Proposition 200: Text of Proposed Law

This initiative measure is submitted to the people in accordance with the provisions of Article II, Section 8 of the Constitution. This initiative measure adds sections to the Insurance Code; therefore, new provisions proposed to be added are printed in italic type to indicate that they are new.

PROPOSED LAW

Pure No-Fault Auto Insurance Act

SECTION ONE. This Act shall be known and may be cited as the "Pure No-Fault Auto Insurance Act."

SECTION TWO. The People of the State of California find and declare:
(a) The auto liability insurance system is a terrible deal for California consumers. It costs too much money and delivers too little protection. Under this system:
(1) No matter how much insurance motorists buy, they get no guarantee that their medical bills and wage losses will be covered if they are injured in a car accident. Seriously injured accident victims typically recover only a small fraction of their losses from auto insurance.
(2) Motorists who violate the law and drive uninsured have exactly the same right to collect liability insurance benefits as do motorists who have insurance. As a result, policyholders are forced to spend well over $1 billion a year to subsidize uninsured motorists.
(3) Only about one-fourth of every dollar spent on insurance covering bodily injury actually goes to pay for accident victims' medical expenses and lost wages. More money--one-third of every such insurance dollar--goes to pay legal fees.
(4) Fraud is rampant. The system actually encourages unscrupulous claimants, lawyers, and health-care providers to defraud insurance companies, and thereby steal from law-abiding policyholders.
(b) California motorists would be better served by an auto insurance system that replaces liability claims and lawsuits with insurance that gives accident victims the right to collect benefits from their own insurance companies without having to prove fault on the part of another driver. Such a system would:
(1) Guarantee that policyholders injured in accidents would indeed be compensated.
(2) Prevent uninsured drivers from collecting insurance benefits paid for by others.
(3) Put more of the insurance dollars paid by motorists into the hands of accident victims than into the pockets of lawyers.
(4) Significantly reduce the incentives to file false or inflated claims.
(5) Reduce the cost of auto insurance.
(c) This new auto insurance system should:
(1) Require motorists to carry enough insurance to cover themselves and their passengers for the economic losses they might incur in an automobile accident, such that, in the vast majority of accidents, the cost of the accident would not be shifted to others.
(2) Allow motorists to choose whether or not to buy even higher limits of coverage, as well as additional coverage for pain and suffering.
(3) Require insurance companies to pay claims within 30 days.
(4) Limit the fees paid to health-care providers for treatment and services covered by auto insurance.
(5) Provide for disputes over claims to be resolved quickly and efficiently through arbitration, rather than through lengthy and costly court proceedings.
(6) Allow drivers who injure other people intentionally, or while driving under the influence of alcohol or drugs, or while committing a felony, to be sued.

SECTION THREE. Part 8 (commencing with Section 12800) is added to Division 2 of the Insurance Code, to read as follows:

