Insurers Violating Mental Health Parity Laws Face New Penalties

August 04, 2014

SACRAMENTO – Health insurers that defy mental health parity laws will be subject to fines of up to $2,500 a day by the Department of Insurance under a bill introduced by Sen. Jim Beall that was approved Monday by the Legislature. Senate Bill 1046 now advances to the Governor’s desk.

“The benefits of mental health parity will be hollow unless we act to enforce it,’’ said Beall, who chairs the Senate Mental Health Caucus. “SB 1046 puts consumers’ rights, first. It puts health insurers on the alert that they must live up to the law or face fines.’’

The bill brings uniformity to California’s laws by remedying a disparity in penalty authority between the Department of Insurance, which regulates self-employer and individual insurance plans, and the Department of Managed Health Care, which regulates health plans.

Under existing law, the DMHC can levy per-day penalties for on-going violations of mental health parity. However, California’s codes do not give the Department of Insurance, which oversees roughly 10 percent of health care consumers, similar powers. With the passage of Beall’s bill that loophole can be closed.

Under state and federal mental health parity laws health insurance companies are required to provide treatment for mental disorders and substance abuse equitable to physical illnesses or injuries.

The parity laws were designed to improve access to mental health services. A UCLA Center for  Health Policy Research study found an estimated 2 million Californians said they need mental health services but the majority of them did not get treatment despite having health coverage.