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6 This act modifies the Health Code to establish a Health Claims Processing and Health Claims
7 Auditing Act. The act requires health care service providers to timely respond to a health
8 claims adjudicator's request for information or face certain penalties. The act establishes
9 the elements of a claims auditing violation. The act creates a private right of action for
10 health claims adjudicators to sue service providers for penalties when service providers
11 violate the response time, or other provisions of the Health Claims Processing and Health
12 Claims Auditing Act, or if a service provider commits a fraudulent act under the Insurance
14 This act affects sections of Utah Code Annotated 1953 as follows:
16 26-45-101, Utah Code Annotated 1953
17 26-45-102, Utah Code Annotated 1953
18 26-45-103, Utah Code Annotated 1953
19 26-45-104, Utah Code Annotated 1953
20 26-45-105, Utah Code Annotated 1953
21 26-45-106, Utah Code Annotated 1953
22 Be it enacted by the Legislature of the state of Utah:
23 Section 1. Section 26-45-101 is enacted to read:
26 26-45-101. Title.
27 This chapter is known as the "Health Claims Processing and Health Claims Auditing Act."
28 Section 2. Section 26-45-102 is enacted to read:
29 26-45-102. Purpose.
30 The purpose of this chapter is to:
31 (1) enable health claims adjudicators to obtain and review information from service
32 providers related to health care services for which the service providers have requested or received
33 compensation, payment, or reimbursement; and
34 (2) provide a private right of action and remedy to health claims adjudicators.
35 Section 3. Section 26-45-103 is enacted to read:
36 26-45-103. Definitions.
37 As used in this chapter:
38 (1) "COBRA" means the health coverage continuation provisions of the federal
39 Consolidated Omnibus Budget Reconciliation Act of 1985.
40 (2) (a) "Conceal" means to take affirmative action to prevent others from discovering
42 (b) "Conceal" does not include inadvertent failure to disclose.
43 (3) "Group health plan" means the same as "Group Health Plan" under COBRA.
44 (4) "Health claims" means an electronic or written request for payment, compensation,
45 reimbursement, or benefit submitted to a health claims adjudicator for adjudication, review, audit,
46 or payment of benefits under any group health plan a group or individual, insurance policy, or other
47 similar arrangement.
48 (5) "Health claims adjudicator" means any of the entities described in this Subsection (5)
49 which adjudicate, review, audit, or pay for any health claims:
50 (a) an insurer described in Subsection 31A-31-102 (3);
51 (b) a third-party administrator; and
52 (c) an employee welfare fund or plan, whether or not it is subject to supervision by the
53 commissioner of insurance under Title 31A, Insurance Code, including a:
54 (i) self-insured plan;
55 (ii) reinsured plan;
56 (iii) medical, dental, optometric, or similar health service plan;
57 (iv) a plan qualified under the federal Employee Retirement Income Security Act of 1974;
59 (v) other trust.
60 (6) "Health claims audit" means an investigation conducted by a health claims adjudicator
61 for the purpose of determining whether there has been any improper, incomplete, or incorrect
62 billing, coding, or request for compensation, payment, or reimbursement.
63 (7) "Person" means an individual, firm, company, corporation, association, limited liability
64 company, partnership, organization, society, business trust, service provider, agency of
65 government, or any legal entity.
66 (8) "Service provider" means:
67 (a) an individual licensed or certified by the state under Title 58, Occupations and
69 (b) an individual similarly licensed in another jurisdiction;
70 (c) an individual practicing any nonmedical treatment rendered in accordance with a
71 recognized religious method of healing; and
72 (d) a hospital, healthcare facility, ambulance service, emergency medical service provider,
73 or other person whose services are compensated directly or indirectly by a group health plan.
74 Section 4. Section 26-45-104 is enacted to read:
75 26-45-104. Request for health claims information -- Notice to service provider.
76 (1) (a) A health claims adjudicator may send a written request for information to a service
77 provider for the purpose of processing one or more health claims or for conducting a health claims
78 audit in accordance with this section.
79 (b) The request for information must:
80 (i) identify the information or records sought with reasonable specificity;
81 (ii) include a release from the subject of the records or his legal representative in
82 compliance with normal professional practice and medical ethics, which release must be dated
83 within four years of the request for information; and
84 (iii) include a statement that the failure of the service provider to respond to the request
85 of the health claims adjudicator in accordance with this section may result in legal action by the
86 health claims adjudicator and the imposition of penalties under Section 26-45-106 .