Chapter 1. Motor Vehicle Insurance

Article 1. Title, Coverage, and Benefits

12800. [TITLE] This chapter shall be known and may be cited as the "Pure No-Fault Auto Insurance Act".
12801. [REQUIRED COVERAGE FOR VEHICLES REGISTERED OR OPERATED IN THIS STATE] (a) Each owner of a motor vehicle required to be registered in this state or which is operated in this state shall maintain property damage liability and personal injury protection (PIP) insurance with respect to each such vehicle, in accordance with this chapter. No motor vehicle registration shall be issued or renewed unless the owner of that vehicle furnishes proof, in a form satisfactory to the Department of Motor Vehicles, that the vehicle is insured as required by this chapter.
(b) The property damage liability insurance required to be maintained shall cover an insured's tort liability for property damage, up to a limit of at least $5,000 for any accident involving the insured vehicle that occurs in this state.
(c) (1) The PIP insurance required to be maintained shall provide medical, rehabilitation, wage-loss, replacement-services, and death benefits to covered persons, in accordance with this chapter. Except as provided by paragraph (2), the PIP insurance required to be maintained shall provide up to at least $1 million in benefits, as described in subdivision (a) of Section 12802, to each covered person.
(2) An owner of a motor vehicle may satisfy the PIP insurance requirement, if he or she has signed the waiver-of-full-benefits statement required under Section 12803, by maintaining PIP insurance that provides up to at least $50,000 in benefits, as described in subdivision (b) of #italic#Section 12802, to each covered person. This paragraph does not apply to a vehicle that is not owned by a natural person or persons, or that is used to carry passengers for hire.
(3) Notwithstanding any other provision of this section, the PIP insurance required to be maintained shall provide up to $1 million in PIP benefits, as described in subdivision (a) of Section 12802, and up to $250,000 in supplemental PIP benefits, as described in subdivision (a) of Section 12804, with respect to:
(A) Any pedestrian, bicyclist, or other person not occupying a motor vehicle who is injured or killed in this state as a result of being struck by the covered vehicle. A person "struck by" a motor vehicle, as that term is used in this section and elsewhere in this chapter, means a person sustaining bodily injury as the direct and proximate result of the operation of a motor vehicle. If such bodily injury is not caused by actual physical contact with a motor vehicle, the applicable insurer is not obligated to provide PIP or supplemental PIP benefits unless the testimony of a competent and disinterested witness who is not a claimant under the insurance coverage applying to the injured person corroborates the injured person's claim that the operation of a motor vehicle was a direct and proximate cause of his or her injuries.
(B) Any person who is not the owner of a vehicle registered in this state or required to be registered in this state nor a resident relative of an owner of such a vehicle and who is injured or killed as a result of an accident in this state while occupying the covered vehicle.
(d) Every policy of insurance issued in accordance with this section shall provide at least the minimum insurance coverage required under the laws of any other state, district, commonwealth, territory, or possession of the United States or any province or territory of Canada in which the insured motor vehicle is operated.
12802. [COVERAGE OPTIONS] (a) Each insurer shall make available standard limits PIP insurance. Standard limits PIP insurance shall provide up to a total of $1 million to each covered person in medical, rehabilitation, wage-loss, replacement-services, and death benefits, in accordance with this chapter, subject to the following limits:
(1) Wage-loss benefits shall be paid to a covered person up to a maximum of $2,500 per month.
(2) Replacement-services benefits shall be paid to a covered person up to a maximum of $2,500 per month.
(3) Death benefits shall be paid in the amount of $50,000 to each surviving dependent up to a maximum of $200,000, divided equally among all such dependents if there are more than four, or $50,000 to the estate if there are no such dependents.
(b) Each insurer shall make available minimum limits PIP insurance. Minimum limits PIP insurance shall provide up to a total of $50,000 to each covered person in medical, rehabilitation, wage-loss, replacement-services, and death benefits, in accordance with this chapter, subject to the following limits:
(1) Wage-loss benefits shall be paid to a covered person up to a maximum of $1,000 per month.
(2) Replacement-services benefits shall be paid to a covered person up to a maximum of $1,000 per month.
(3) Death benefits shall be paid in the amount of $50,000, which shall be divided equally among all surviving dependents, or $25,000 to the estate if there are no such dependents.
(c) Each insurer shall also make available PIP insurance with total limits per covered person of $250,000, $500,000, $2,000,000 and $5,000,000, except that an insurer with total written private passenger automobile insurance premiums in this state of less than $100 million for the most recent year for which such data is available is not required to make available PIP insurance with limits in excess of standard limits PIP insurance. An insurer may also make available PIP insurance with limits above $50,000 or providing benefits, subject to approval by the commissioner, other than those specified by this section.
12803. [WAIVER-OF-FULL-BENEFITS STATEMENT] (a) An insurer shall obtain a signed waiver-of-full-benefits statement from an applicant for insurance or named insured prior to selling such person PIP insurance providing benefits less than those provided under standard limits PIP insurance. The limit on PIP benefits imposed under an insurance policy purchased in accordance with this section shall apply to all persons covered under such policy, except as provided by paragraph (3) of subdivision (c) of Section 12801. A signed waiver-of-full-benefits statement shall apply to all transfer, renewal, and replacement policies until revoked in writing by a named insured.
(b) The waiver-of-full-benefits statement shall be written in plain language. It shall advise each vehicle owner of his or her right to purchase PIP insurance with a coverage limit of at least $1 million. It shall also advise each vehicle owner that by maintaining PIP insurance with limits lower than standard limits PIP insurance he or she increases the risk that in the event he or she or any of his or her resident relatives is seriously injured in an accident, the PIP benefits provided to him or her may not be enough to cover all of his or her economic losses. The commissioner shall establish the wording of the statement and the procedures for its use.
12804. [SUPPLEMENTAL PIP INSURANCE FOR PAIN AND SUFFERING] (a) Each insurer shall make available supplemental PIP insurance that pays compensation for the pain and suffering of a person injured in an accident who suffers permanent and serious impairment of body function or permanent and serious disfigurement. Benefits under this insurance shall be paid according to a schedule established by the commissioner that sets forth the amount of payment to be made to a covered person based on the severity of the injury suffered. Such schedule shall provide for a maximum payment of $250,000 to a covered person for pain and suffering arising from injuries suffered in any one accident.
(b) Subject to approval by the commissioner, insurers may also make available supplemental PIP insurance that pays compensation for pain and suffering resulting from any injury sustained in an accident. Such insurance may, but need not, pay compensation according to a schedule.
12805. [AVAILABILITY OF COVERAGE] Except as provided by Sections 1861.02 and 11628, an insurer shall not refuse to sell to any motor vehicle owner who qualifies as a good driver any of the coverages it is required to make available under this chapter. The California Automobile Assigned Risk Plan shall make available PIP insurance with limits of $50,000, $250,000, $500,000 and $1,000,000 and supplemental PIP insurance as described in subdivision (a) of Section 12804. The term "good driver" refers to any person who qualifies as such under Section 1861.025.
