20:06:52:01.  Definitions. Terms used in this chapter mean:

          (1)  "Appeal," any review or appeal before an administrative agency, arbitrator, court or mediator;

          (2)  "Discretionary clause," a provision in a policy that purports to bind the claimant to, or grant deference in, proceedings subsequent to the insurer's decision, denial, or interpretation on terms, coverage, or eligibility for benefits, including a policy provision that provides any of the following:

               (a)  A policyholder or other claimant may not appeal a denial of a claim;

               (b)  The insurer's decision to deny policy coverage is binding upon a policyholder or other claimant or is otherwise entitled to deference upon appeal or review;

               (c)  On appeal or review the insurer's decision-making power as to policy coverage is binding or otherwise entitled to deference;

               (d)  The insurer's interpretation of the terms of a policy is binding upon a policyholder or other claimant or is otherwise entitled to deference;

               (e)  On appeal the insurer's interpretation of the terms of a policy is binding or is otherwise entitled to deference;

               (f)  A standard of review on appeal that gives deference in the original claim decision, or gives rise to such standard of review;

               (g)  A standard of review on appeal other than a de novo review, or gives rise to a standard of review other than de novo;

               (h)  The insurer has discretion to determine whether a claim is compensable or to interpret the provisions of the policy or certificate;

          (3)  "Policy," any plan, certificate, contract, policy, and agreement that provides for health insurance as defined by SDCL 58-9-3 or otherwise provides health or disability benefits.

          Source: 35 SDR 48, effective September 8, 2008.

          General Authority: SDCL 58-2-39, 58-17-87, 58-18-79, 58-18-79(14), 58-29D-34.

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-29D-23, 58-29D-31(2)(6), 58-33-67.

          20:06:52:02.  Discretionary clauses prohibited. A discretionary clause is not permitted in any individual or group health policy. No policy offered or issued in this state by a health carrier or plan to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services may contain a discretionary clause or similar provision purporting to reserve discretion to the health carrier or plan to interpret the terms of the policy or to provide standards of interpretation or review that are inconsistent with the laws of this state. The provisions of this rule apply to any health insurance policy issued or renewed after June 30, 2008.

          Nothing in this section limits the director's authority under SDCL 58-11-19 to 58-11-21, inclusive, to disapprove or withdraw approval of any policy that contains a discretionary clause or to otherwise disapprove any practice involving a discretionary clause.

          Source: 35 SDR 48, effective September 8, 2008.

          General Authority: SDCL 58-2-39, 58-17-87, 58-18-79, 58-18-79(14), 58-29D-34.

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-29D-23, 58-29D-31(2)(6), 58-33-67.

          20:06:52:03.  Application to claims administration services. The provisions of this chapter apply to any health insurer or third party administrator engaged in the business of insurance including any contractual arrangement entered into for the administration of claims under an employer health benefit plan. No health insurer or third party administrator exercising any claims administrative authority may decide or adjudicate any claim by or through the exercise of any discretionary clause.

          Source: 35 SDR 48, effective September 8, 2008.

          General Authority: SDCL 58-2-39, 58-17-87, 58-18-79, 58-18-79(14), 58-29D-34.

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-29D-23, 58-29D-31(2)(6), 58-33-67.