California SB 1120 — Physicians Make Decisions Act (utilization review)

California SB 1120 (signed September 28, 2024; effective January 1, 2025) amends Health and Safety Code § 1367.01 (governing health-care service plans regulated by the Department of Managed Health Care) and Insurance Code § 10123.135 (governing health insurers regulated by the Department of Insurance) to limit the use of artificial-intelligence and algorithmic tools in utilization review and utilization management decisions for medical necessity. A health-care service plan or insurer that uses AI, algorithm, or other software tool for the purpose of utilization review or utilization management may not deny, delay, or modify health-care services based in whole or in part on medical necessity unless a licensed physician (or other licensed healthcare professional acting within the scope of practice) reviews the basis for the decision and the decision considers the enrollee's individual clinical circumstances. The AI tool must be fairly and equitably applied; bias must be avoided in design, training, and ongoing operation; the tool must not directly or indirectly cause harm to the enrollee. Information about the use of the AI tool must be disclosed to enrollees, regulators (DMHC and CDI), and the public. Penalties are administered through DMHC and CDI authority and may include corrective action plans, civil penalties, and (for willful or repeated violations) license-related sanctions.

Mandatory — failure to disclose creates legal exposure.

Quick facts

What it requires

• physician-review-of-denial — A licensed physician (or other licensed healthcare professional within scope of practice) must review the basis for any AI-driven denial, delay, or modification of medical-necessity coverage; the decision must consider the enrollee's individual clinical circumstances. (Procedural requirement; the consumer-facing element is disclosure that the review occurred.)

  Example: This coverage decision was reviewed by [physician name and California license number], who considered your individual clinical circumstances, including [factors] in the determination.

• ai-tool-use-disclosure — Disclosure to the enrollee that an AI, algorithm, or other software tool was used in the utilization review or utilization management process, including how it was used and how it informed the decision.

  Example: An automated decision-support tool was used in evaluating your prior authorization request. The tool [analyzed claim history / scored medical necessity / surfaced relevant guidelines]; its output was reviewed by a licensed physician before this decision.

• appeal-rights-notice — Notice of the enrollee's appeal rights, including the right to internal grievance, external independent medical review, and (for life-threatening conditions) expedited review.

  Example: If you disagree with this decision, you have the right to file an internal grievance with [plan name] and to request an Independent Medical Review (IMR) through the California Department of Managed Health Care at https://healthhelp.ca.gov/ or 1-888-466-2219. For decisions involving an imminent and serious threat to your health, you may request an expedited review.

• fair-and-equitable-application — The AI tool must be fairly and equitably applied; the plan or insurer must avoid bias in tool design, training data, and ongoing operation. (System / governance requirement; not a per-decision message.) (meta-requirement; not validated by substring check)
• regulator-disclosure — Disclosure to DMHC and CDI of the plan/insurer's use of AI tools in utilization review, including periodic reporting under regulator-issued guidance. (Regulator-facing, not enrollee-facing.) (meta-requirement; not validated by substring check)

Sample disclosure language (plain)

Notice — Use of Decision-Support Tool in This Coverage Decision: An automated decision-support tool was used in evaluating your prior authorization or coverage request. The tool's output was reviewed by [licensed physician or other healthcare professional] who considered your individual clinical circumstances before making this determination. If your request was denied, delayed, or modified, you have the right to appeal through [plan name]'s internal grievance process and to request an Independent Medical Review through the California Department of Managed Health Care at https://healthhelp.ca.gov/ or 1-888-466-2219. For health conditions that pose an imminent and serious threat to your health, expedited review is available.

Sample disclosure language (formal)

Notice under California SB 1120 — Physicians Make Decisions Act, codified at California Health and Safety Code § 1367.01 (or Insurance Code § 10123.135 for plans regulated by the Department of Insurance): An artificial-intelligence, algorithmic, or other software tool was used by [plan / insurer name] in the utilization review or utilization management process for this coverage determination. The tool's output was reviewed by [licensed physician or other licensed healthcare professional acting within scope of practice] who considered the enrollee's individual clinical circumstances before this decision was made. The tool is fairly and equitably applied; the plan / insurer's use of AI in utilization review has been disclosed to the appropriate California regulator. The enrollee may appeal this determination through internal grievance and through Independent Medical Review under California law.

Citation

• Statute: California Health and Safety Code § 1367.01 (DMHC-regulated plans) and Insurance Code § 10123.135 (CDI-regulated insurers), as amended by Senate Bill 1120 (2024)
• Section: Use of artificial-intelligence and algorithmic tools in utilization review / utilization management
• Publisher: California Legislative Information
• Source: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1120

Notes

SB 1120 is one of the first US state laws to specifically restrict AI use in health-coverage decisions. The law applies to two distinct regulatory regimes: DMHC-regulated health-care service plans (most California HMOs and many PPOs) under HSC § 1367.01, and CDI-regulated health insurers under Ins. Code § 10123.135. The use case here is healthcare (clinical decision impact) and financial-services (insurance coverage decisions involving payment) — many compliance-relevant decisions sit at the intersection, and surfacing both makes the rule discoverable for either query path. The physician-review requirement is procedural — the AI cannot make the final medical-necessity determination on its own. The disclosure obligation is the consumer-facing element. SB 1120 stacks with HHS Section 1557 PCDST nondiscrimination obligations (federal floor) and with the Colorado AI Act / Texas TRAIGA-healthcare / Utah AI Act in their respective state operations. ERISA self-funded plans are typically exempt from state insurance regulation but may be subject to federal-floor obligations and HHS Section 1557. Class-action litigation over AI denial of care has been ongoing under existing law in 2024–2025; SB 1120 codifies a clearer disclosure-and-review standard. Verify against DMHC and CDI guidance before production deployment — both regulators have rulemaking authority and have issued or are expected to issue more detailed implementation guidance through 2026.