12806. [PREMIUM-REDUCTION OPTIONS] (a) Notwithstanding any provision of this chapter, the commissioner may approve with appropriate premium reductions the following policy options with respect to PIP insurance:
(1) Policies that carry deductibles, provided that the deductible for medical benefits under minimum limits PIP insurance not exceed $1,000 per covered person.
(2) Policies that extend the one-week period between the date an injury is sustained and the date coverage of wage-loss commences, provided that such period not exceed three weeks under a minimum limits PIP insurance policy.
(b) The PIP insurance limitations authorized by subdivision (a) shall apply only to the named insured and resident relatives of the named insured. An insurer shall disclose to an applicant for insurance the effect of each such policy option, with regard to premiums and benefits, and shall obtain a copy of such disclosure signed by the applicant before issuing a policy with a premium-reducing option.
(c) Each insurer shall make available, at appropriately reduced premiums, collision and comprehensive insurance with deductibles of $250, $500, $750, and $1,000, in addition to any other deductible amounts an insurer wishes to make available.
12807. [PERSONS COVERED UNDER PIP INSURANCE] (a) PIP insurance and supplemental PIP insurance covering a motor vehicle registered in this state or required to be registered in this state shall provide for applicable benefits to be paid with respect to the following persons:
(1) Any person who is injured or killed as a result of an accident while occupying the covered vehicle in any state, district, commonwealth, territory, or possession of the United States or any province or territory of Canada, except a person who is injured or killed while voluntarily occupying the vehicle while it is being operated without the owner's permission.
(2) The named insured and resident relatives of the named insured who are injured or killed as a result of an accident while occupying any motor vehicle in any state, district, commonwealth, territory, or possession of the United States or any province or territory of Canada.
(3) Any pedestrian, bicyclist or other person not occupying a motor vehicle who is injured or killed in this state as a result of being struck by the covered vehicle, in accordance with paragraph (3) of subdivision (c) of Section 12801.
(4) The named insured and any resident relative of the named insured who is injured or killed in this state as a result of being struck by any motor vehicle while on foot, on a bicycle, or otherwise not occupying a motor vehicle.
(5) Any person riding a motorcycle, except a motorcycle that is not insured as required by this chapter, who is injured or killed in this state as a result of a collision with the covered vehicle, if the covered vehicle is not also a motorcycle, in accordance with subdivision (f).
(b) PIP insurance and supplemental PIP insurance covering a motor vehicle operated in this state which is not registered in this state nor required to be registered in this state shall provide for applicable benefits to be paid with respect to the following persons:
(1) Any person who is injured or killed as a result of an accident in this state while occupying the covered vehicle, except a person who is injured or killed while voluntarily occupying the vehicle while it is being operated without the owner's permission.
(2) Any pedestrian, bicyclist or other person not occupying a motor vehicle who is injured or killed in this state as a result of being struck by the covered vehicle, in accordance with paragraph (3) of subdivision (c) of Section 12801.
(3) Any person riding a motorcycle, except a motorcycle that is not insured as required by this chapter, who is injured or killed in this state as a result of a collision with the covered vehicle, if the covered vehicle is not also a motorcycle, in accordance with subdivision (f).
(c) Except as provided in subdivision (d), a person who is entitled to PIP or supplemental PIP benefits under both the insurance applying to the vehicle in which the person was injured or killed and the insurance applying to a vehicle owned by the person or a resident relative of the person shall be provided benefits as follows: The insurer providing the insurance applying to a vehicle owned by the person or a resident relative of the person shall provide benefits up to the limits of such insurance. The insurer providing insurance applying to the vehicle in which the person was injured or killed shall provide any benefits covered under such insurance to the extent that such benefits are in excess of the limits of, or are not covered under, the insurance applying to a vehicle owned by the person or a resident relative of the person.
(d) A person injured or killed while occupying a vehicle owned by himself or herself or a resident relative of his or hers shall be provided benefits only under the PIP and supplemental PIP insurance applying to that vehicle. An owner of a motor vehicle that is not insured as required by this chapter and his or her resident relatives are not entitled to PIP or supplemental PIP benefits under any insurance policy if injured or killed while occupying that vehicle, except as provided by paragraph (3) of subdivision (a) of Section 12841.
(e) A person who is injured or killed as a result of being struck by a motor vehicle while not occupying a vehicle and who is entitled to PIP or supplemental PIP benefits under both the insurance covering the vehicle which struck the person and the insurance covering a vehicle owned by the person or a resident relative of the person shall be provided benefits as follows: The insurer providing the insurance applying to a vehicle owned by the person or a resident relative of the person shall provide benefits up to the limits of such insurance. The insurer providing the insurance applying to the vehicle which struck the person shall provide any benefits required to be provided under paragraph (3) of subdivision (c) of Section 12801 that are in excess of the limits of, or are not covered under, the insurance applying to a vehicle owned by the person or a resident relative of the person.
(f) A person who is injured or killed while riding a motorcycle that is insured as required by this chapter and is involved in a collision with another motor vehicle other than a motorcycle, shall be provided benefits under the insurance policy applying to the motorcycle. However, the insurer issuing such policy is entitled to reimbursement from the insurer issuing the policy which applies to the vehicle involved in the collision with the motorcycle for those benefits it has provided which are covered under minimum limits PIP insurance.
(g) Notwithstanding any other provision of this chapter, neither PIP benefits nor supplemental PIP benefits shall be provided to any operator of a motor vehicle injured or killed in an accident that he or she intentionally caused. For purposes of this subdivision, an operator of a motor vehicle intentionally causes an accident if that person acts or fails to act for the purpose of causing an accident or with clear knowledge that an accident is substantially certain to follow. An operator of a motor vehicle does not intentionally cause an accident (1) merely because his or her act or failure to act is intentional or done with the realization that it creates a grave and substantial risk of causing an accident; or (2) if the act or omission causing an accident is for the purpose of averting an accident.
(h) Regardless of the number of motor vehicles involved, the number of persons covered or claims made, vehicles insured or premiums paid, the limit of coverage under PIP or supplemental PIP insurance shall not be added to or stacked upon limits for such insurance applying to other vehicles to determine the amount of benefits to which a covered person is entitled, except as specified by this section.
(i) An insurer that provides PIP benefits under this chapter shall be subrogated to any tort claim that an applicable covered person may have.
