Effective Date of Rule: Thirty-one days after filing.

     Purpose: These new rules inform and clarify for health and disability carriers that the Washington insurance code prohibits the use of a discretionary clause. This is consistent with the NAIC endorsement of the prohibition of discretionary clauses as well as similar prohibition adopted by other state insurance regulators.

     Statutory Authority for Adoption: RCW 48.20.450, 48.20.460, 48.30.010, 48.44.050, 48.46.200, and 48.02.060.

     Other Authority: RCW 48.18.110, 48.44.020, and 48.46.060.

      Adopted under notice filed as WSR 09-07-030 on March 10, 2009.

     A final cost-benefit analysis is available by contacting Donna Dorris, P.O. Box 40258, Olympia, WA 98504, phone (360) 725-7040, fax (360) 586-3109, e-mail DonnaD@oic.wa.gov.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 4, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 4, Amended 0, Repealed 0.

     Date Adopted: August 5, 2009.

Mike Kreidler

Insurance Commissioner

OTS-2184.1

NEW SECTION
WAC 284-44-015   Discretionary clauses prohibited.   (1) No contract may contain a discretionary clause. "Discretionary clause" means a provision that purports to reserve discretion to a carrier, its agents, officers, employees, or designees in interpreting the terms of a contract or deciding eligibility for benefits, or requires deference to such interpretations or decisions, including a provision that provides for any of the following results:

     (a) That the carrier's interpretation of the terms of the contract is binding;

     (b) That the carrier's decision regarding eligibility or continued receipt of benefits is binding;

     (c) That the carrier's decision to deny, modify, reduce or terminate payment, coverage, authorization, or provision of health care service or benefits, is binding;

     (d) That there is no appeal or judicial remedy from a denial of a claim;

     (e) That deference must be given to the carrier's interpretation of the contract or claim decision; and

     (f) That the standard of review of a carrier's interpretation of the contract or claim decision is other than a de novo review.

     (2) Nothing in this section prohibits a carrier from including a provision in a contract that informs an insured that as part of its routine operations the carrier applies the terms of its contracts for making decisions, including making determination regarding eligibility, receipt of benefits and claims, or explaining its policies, procedures, and processes.

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OTS-2185.1

NEW SECTION
WAC 284-46-015   Discretionary clauses prohibited.   (1) No contract may contain a discretionary clause. "Discretionary clause" means a provision that purports to reserve discretion to a health maintenance organization, its agents, officers, employees, or designees in interpreting the terms of a contract or deciding eligibility for benefits, or requires deference to such interpretations or decisions, including a provision that provides for any of the following results:

     (a) That the carrier's interpretation of the terms of the contract is binding;

     (b) That the carrier's decision regarding eligibility or continued receipt of benefits is binding;

     (c) That the carrier's decision to deny, modify, reduce or terminate payment, coverage, authorization, or provision of health care service or benefits, is binding;

     (d) That there is no appeal or judicial remedy from a denial of a claim;

     (e) That deference must be given to the carrier's interpretation of the contract or claim decision; and

     (f) That the standard of review of a carrier's interpretation of the contract or claim decision is other than a de novo review.

     (2) Nothing in this section prohibits a carrier from including a provision in a contract that informs an insured that as part of its routine operations the carrier applies the terms of its contracts for making decisions, including making determination regarding eligibility, receipt of benefits and claims, or explaining its policies, procedures, and processes.

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OTS-2186.1

NEW SECTION
WAC 284-50-321   Discretionary clauses prohibited.   (1) No disability insurance policy may contain a discretionary clause. "Discretionary clause" means a provision that purports to reserve discretion to an insurer, its agents, officers, employees, or designees in interpreting the terms of a policy or deciding eligibility for benefits, or requires deference to such interpretations or decisions, including a provision that provides for any of the following results:

     (a) That the insurer's interpretation of the terms of the policy is binding;

     (b) That the insurer's decision regarding eligibility or continued receipt of benefits is binding;

     (c) That the insurer's decision to deny, modify, reduce or terminate payment, coverage, authorization, or provision of health care service or benefits, is binding;

     (d) That there is no appeal or judicial remedy from a denial of a claim;

     (e) That deference must be given to the insurer's interpretation of the contract or claim decision; and

     (f) That the standard of review of an insurer's interpretation of the policy or claim decision is other than a de novo review.

     (2) Nothing in this section prohibits an insurer from including a provision in a policy that informs an insured that as part of its routine operations the insurer applies the terms of its policies for making decisions, including making determination regarding eligibility, receipt of benefits and claims, or explaining its policies, procedures, and processes.

[]

OTS-2187.1

NEW SECTION
WAC 284-96-012   Discretionary clauses prohibited.   (1) No disability insurance policy may contain a discretionary clause. "Discretionary clause" means a provision that purports to reserve discretion to an insurer, its agents, officers, employees, or designees in interpreting the terms of a policy or deciding eligibility for benefits, or requires deference to such interpretations or decisions, including a provision that provides for any of the following results:

     (a) That the insurer's interpretation of the terms of the policy is binding;

     (b) That the insurer's decision regarding eligibility or continued receipt of benefits is binding;

     (c) That the insurer's decision to deny, modify, reduce or terminate payment, coverage, authorization, or provision of health care service or benefits, is binding;

     (d) That there is no appeal or judicial remedy from a denial of a claim;

     (e) That deference must be given to the insurer's interpretation of the contract or claim decision; and

     (f) That the standard of review of an insurer's interpretation of the policy or claim decision is other than a de novo review.

     (2) Nothing in this section prohibits an insurer from including a provision in a policy that informs an insured that as part of its routine operations the insurer applies the terms of its policies for making decisions, including making determination regarding eligibility, receipt of benefits and claims, or explaining its policies, procedures, and processes.

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