SB 1120: California’s AI Health Insurance Denial Law

Legally reviewed By Scott Glovsky in Uncategorized

Artificial intelligence is becoming part of everyday healthcare. It helps physicians review medical records, assists hospitals with administrative tasks, and supports many functions within the healthcare system. As insurers have also begun using AI and automated tools during the claims review process, many Californians have started asking an important question: Can a computer deny my health insurance claim?

SB 1120 in California, known as the Physicians Make Decisions Act, was enacted to address those concerns. The law recognizes that technology can assist with healthcare administration, but it also makes clear that decisions involving medical necessity and utilization review cannot simply be delegated to an algorithm or automated system. Those decisions must remain the responsibility of qualified healthcare professionals who evaluate each patient’s individual medical circumstances.

If you believe an automated system may have influenced your health insurance denial, understanding what SB 1120 requires and what it does not require can help you better evaluate your rights and your next steps.

You may feel overwhelmed, but you don’t have to navigate this alone. Contact us online or call 626-243-5598 to get some clarity.

What Is SB 1120 in California?

California SB 1120 established new safeguards governing how health insurers and healthcare service plans use artificial intelligence during the utilization review process.

The law does not prohibit insurers from using AI or other software to assist with administrative tasks or organize medical information. Instead, it focuses on who ultimately makes decisions about medical necessity and insurance coverage.

A licensed physician or other qualified healthcare professional must exercise independent medical judgment when reviewing requests for treatment. AI and other automated decision-making tools cannot replace that individualized clinical review or make medical necessity determinations on their own.

The law reflects growing concerns that automated systems may process large numbers of requests efficiently but cannot fully account for a patient’s unique medical history, treating physician’s recommendations, or the clinical circumstances that often distinguish one case from another.

Can Insurance Companies Use AI to Deny Claims?

The short answer is no, not by itself. One of the biggest misconceptions surrounding the California AI denial law is that it completely bans insurers from using artificial intelligence. That is not what SB 1120 does.

Health plans may continue using AI and other technology to assist with certain aspects of the utilization review process, such as organizing records, identifying applicable medical policies, or helping reviewers evaluate large amounts of information. What the law prohibits is allowing an algorithm or automated system to replace the medical judgment that California requires from qualified healthcare professionals.

If a health insurer determines that requested treatment is not medically necessary, that decision must be based on an individualized review of the patient’s medical information rather than solely on the recommendation of software or an automated model.

For patients, that distinction matters. If you are researching whether insurance can use AI to deny your claim, the better question may be whether a qualified medical professional independently evaluated your specific circumstances before the denial was issued.

What Does the Physicians Make Decisions Act Require?

The Physicians Make Decisions Act reinforces an important principle: Medical necessity decisions should be based on the judgment of qualified healthcare professionals, not solely on automated technology.

When reviewing a request for treatment, a licensed physician or other qualified healthcare professional must exercise independent medical judgment and consider the patient’s individual medical circumstances. While technology may assist with gathering records or organizing information, it cannot replace the clinical evaluation required by California law.

That distinction is especially important in cases involving complex medical conditions. A patient’s diagnosis, medical history, prior treatments, and treating physician’s recommendations may not fit neatly within standardized criteria or automated decision-making tools. Individualized review helps ensure those factors are considered before coverage is denied.

The law also reflects the reality that medicine is rarely one-size-fits-all. Two patients with the same diagnosis may require different treatments based on their medical histories, underlying conditions, or responses to previous care. Those individualized differences should be evaluated by qualified healthcare professionals rather than determined solely by software.

What Should You Do If You Believe AI Influenced Your Denial?

If you suspect an automated system played a role in your health insurance denial, your first step should not be to assume the denial violated California law. Instead, begin by gathering information about how the decision was made.

Start by carefully reviewing your denial letter. Look for the stated reason the request was denied, any medical policies the insurer relied upon, and information about your appeal rights. If the explanation is unclear, you can contact your health plan and ask for additional information about the review process.

You may also want to ask questions such as:

• Who reviewed my request for coverage?
• Was the decision reviewed by a licensed physician or another qualified healthcare professional?
• What medical policy or clinical guideline was applied?
• Did the reviewer consider the medical information submitted by my treating physician?
• Is additional medical documentation needed before the decision can be reconsidered?

Your treating physician can also play an important role. Ask your physician to review both the denial letter and any medical policies or clinical guidelines cited by the insurer. In many situations, a physician may be able to provide additional medical information that directly addresses the insurer’s stated concerns or clarifies why the requested treatment is appropriate for your individual condition.

Understanding how the review was conducted is often just as important as understanding why coverage was denied. Before deciding whether to file an appeal or pursue another option, it can be helpful to understand whether the insurer’s decision reflects an individualized medical review or simply references standardized criteria without adequately addressing your specific medical circumstances.

Does SB 1120 Mean Your Health Insurance Denial Was Wrong?

Not necessarily. A health insurance denial does not automatically violate California law simply because an insurer uses artificial intelligence or other technology during the review process. The important question is not whether AI was involved. The question is whether the insurer complied with the law when making its decision.

Some requests for treatment are appropriately denied because the requested service is not covered under the health plan, the medical evidence does not support the request, or additional information is needed before a coverage decision can be made. SB 1120 does not change those principles.

Instead, the law focuses on how medical necessity decisions are reached. If AI or another automated tool effectively replaces the independent medical judgment that California law requires, that raises different concerns than a denial based on a physician’s individualized review of the patient’s medical circumstances.

For that reason, it is helpful to learn more than why coverage was denied. It may also be important to understand how the decision was made and whether a qualified healthcare professional independently evaluated the medical information submitted by your treating physician.

If You Still Have Questions About the Review Process

Even after reviewing your denial letter, you may still be left wondering how your health plan reached its decision. That is understandable. A denial letter often summarizes the outcome of the review without fully explaining the process that led to it.

If you believe important medical information was overlooked or you remain uncertain whether your request received the individualized review required by California law, consider asking your health plan for additional information about the review process. Understanding who reviewed your request, what medical evidence was considered, and how the decision was reached may help you determine whether an appeal, independent medical review, or another option is appropriate.

The goal is not simply to challenge every denial. It is to make sure you understand how the decision was made and whether your individual medical circumstances received the careful consideration that California law requires.

You Deserve More Than a Computer-Generated Decision

When your doctor recommends treatment, you deserve to know that your health insurance company evaluated your request using the individualized medical judgment required by California law. If you are left wondering whether your medical history, your physician’s recommendations, or your unique circumstances were fully considered, it may be time to ask additional questions about the review process.

At the Law Offices of Scott Glovsky, we have spent decades helping Californians evaluate health insurance denials and determine whether insurers have met their legal obligations. If you have questions about an AI health insurance denial, the review process used by your health plan, or the options available after a denial, we invite you to contact us online or call 626-243-5598 to discuss your situation.

Legal References Used to Inform This Page

To ensure the accuracy and clarity of this page, we referenced official legal resources during the content development process:

• California Legislative Information – SB1120
• California Medical Association SB1120