12808. [PROMPT PAYMENT OF BENEFITS] (a) Benefits that are required to be provided under this chapter are payable as loss accrues. Such benefits are overdue if not paid within 30 days after an insurer receives reasonable documentation of the fact and amount of loss sustained.
(b) If reasonable documentation is not supplied as to the entire claim, the amount supported by reasonable documentation is overdue if not paid within 30 days after the documentation is received by the insurer. Any part of the remainder of the claim that is later supported by reasonable documentation is overdue if not paid within 30 days after the documentation is received by the insurer.
(c) An insurer owing overdue benefits shall pay to the applicable covered person or health-care provider an interest penalty of 24% per annum with respect to such benefits. Such insurer shall also pay reasonable attorney's fees and costs incurred by a covered person or health-care provider in obtaining payment of an overdue amount. The amount of such attorney's fees and costs that are reasonable shall be determined by the arbitrator who arbitrates the dispute.
(d) This section does not apply to payments withheld by insurers for medical treatment that has been referred to a peer review organization for review in accordance with Section 12821.
12809. [PROHIBITED PREMIUM INCREASES] An insurer shall not increase the premium of an insured solely because of a claim for PIP benefits or collision damage to the insured vehicle, unless that insured was 51 percent or more responsible for causing the accident. The commissioner may impose a civil penalty of up to $1,000 for each violation of this section. Such penalty shall be in addition to any penalty imposed under Section 790.035.
12810. [MEDICAL AND REHABILITATION BENEFITS] (a) Payments shall be made for all medically appropriate products, services, and accommodations provided to a covered person for the treatment of an injury arising out of an accident, up to the applicable PIP insurance limits.
(b) Upon receipt of reasonable documentation, an insurer shall pay or reimburse health-care providers directly for covered products, services, or accommodations provided, except with regard to any applicable deductible. Such documentation shall include a copy of the health-care provider's bill signed by the covered person affirming that he or she has received the services, products, and accommodations for which the insurer is being billed. A health-care provider may not bill a covered person directly, but rather must bill the applicable insurer for the amount payable, except with regard to any applicable deductible.
(c) Medical benefits include personal assistance benefits for covered persons. Reasonable payment shall be made for expenses incurred for home assistance provided to a covered person who was injured as a result of an accident if that person is unable, as a result of that accident, to care for himself or herself or to perform the essential activities of everyday life without assistance.
(d) Expenses shall be paid for rehabilitation services provided that they are reasonably likely to enable an injured person to re-acquire employment skills. Expenses need not be covered for such services provided for more than two years following the date of the accident.
12811. [WAGE-LOSS BENEFITS] (a) Payment shall be made in accordance with this section, up to the applicable PIP insurance limits, for wage loss sustained by a covered person as a result of an injury arising out of an accident.
(b) Payment shall be made only with respect to wage loss sustained 7 days or more after the date of the accident which caused the injury. During the one-year period following the date of the accident, benefit payments shall be made for 85% of lost net income for as long as the covered person's injuries prevent the person from engaging in the employment in which he or she was engaged immediately prior to the accident. If the covered person's injuries, after more than one year following the date of the accident, continue to prevent him or her from engaging in such employment, benefit payments shall continue to be made only if the person endeavors to engage in employment of whatever type he or she is capable of performing. If, pursuant to such requirement, the covered person engages in a form of employment other than that in which he or she was engaged immediately prior to the accident, the person shall receive payment for the difference between his or her resulting net income and his or her net income immediately prior to the accident. If the covered person's injuries prevent the person, after more than one year following the date of the accident, from engaging in any gainful employment, the person shall continue to receive benefit payments for 85% of lost net income. If the covered person was not employed at the time of the accident, the determination of benefit payment amounts under this subdivision shall be based upon income from employment in which the covered person would reasonably have been expected to engage had he or she not been injured.
(c) An injured person shall not submit a claim for wage-loss benefits unless a health-care provider treating the injured person makes a determination that he or she is incapable of engaging in gainful employment that he or she would otherwise perform. Wage-loss benefits shall not be paid on behalf of a deceased person.
12812. [REPLACEMENT-SERVICES BENEFITS] (a) Payment shall be made to a covered person, up to the applicable PIP insurance limits, for the reasonable cost of obtaining ordinary and necessary services that such person would have performed personally for his or her own benefit or for the benefit of his or her family, if he or she had not been injured as a result of an accident. An injured person shall not submit a claim for replacement-services benefits unless a health-care provider treating the injured person makes a determination that he or she is incapable of performing the ordinary and necessary services covered under this section.
(b) Except as otherwise provided in this subdivision, payment shall be made for replacement-services expenses that are incurred commencing 7 days after the date of the accident that caused the injury and shall continue to be made for as long as the covered person is unable to perform such services himself or herself. Replacement-services benefits shall not be paid on behalf of a deceased person.
(c) A person who receives benefits under both this section and Section 12811 is not entitled to combined monthly benefits that are greater than the monthly amount payable for either wage-loss benefits or replacement-services benefits under the applicable policy limits.
12813. [DEATH BENEFITS] (a) Payment shall be made in the event a covered person is killed as a result of an accident, up to the applicable PIP insurance limits, to the surviving dependents of the deceased person, or to the estate of the deceased person if the deceased person had no such dependents.
(b) The amount of the payment required to be made under this section shall be reduced by the amount of payment made to the deceased person under Sections 12811 and 12812. For purposes of this section and Section 12802, the term "dependent" means a spouse or any person under 18 years of age who was being supported by a covered person at the time of the covered person's death as a result of an accident, including any such person who was entitled to receive child support payments from the covered person at the time of his or her death.
12814. [COORDINATION OF BENEFITS] Notwithstanding any other provision of this chapter, benefits payable to a covered person under PIP insurance shall be reduced by the amount of benefits recovered by such person from workers' compensation insurance, state-mandated disability insurance, social security disability insurance, or under any similar federal or state law providing disability benefits, except as prohibited by federal or state law.
12815. [APPROVAL OF RATES] Each insurer shall file in accordance with Section 1861.05 an application with the commissioner for approval of the initial rates it desires to charge, and for subsequent rate changes it desires to make, with respect to the insurance coverages established by this chapter.