87 (c) The information or records sought must:
88 (i) be related to treatment, services, or procedures for which the service provider has
89 requested or received compensation, payment, or reimbursement from the health claims
91 (ii) be related to treatment, services, or procedures which the service provider has
92 previously provided and which are relevant to a determination of whether the health claims
93 adjudicator is obligated in its own capacity, or on behalf of a third party, to pay health claims under
94 a group health plan, a group or individual insurance policy, or a similar arrangement; and
95 (iii) pertain to treatment or services provided within the four years preceding the date of
96 the request for information.
97 (2) A service provider who receives a written request for information in compliance with
98 this section must, within 20 days of receipt of the request, provide the health claims adjudicator
99 with the requested information that is in the possession of the service provider, unless the service
100 provider has requested and received the consent of the health claims adjudicator to extend the
101 20-day period.
102 (3) A provider who fails to comply with this section is subject to the penalties and
103 damages under Section 26-45-106 .
104 Section 5. Section 26-45-105 is enacted to read:
105 26-45-105. Health claims violations.
106 It is a violation of this chapter and is subject to sanctions under Section 26-45-106 , if the
107 service provider:
108 (1) commits a fraudulent insurance act within the meaning of Subsection 31A-31-103 (2);
109 (2) does not comply with the request for information requirements of Section 26-45-104 ;
110 (3) misrepresents or conceals a material fact concerning any of the following:
111 (a) a claim for payment or benefit pursuant to any group health plan;
112 (b) payments made in accordance with the terms of any insurance policy; or
113 (c) a treatment code, office visit code, Current Procedural Terminology Code, or other
114 similar code; or
115 (4) when submitting a claim to a health claims adjudicator knowingly with the intent to
116 deceive or defraud:
117 (a) withholds information material to the payment of the claim; or
118 (b) provides false or misleading information.
119 Section 6. Section 26-45-106 is enacted to read:
120 26-45-106. Remedies and enforcement.
121 (1) If a service provider commits a violation under Section 26-45-105 , a health claims
122 adjudicator has a private right of action and remedy against the service provider. The private right
123 of action and remedy includes the right of the health claims adjudicator to pursue an action in court
125 (a) enforce provisions of this chapter;
126 (b) recover the penalties described in Subsection (2);
127 (c) obtain preliminary and other equitable or declaratory relief; and
128 (d) recover an award of attorney's fees and litigation costs reasonably incurred by the
129 health claims adjudicator in pursuing the private right of action.
130 (2) (a) A service provider who commits a health claim violation under Section 26-45-105
131 shall pay to the health claims adjudicator the following penalties:
132 (i) for the first violation within a 90-day period for the same or a different health claim,
133 a penalty equal to the greater of $100 or 1/3 of the amount of the health claim;
134 (ii) for the second violation within a 90-day period for the same or a different health claim,
135 a penalty equal to the greater of $500 or 2/3 of the amount of the health claim; and
136 (iii) for the third violation within a 90-day period for the same or a different health claim,
137 a penalty equal to the greater of $1,000 or 100% of the amount of the health claim.
138 (b) If the service provider does not pay the penalties imposed under this Subsection (2)(a)
139 to the health claims adjudicator within 20 days of written demand by the health claims adjudicator,
140 the health claims adjudicator may offset the penalties against any current and future payments
141 otherwise due from the health claims adjudicator to the service provider on other health claims.
142 If no payments are currently due from the health claim adjudicator to the service provider on other
143 health claims, the health claims adjudicator may pursue a private action against the service
144 provider in accordance with Subsection (1).
145 (c) A penalty imposed under this Subsection (2):
146 (i) must be separately identified on the documentation used by the health claims
147 adjudicator to pay or adjust a health claim; and
148 (ii) shall be automatically assessed without further action or notice by the health claims
150 (d) Any penalty or award of costs and fees imposed under this section may not be billed
151 or charged by the service provider to the patient or the person covered by a group health plan,
152 insurance policy, or similar arrangement.
Legislative Review Note
as of 2-1-01 12:54 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.