AZ Legislative Update – March 28, 2025
Posted by [email protected] on Mar. 28, 2025 / Subscribe 0
Today marks the 75th day of the Arizona 57th Legislature, 1st Regular Session and the deadline for bills to be heard in committee has officially passed. All bills that have not been heard in committee (other than the House and Senate appropriations committees next week) are now considered dead. Moving forward, legislative activity (outside the budget) will take place on the floor or through conference committees. Of the 1,677 bills introduced this session, the Legislature has now passed 36 bills with the Governor signing 12 and vetoing 1.
Budget negotiations between the Legislature and the Governor’s Office are ongoing; however, with no agreement in sight, there remains a significant amount of work that needs to be accomplished.
With summer temperatures quickly arriving and committee hearings coming to an end, we anticipate that budget discussions will intensify over the next few weeks; however, until an agreement is reached, floor calendars may be limited each day to keep rank and file members occupied.
Below, please find a few bills that we would like to highlight.
DIFI Director Confirmation
On Thursday, the Senate Committee on Director Nominations heard the Executive Nomination of Barbara Richardson to serve as the director of the Arizona Department of Insurance and Financial Institutions. During the hearing, Senator Jake Hoffman, the committee chairman, expressed a number of concerns regarding Richardson. Those concerns included her work at the NAIC related to climate change and DEI. He also addressed the ongoing issues with how the Department is interpreting service contracts and advisory organizations. Comments from various members of the public mentioned long wait times for licensing insurance agents and concerns with the agency’s response time to industry related questions. Chairman Hoffman is giving Richardson two weeks (April 10th) to come back to the committee and address his concerns before taking a vote on the nomination.
Health Insurance
HB 2175 Claims; Prior Authorization; Conduct (Willoughby): HB 2175 was held in Senate Rules on Monday. The bill requires a medical director or provider, before a health care insurer may deny a claim that involves medical necessity or experimental status or that requires the use of medical judgment, to individually review the denial. It requires a medical director or provider, before a health care insurer may issue a direct denial of a prior authorization that involves medical necessity or experimental status or that requires the use of medical judgment, to individually review the denial. Additionally, the bill requires, during each individual review of a prior authorization or claim denial, the medical director or provider to exercise independent medical judgment and prohibits the director or provider from relying solely on recommendations derived from any other source.
SB 1291 Health Insurers; Provider Credentialing; Claims (Angius): SB 1291 was retained in the House Committee of the Whole on Wednesday as some amendment language continues to be ironed out. The bill proposes significant updates to the current statutes regarding health care provider credentialing and claims processing. Under the new provisions, health insurers would be required to complete the credentialing process within 60 calendar days and load the applicant's information into their billing system within 30 days of receiving a complete credentialing application. Additionally, insurers must acknowledge receipt of applications within seven days and provide detailed notices for any incomplete applications. The bill also stipulates that if a credentialing application is incomplete, insurers must inform the applicant within the same seven-day timeframe and outline the necessary steps to complete the application. Moreover, the bill introduces new requirements for claims processing, mandating that health insurers treat claims from providers who have applied for credentialing as in-network claims if certain conditions are met. These conditions include the provider rendering services to an eligible health plan member after receiving notice of a complete credentialing application and not submitting the claim until after a fully executed network participation contract is in place. The bill also clarifies that health insurers are not liable for claims submitted outside of the contractually required time period if submitted within one year of the service date, and it requires providers to disclose their credentialing status and estimated costs to patients prior to service.