Article 2. Cost Controls

12820. [HEALTH-CARE FEES] (a) A health-care provider's charge for products, services, and accommodations covered by PIP insurance shall not exceed the charges permissible under the schedules prepared and established by the Director of the Workers' Compensation Appeals Board for industrial accidents, unless the applicable insurer or arbitrator determines that extraordinary procedures or circumstances justify a higher charge.
(b) The commissioner, after consulting with the Administrative Director of the Division of Workers' Compensation and the State Director of Health Services, shall promulgate rules and regulations implementing and coordinating the provisions of this chapter with respect to charges for medical products, services, and accommodations, including the establishment of schedules for those services for which schedules have not been prepared and established by the Director of the Workers' Compensation Appeals Board.
12821. [PEER REVIEW] (a) Each insurer providing PIP insurance, except for self-insurers, shall contract with a Peer Review Organization (PRO), either jointly with other insurers or individually.
(b) A PRO is authorized to determine whether the health-care treatment and services provided to a covered person are medically necessary, medically appropriate, and meet professional standards of performance. A PRO is also authorized to determine whether injuries for which health-care treatment or services are provided were caused by an accident. A PRO may not mediate disputes over appropriate charges, costs, or payments and may not engage in the administration of claims for insurers. A PRO owned in whole or in part by an insurer may not review treatment or services for which that insurer has been billed. PRO personnel may not review treatment or services provided to a covered person by any institution or agency in which they have a financial interest.
(c) An insurer may refer a health-care provider's bill to a PRO if the insurer believes that a PRO should evaluate it with respect to any of the factors set forth in subdivision (b), provided that such referral is made within 90 days after the insurer receives the health-care provider's bill and reasonable documentation supporting the bill. An insurer shall notify a health-care provider, in writing, when referring bills for PRO review, at the time of the referral. If an insurer makes a referral within 30 days of receipt of a bill for medical treatment and reasonable documentation supporting the bill, the insurer need not pay the applicable health-care provider until a determination has been made by the PRO. If an insurer makes its referral after the 30th day, the health-care provider's bill shall be paid.
(d) Within 30 days of a referral, a PRO shall request in writing, from the applicable health-care provider, the records and documents necessary for its review. The PRO shall afford the health-care provider an opportunity to submit additional information during the review process. The PRO may order an independent medical examination of the applicable covered person if such an examination is necessary in order for the PRO to determine whether or not the covered person's injuries for which treatment and services are provided were caused by an accident. If a covered person unreasonably refuses to submit to such an examination, the applicable insurer may suspend all future benefits to that person.
(e) A PRO shall make an initial determination within 30 days after the receipt of any requested information, or 30 days after the receipt of additional information submitted by the applicable health-care provider, whichever is later. A PRO's initial determination shall be made by a licensed practitioner of the same specialty as the health-care provider or by a licensed practitioner who has had experience providing and prescribing the care which is the subject of the review. Within five business days of the determination, a PRO shall provide a written analysis, including specific reasons for its decision, to applicable insurers, health-care providers, and covered persons.
(f) An insurer, health-care provider, or covered person may request, in writing, reconsideration of the initial PRO determination within 30 days of the date the initial determination is made. A reconsideration shall be made by a licensed practitioner of the same specialty as the health-care provider, except that the person making the reconsideration may not be the same person who made the PRO's initial determination. Reconsideration must be requested prior to filing any action for review of the determination in court.
(g) A reconsideration shall be based upon the information that led to the initial determination, new information found in medical records, or additional evidence submitted by the requesting party. A PRO shall complete a reconsideration within 30 days after receipt of such information. Upon determination of a reconsideration by a PRO, an insurer, health-care provider, or covered person may obtain review of the determination in any court of competent jurisdiction.
(h) If a PRO determines that health-care treatment or services provided to a covered person conformed to professional standards of performance and were medically necessary and appropriate, the insurer shall pay to the health-care provider the outstanding amount plus interest, at the rate of ten percent per annum, on the amount withheld by the insurer. If the determination of a PRO is reviewed by a court, and if the court determines that health-care treatment or services provided to a covered person conformed to professional standards of performance and were medically necessary and appropriate, the insurer shall pay to the health-care provider the outstanding amount plus interest, at the rate of ten percent per annum, the health-care provider's costs in responding to the challenge, and reasonable attorney's fees and costs for responding to the challenge.
(i) If a PRO, or a court reviewing a PRO determination, determines that health-care treatment or services provided did not conform to professional standards of performance or were not medically necessary or appropriate, or that future provision of such health-care treatment or services would be medically unnecessary or inappropriate, the health-care provider may not collect payment for the medically unnecessary, inappropriate, or unprofessionally-provided health-care treatment or services. If the health-care provider has collected such payment, it must return within 30 days the amount paid plus interest at the rate of ten percent per annum. In no case does the failure of the health-care provider to return the payment obligate the covered person to assume responsibility for payment.
12822. [EXAMINATION OF COVERED PERSON] (a) If an insurer believes that the physical condition of a covered person is material to any claim or continuing claim for PIP or supplemental PIP benefits, the covered person's insurer may require the person to submit to a reasonable physical examination by an independent and qualified health-care provider. Such examination may include a determination of the covered person's condition, prognosis, need for additional medical services, and whether he or she is able to work.
(b) If a covered person unreasonably refuses to submit to a physical examination required by an insurer pursuant to subdivision (a), the insurer may suspend all future benefits until the person submits to such examination.
(c) An insurer requiring a physical examination of a covered person shall send to the person examined a copy of a detailed written report of the examining physician setting forth his or her findings, including results of all tests made, diagnoses, and conclusions, and any reports of earlier examinations of the same condition.
(d) No more than one physical examination of a covered person may be required within a six-month period.
12823. [VERIFICATION OF LOST WAGES AND MEDICAL EXPENSES] (a) Upon the request of an insurer, an employer shall furnish a statement of the work record and earnings of an employee who has claimed wage-loss benefits. Each such statement shall cover the period specified by the insurer making the request, which may include a reasonable period before, and the entire period after, the injury was sustained. Each such statement shall also state what benefits that employee has received or is entitled to receive from that employer as a result of his or her employment.
(b) Every health-care provider shall, if requested to do so by the applicable insurer, furnish a written report of the history, condition, treatment, and the dates and costs of the treatment of a covered person who has filed a claim for benefits under this chapter. Every such provider shall promptly produce and permit the inspection and copying of its records regarding such history, condition, treatment, and the dates and costs of treatment. Such written report shall be provided, together with a sworn statement under oath that the treatment was medically necessary and medically appropriate. The sworn statement required under this section shall read as follows: "Under penalty of perjury, I declare that I have read the foregoing report and the facts set forth therein are true, to the best of my knowledge and belief."
12824. [FRAUD INVESTIGATION AND PROSECUTION] In order to reduce the cost of auto insurance by reducing the incidence of auto insurance fraud, the annual fee which insurers #italic#may be required to pay pursuant to Section 1872.8, for the investigation and prosecution of fraudulent auto insurance claims, shall be increased to two dollars per insured vehicle. For purposes of this section, and Section 1872.8, the term "insured vehicle" means a motor vehicle covered by PIP insurance.

