ded by a medical examination or claim
review, to the effect that the services, proc edures or supplies for
which payment is being denied were not medically necessary. In the
event that claims for mental hea lth or substance use disorder
treatments and services are under review, the reviewing health care
provider shall have appropriate, qualified, and specialized
credentials with respect to the services and treatments. Upon
written request of a claimant, treating physician, or hospital, or
authorized person or entity, the opinion shall be set forth in a
written report, prepared and signed by the review ing physician. The
report shall detail which specific services, procedures, or supplies
were not medically ne cessary, in the opinion of the reviewing
physician, and an explanation of that co nclusion. A copy of each
report of a reviewing physician shall b e mailed by the health
insurer, or administrator, postage prepaid, to the claimant,
treating physician, or hospital, or authorized person or entity
requesting same within fifteen (15) days after receipt of the
written request. As used in this paragraph, “physician” means a
person holding a valid license to practice medicine and surgery ,
osteopathic medicine, podiatric medicine, dentistry, chiropractic,
or optometry, pursua nt to the state licensing provisions of Title 59
of the Oklahoma Statutes;
11. Compensating a reviewing phys ician, as defined in paragraph
10 of this section, on the basis of a percentage of the amount by
which a claim is reduced for payment;
12. Violating the provisions of the Health Care Fraud
Prevention Act;
13. Compelling, without just cause, policyholders to institute
suits to recover amounts due under its insurance policies or
insurance contracts by offering substantially less than the amounts
ultimately recovered in suits brought by them, when th e
policyholders have made claims f or amounts reasonably sim ilar to the
amounts ultimately recovered;
14. Failing to maintain a complete record of all complaints
which it has received during the preceding t hree (3) years or since
the date of its last fina ncial examination conducted or acce pted by
the Commissioner, whichever time is longer. This record shall
indicate the total number of complaints, their classification by
ENR. S. B. NO. 557 Page 4
line of insurance, the nature of eac h complaint, the disposition of
each complaint, and the time it took to process each complaint. For
the purposes of this paragraph, “complaint” means any written
communication primarily expressing a grievance;
15. Requesting a refund of all or a portion of a payment of a
claim made to a claimant more than twelve (12) months or a health
care provider more tha n eighteen (18) months after the payment is
made. This paragraph shall not apply:
a. if the payment was made because of fraud committed by
the claimant or health car e provider, or
b. if the claimant or health care provider has otherw ise
agreed to make a refu nd to the insurer for overpayment
of a claim;
16. Failing to pay, or requesting a ref und of a payment, for
health care services covered under the policy if a heal th benefit
plan, or its agent, has provided a preauthorization or
precertification and verifi cation of eligibility for those health
care services. This paragraph shall not apply if:
a. the claim or payment was made because of fraud
committed by the claima nt or health care provider,
b. the subscriber had a preexisting excl usion under the
policy related to the service provided, or
c. the subscriber or employer failed to pay the
applicable premium and all grace periods and
extensions of coverage have expired;
17. Denying or refusing to accept an application for life
insurance, or refusing to renew, cancel, restrict or otherwise
terminate a policy of life insurance, or charge a differ ent rate
based upon the lawful travel destination of an applicant or insured
as provided in Section 40 24 of this title; or
18. As a health insurer that provides pharmacy benefits or a
pharmacy benefits manager that administers pharmacy benefits for a
health plan, failing to include any amount paid by an enrollee or on
ENR. S. B. NO. 557 Page 5
behalf of an enrollee by anoth er person when calculating the
enrollee’s total contribution to an out -of-pocket maximum,
deductible, copayment, coinsurance or other cost-sharing
requirement.
However, if, under federal law, application of this paragraph
would result in health savings account ineligibility under Sect ion
223 of the federal Internal Revenue Code, as amended, this
requirement shall apply only for health savings accounts with
qualified high-deductible health plans with respect to the
deductible of such a plan after t he enrollee has satisfied the
minimum deductible, except with respect to items or ser vices that
are preventive care pursuant to Section 223(c)(2)(C) of the federal
Internal Revenue Code, as amended, in which case the requirements of
this paragraph shall apply regardless of whether the minimum
deductible has been satisfied.
SECTION 2. This act shall become effective November 1, 2023.
ENR. S. B. NO. 557 Page 6
Passed the Senate the 22nd day of February, 2023.
Presiding Officer of the Senate
Passed the House of Representatives the 27th day of April, 2023.
Presiding Officer of the House
of Representatives
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this _______ _____________
day of _________________ __, 20_______, at _______ o'clock _______ M.
By: _______________________________ __
Approved by the Governor of the State of Oklahoma this _____ ____
day of _________________ __, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this _______ ___
day of __________________, 20 _______, at _______ o'clock _______ M.
By: _______________________________ __