CA AB2540

Designates engaging in health insurance postclaims underwriting as an unfair method of competition and unfair or deceptive act or practice in the business of insurance.

Establishes civil penalties for postclaims underwriting violations ranging up to $5,000 for each act, or up to $10,000 if the act was willful.

Directs that any penalty amount exceeding $118 be deposited into the Major Risk Medical Insurance Fund for the California Major Risk Medical Insurance Program upon legislative appropriation.

Exempts insurers from the $118 penalty under Section 10400 if they have already been assessed a civil penalty for the same postclaims underwriting violation under Section 790.035.

Specifies that funds deposited into the Major Risk Medical Insurance Fund from these penalties are not continuously appropriated and require separate legislative action for use.