Article 3. Tort Liability

12830. [LIMITATION OF TORT LIABILITY] (a) Except as provided in subdivision (b), tort liability of an owner or operator of a motor vehicle for death or bodily injury arising out of the operation or use, or maintenance, of that motor vehicle in this state is abolished. The abolition of tort liability under this section shall also apply to any person who would otherwise be legally responsible or vicariously liable, in whole or in part, for the actions or omissions of such owner or operator.
(b) The abolition of tort liability under subdivision (a) shall not apply to:
(1) An operator of a motor vehicle who causes death or bodily injury to another person in the commission of a felony and is convicted of such felony.
(2) An operator of a motor vehicle who causes death or injury to another person and is convicted in connection with such accident of operating a motor vehicle while under the influence of alcohol or drugs in violation of Section 23152 or 23153 of the Vehicle Code.
(3) An operator of a motor vehicle who causes death or injury to another person and is convicted in connection with such accident of leaving the scene of an accident in violation of Section 20001 of the Vehicle Code.
(4) An owner of a motor vehicle that transports a cargo of hazardous material for commercial purposes, if such motor vehicle is involved in an accident in which the cargo of hazardous material causes death or injury to another person.
(c) Subdivision (a) shall not be construed to abolish the tort liability of any person other than an owner or operator of a motor vehicle, or any person legally responsible or vicariously liable, in whole or in part, for the actions or omissions of such owner or operator, for death or bodily injury resulting from an accident involving that motor vehicle.
12831. [BAN ON PROPERTY CLAIMS BY UNINSURED MOTORISTS] An owner of a motor vehicle that is not insured for property damage liability, as required by this chapter, shall have no cause of action against any person for damage to that motor vehicle caused as a result of an accident, except with respect to damage caused by a person operating that vehicle without the permission of its owner.