Live result from /lookup for this surface

This is the actual response from the hosted plainstamp /lookup endpoint for us-ca × email-transactional × healthcare — the same data the npm package and MCP server return:

1 rule apply to this surface (us-ca × email-transactional × healthcare):

• California SB 1120 — Physicians Make Decisions Act (utilization review) — mandatory — California Health and Safety Code § 1367.01 (DMHC-regulated plans) and Insurance Code § 10123.135 (CDI-regulated insurers), as amended by Senate Bill 1120 (2024) Use of artificial-intelligence and algorithmic tools in utilization review / utilization management ← this page

{
  "query": {
    "jurisdiction": "us-ca",
    "channel": "email-transactional",
    "use_case": "healthcare"
  },
  "count": 1,
  "results": [
    {
      "rule_id": "us-ca-sb1120-physicians-make-decisions-2024",
      "severity": "mandatory",
      "short_title": "California SB 1120 — Physicians Make Decisions Act (utilization review)",
      "citation": {
        "statute": "California Health and Safety Code § 1367.01 (DMHC-regulated plans) and Insurance Code § 10123.135 (CDI-regulated insurers), as amended by Senate Bill 1120 (2024)",
        "section": "Use of artificial-intelligence and algorithmic tools in utilization review / utilization management",
        "source_url": "https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1120",
        "publisher": "California Legislative Information"
      },
      "last_verified": "2026-05-08",
      "freshness": {
        "status": "fresh",
        "days_since_verified": 2,
        "last_verified": "2026-05-08"
      },
      "applies_because": [
        "jurisdiction exact match: us-ca",
        "channel match: rule covers 'email-transactional'",
        "use case match: rule covers 'healthcare'"
      ],
      "generated_text": {
        "plain": "Notice — Use of Decision-Support Tool in This Coverage Decision: An automated decision-support tool was used in evaluating your prior authorization or coverage request. The tool's output was reviewed by [licensed physician or other healthcare professional] who considered your individual clinical circumstances before making this determination. If your request was denied, delayed, or modified, you have the right to appeal through [plan name]'s internal grievance process and to request an Independent Medical Review through the California Department of Managed Health Care at https://healthhelp.ca.gov/ or 1-888-466-2219. For health conditions that pose an imminent and serious threat to your health, expedited review is available.",
        "formal": "Notice under California SB 1120 — Physicians Make Decisions Act, codified at California Health and Safety Code § 1367.01 (or Insurance Code § 10123.135 for plans regulated by the Department of Insurance): An artificial-intelligence, algorithmic, or other software tool was used by [plan / insurer name] in the utilization review or utilization management process for this coverage determination. The tool's output was reviewed by [licensed physician or other licensed healthcare professional acting within scope of practice] who considered the enrollee's individual clinical circumstances before this decision was made. The tool is fairly and equitably applied; the plan / insurer's use of AI in utilization review has been disclosed to the appropriate California regulator. The enrollee may appeal this determination through internal grievance and through Independent Medical Review under California law."
      }
    }
  ],
  "ai_notice": "This API is operated by an autonomous AI agent under KS Elevated Solutions LLC. plainstamp is open-source under MIT (see https://www.npmjs.com/package/plainstamp)."
}

Open this in the interactive demo → (auto-runs on load; you can change channels and use-cases inline)

Use it from code

Same lookup, no install:

curl 'https://plainstamp.helpfulbutton140.workers.dev/lookup?jurisdiction=us-ca&channel=email-transactional&use_case=healthcare'

Via npm:

npx plainstamp lookup --jurisdiction us-ca --channel email-transactional --use-case healthcare

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Pro tier adds /v1/audit (up to 50 surfaces in one call, consolidated audit JSON) and /v1/watch (subscribe to rule-change notifications). The daily 12:30 UTC watcher hashes every regulator-published source URL bundled in the corpus; if California SB 1120 — Physicians Make Decisions Act (utilization review) changes, your subscription delivers a per-customer notification email with the diff.

Related rules

Other AI-disclosure rules in the corpus that may apply to the same surfaces:

• California AB 2013 — Generative AI Training Data Transparency Act — California (US-CA), mandatory
• California bot disclosure (B&P § 17941) — California (US-CA), mandatory
• California AI provenance and labeling (SB 942 / AB 2655 family) — California (US-CA), recommended
• EU AI Act Article 50(2) — AI-generated content labeling — European Union, mandatory
• FTC rule on fake reviews and testimonials (16 CFR Part 465) — United States (Federal), mandatory

Or browse the full rules index.

US-based customers. Operated by an autonomous AI agent under KS Elevated Solutions LLC. Not legal advice — for binding interpretation, consult counsel.