Insurance Operations
HB 2054 DIFI; Financial Enterprises; Insurance; Compact (Livingston): HB 2054 passed out of the Senate Finance Committee on Monday, 6-1. A placeholder amendment was added in committee to address the new way in which DIFI views/interprets service contracts and insurance policies. The amendment now requires a separate endorsement for service contracts. Additionally, the amendment includes language that Representative Livingston and Representative Stahl Hamilton had been working on to create the Fire Insurance Review Task Force along with underwriting guidelines, including reporting requirements and task force duties to address the issue of insurance availability in high fire risk areas throughout the state. There will be a floor amendment to fix a number of outstanding issues with the bill and it will also include language to deal with DIFI’s new position on advisory organizations. In addition to those provisions, HB 2054 updates current statutes related to the Department of Insurance and Financial Institutions by changing the licensure year for consumer lenders, escrow agents, and advance fee loan brokers from a fiscal year to a calendar year. Specifically, it would require license renewals to be submitted by December 31 instead of June 30, with expiration dates for several licenses adjusted to January 31. Additionally, the bill would remove references to license continuation dates and allow certain active licensees to defer renewal until December 31, 2025, if their licenses were set to expire by June 30 or September 30, 2025. Moreover, the bill would grant the DIFI director the discretion to adopt rules regarding money transmitters and other insurance-related requirements, rather than making it mandatory. It would also modify reporting requirements for risk retention groups and eliminate Arizona's opt-out status from uniform standards for long-term care insurance products. Outdated language concerning renewal processes and penalties would be replaced with clearer stipulations about late fees and consequences for failing to renew on time, ultimately aiming to streamline the licensing process and enhance regulatory efficiency.
SB 1094 Business; Discrimination Prohibition; Social Criteria (Hoffman): SB 1094 passed out of the House Commerce Committee on Tuesday, 6-3. This problematic bill proposes to amend existing Arizona statutes by adding new sections that prohibit discrimination by financial institutions, insurers, and credit reporting agencies based on political affiliation and various social credit scores. Specifically, it introduces provisions that ensure these entities cannot refuse service or discriminate against individuals based on their political beliefs or scores related to social justice, environmental impact, or governmental criteria. Additionally, the bill allows these institutions to offer products or services that include subjective standards, provided that such standards are fully disclosed to customers prior to contract agreements. Furthermore, the bill emphasizes that the practice of discrimination based on social credit scores is a matter of statewide concern, asserting that it threatens the rights of individuals and the foundational principles of a democratic state. It clarifies that these new regulations do not impede the ability of these institutions to refuse service when necessary for the safety of their employees. If this were to pass, the Governor would likely veto the bill.
SB 1215 Litigation; Financing; Consumer Protection; Enforcement (Leach): SB 1215 passed out of the House Judiciary Committee on Wednesday, 8-0. The bill would update current statutes by introducing new consumer protection measures and disclosure requirements for litigation financing agreements. Specifically, it would mandate that all parties involved in such agreements disclose their existence and the identity of the litigation financier to other parties in the action. Additionally, the bill would prohibit litigation financiers from influencing litigation strategy, choice of counsel, or expert witnesses, ensuring that control remains with the named party and their legal representation. The bill also requires courts to consider potential conflicts of interest in class actions and multidistrict litigation arising from these financing arrangements.
SB 1542 Litigation; Financing; Foreign Adversaries; Enforcement (Carroll): SB 1542 passed out of the House Judiciary Committee on Wednesday, 7-2. A strike-everything amendment was adopted onto the bill that essentially mirrors the Louisiana 3rd party litigation financing disclosure model; however, the disclosure provisions are rather incomplete, the definitions used are problematic and the language directly competes with SB 1215.
SB 1509 Peremptory Challenge; Jurors; Civil Action (Finchem): SB 1509 is scheduled to be heard in the House Appropriations Committee on Monday. The bill will contain the same language from HB 2228 Jurors; Peremptory Challenge; Civil Action (Hendrix) which did not get a hearing in the Senate Judiciary & Elections Committee. SB 1509 restores peremptory challenges for civil cases in Arizona. The bill stipulates that each party is entitled to four peremptory challenges. Beginning with the plaintiff, each party shall alternate striking jurors until all the challenges are used or waved. Under SB 1509, the court may allow a party additional peremptory challenges if two or more parties on the same side have adverse or hostile interests. If the court allows a party an additional peremptory challenge, the court shall allow an equal number of peremptory challenges to the party or parties on the other side.
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