Article 4. Miscellaneous

12840. [INSURANCE POLICY REQUIREMENT] (a) The insurance required to be maintained under Section 12801 shall be in the form of a policy of insurance issued by an insurer authorized to transact business in this state or, if the vehicle is registered in another state, district, commonwealth, territory, or possession of the United States, or province or territory of Canada, by a policy of insurance issued by an insurer authorized to transact business in this state or in the jurisdiction in which the vehicle is registered, except as provided by subdivisions (b) and (c).
(b) Subject to approval of the commissioner, the owner of a motor vehicle not owned by a natural person or persons may satisfy the insurance requirements of this chapter by self-insuring if the owner files with the commissioner, in accordance with regulations of the commissioner:
(1) a continuing undertaking to pay benefits that would be payable under at least a standard limits PIP insurance policy;
(2) evidence that appropriate provision exists for prompt and efficient administration of all claims, benefits, and obligations under this chapter; and
(3) evidence that reliable financial arrangements, deposits, resources, or commitments exist providing assurance that is substantially equivalent to that afforded by a contract of insurance under this chapter for payment of all applicable benefits and performance of all obligations under this chapter.
(c) Any vehicle owned by the United States, this state, or any municipality or subdivision of this state, is deemed self-insured under this chapter unless covered by a policy of insurance in accordance with subdivision (a).
12841. [ASSIGNED CLAIMS PLAN] (a) The commissioner shall organize, and all insurers and qualified self-insurers authorized to provide PIP insurance shall participate in, an assigned claims plan to provide PIP insurance benefits. The commissioner shall adopt rules for the operation of the plan and for the equitable distribution of costs. Benefits under the assigned claims plan shall be provided as follows:
(1) Any pedestrian, bicyclist, or other person not occupying a motor vehicle who is injured or killed in this state as a result of being struck by an uninsured or unidentified vehicle shall be provided applicable benefits covered under standard limits PIP insurance, as described in subdivision (a) of Section 12802, and supplemental PIP insurance, as described in subdivision (a) of Section 12804, that such person is not entitled to receive under Section 12807.
(2) Any person who is not the owner of a vehicle registered in this state or required to be registered in this state nor a resident relative of an owner of such a vehicle and who is injured or killed as a result of an accident in this state while occupying an uninsured vehicle shall be provided benefits covered under standard limits PIP insurance, as described in subdivision (a) of Section 12802, and supplemental PIP insurance, as described in subdivision (a) of Section 12804.
(3) Any person who is not otherwise entitled to PIP benefits and is injured or killed as a result of an accident in this state while occupying an uninsured vehicle, and who was under 18 years of age at the time of the accident, shall be provided benefits covered under minimum limits PIP insurance, as described in subdivision (b) of Section 12802, except that no death benefits shall be provided.
(b) A claim brought under the assigned claims plan shall be assigned to an insurer who shall have the same rights and obligations with respect to that claim that it would have had if it had issued an insurance policy applicable to the loss. A person who accepts PIP benefits under the assigned claims plan has the same rights and obligations he or she would have had if the benefits had been provided under an insurance policy issued to him or her.
(c) If a claim qualifies for assignment under this section, the assigned claims plan and the insurer to whom the claim is assigned shall be subrogated to the rights of the claimant against any person who is liable for the loss and against any insurer, or other person legally obligated to provide PIP benefits to the injured person, for benefits provided by the insurer.
(d) An owner of an uninsured vehicle is liable to the assigned claims plan and the insurer to whom the claim is assigned for any benefits paid by the assigned claims plan to persons who would have been entitled to such benefits under PIP insurance covering such vehicle if such vehicle had been insured.
12842. [ARBITRATION] Any dispute regarding an insurer's liability to pay benefits under insurance coverages established by this chapter, except a dispute that has been referred under Section 12821 to a Peer Review Organization, shall be submitted to arbitration pursuant to regulations adopted by the commissioner.
12843. [IMPLEMENTATION] (a) The insurance and the benefits established by this chapter shall apply to accidents occurring on or after July 1, 1997. The abolition of tort liability provided for in Article 3 of this chapter shall apply to accidents occurring on or after July 1, 1997.
(b) The commissioner shall expeditiously implement this chapter, and may adopt regulations to interpret, administer, and implement this chapter, in accordance with its purposes. Prior to July 1, 1997, the commissioner shall adopt technical changes in existing regulations and shall recommend to the Legislature changes in existing statutes designed to conform existing regulations and statutes to this chapter.
(c) Each insurer shall notify each of its insureds of the changes to his or her insurance coverage made by this chapter at least 60 days prior to the date on which the insurance and the benefits established by this chapter and the abolition of tort liability provided for in Article 3 take effect.
12844. [PREEMPTION] In the event that provisions of this chapter conflict with other laws, regulations, or ordinances of state or local government, such laws, regulations, or ordinances are preempted by this chapter. It is the intent of this chapter that all laws regulating the business of automobile insurance, including laws regulating insurance rates, cancellation and nonrenewal of policies, and claims and sales practices, shall apply to the insurance established by this chapter, except where a given law deals with a specific type of insurance and that law's application to the insurance established by this chapter would have a clearly unintended effect. The insurance required under this chapter shall satisfy for all purposes the financial responsibility laws of this state.

Article 5. Definitions

12850. [DEFINITIONS] For purposes of this chapter, the following terms shall have the following meanings:
(a) "Accident" means an accident arising out of the operation or use of a motor vehicle.
(b) "Commissioner" means the Insurance Commissioner.
(c) "Covered person" means a person to whom PIP or supplemental PIP benefits are required to be provided under Section 12807 or 12841.
(d) "Covered vehicle" means a motor vehicle insured as required under this chapter.
(e) "Injury" means bodily injury.
(f) "Insurer" means an insurance company authorized to sell PIP or supplemental PIP insurance or, with respect to any policy providing insurance for a vehicle registered in another state, the insurer issuing that policy, and any self-insurer obligated to provide PIP or supplemental PIP benefits.
(g) (1) "Medically appropriate products, services, and accommodations" means products, services, and accommodations that are rendered or prescribed by a health-care provider and that are medically necessary and appropriate for an injured person's care, recovery, or rehabilitation.
(2) The term does not include any product, service, or accommodation (A) that is not medically appropriate and medically necessary for an injured person's care, recovery, or rehabilitation and reasonably likely to provide continued effectiveness with respect to that victim's care, recovery, or rehabilitation; or (B) that would have been needed or used by an injured person without regard to the accident.
(3) The term also does not include (A) that portion of a charge for a room in a hospital, clinic, convalescent or nursing home, or any other health-care facility, in excess of a reasonable and customary charge for semi-private accommodations, unless the injured person requires special or intensive care; or (B) any amount for experimental treatment or participation in research projects.
(4) The term includes (A) emergency medical services; (B) attendant-care services provided by a licensed home health agency, subject to regulations of the commissioner; (C) the reasonable cost of devices, equipment, and facilities necessary for independent functioning; (D) transportation costs where necessary to secure medical and rehabilitation services; (E) chiropractic treatment rendered by a licensed chiropractor; (F) vocational rehabilitation services provided by a person licensed by this or any other state, or if this state does not license persons providing vocational rehabilitation services, by a person who has been certified by the National Commission on Rehabilitation Certification as a rehabilitation counselor, case manager, or vocational evaluator; and (G) any non-medical remedial care and treatment rendered in accordance with a religious method of healing recognized by the laws of this state.
(h) "Motor vehicle" or "vehicle" means a vehicle of a kind required to be registered under the Vehicle Code, designed primarily for operation upon the public streets, roads, and highways, and driven by power other than muscular power. A trailer drawn by or attached to such a vehicle is also a "motor vehicle".
(i) "Net income" means income after the deduction of federal and state income taxes. "Lost net income" means the loss of earnings after the deduction of federal and state income taxes from work that the covered person would have performed had he or she not been injured.
(j) "Operation or use of a motor vehicle" means operation or use of a motor vehicle as a motor vehicle. Operation or use does not include manufacture or maintenance of a motor vehicle.
(k) "Owner" means the person or persons in whose name a motor vehicle has been registered. If no registration is in effect at the time of an accident, the term means the person or persons holding legal title to the vehicle, or, if the vehicle is the subject of a security agreement or lease with option to purchase with the debtor or lessee having the right to possession, the term means the debtor or lessee.
(l) "Peer Review Organization" or "PRO" means a professional organization with which the Health Care Financing Administration (HCFA) or other authorized federal agency or this state contracts for medical review of Medicare or Medi-Cal services, or a health-care entity approved by the commissioner, that engages in reviewing medical files for the purpose of determining that medical and rehabilitation services are medically necessary and reasonable.
(m) "PIP insurance" means personal injury protection insurance.
(n) "Health-care provider" or "provider" means a person or facility licensed to provide health-care services.
(o) "Rehabilitation" means (1) reduction of disability; (2) restoration and maintenance, as restored, of the physical and vocational functioning of a person who sustained an injury in an accident; and (3) restoration of the capacity of such a person to be gainfully employed.
(p) "Resident relative" means a person who, at the time of the accident, is related by blood, marriage, or adoption to the named insured (or vehicle owner, if so specified) or his or her resident spouse, and who resides in the named insured's (or vehicle owner's) household, even if temporarily living elsewhere, and any ward or foster child who usually resides with the named insured (or vehicle owner), even if temporarily living elsewhere.
(q) "Wage loss" means the loss of earnings from work, including self-employment, which the covered person would have performed had he or she not been injured. #roman#

SECTION FOUR. (a) Except as provided in subdivision (b) of this section, the provisions of this initiative shall not be amended except by a statute that becomes effective only when approved by the electorate. #roman#(b) The provisions of this initiative may be amended only to further its purposes, by a statute passed in each house of the Legislature by roll call vote entered in the journal, two-thirds of the membership of each house concurring, except that a statute which would further the purposes of this initiative and have the effect of providing consumers with further opportunities to reduce their auto insurance premiums without reducing their benefits may be passed by majority vote in each house. In any judicial action with respect to any legislative amendment, the court shall exercise its independent judgment as to whether or not the amendment satisfies the requirements of this subdivision. #roman#

SECTION FIVE. If any provision of this initiative other than Section 12830 of the Insurance Code, or any application thereof to any person or circumstance, is held invalid, that invalidity shall not affect any provision or application of the initiative that can be given effect without the invalid provision or application. To this end, the provisions of this initiative, except Section 12830 of the Insurance Code, are severable.



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