California SB 1120: Physicians Make Decisions Act — No AI-Only Healthcare Denials
California · Cal. Health & Safety Code § 1367.01; Cal. Insurance Code § 10123.135 (SB 1120, Stats. 2024, ch. 1020)
California was the first U.S. state to directly prohibit health insurance plans from using AI to deny, delay, or modify care. Under SB 1120, when a plan uses AI or algorithms in utilization review, a licensed physician or other qualified clinician — not an AI system — must make every medical-necessity determination. AI tools can assist in data analysis, but the final coverage decision must come from a licensed human. Insurers must disclose AI use and make their algorithms available for regulatory audits. Signed September 28, 2024; effective January 1, 2025.
Technical detail
SB 1120 (2023–2024 Reg. Sess.; signed Sept. 28, 2024; eff. Jan. 1, 2025) amends Cal. Health & Safety Code § 1367.01 and Cal. Insurance Code § 10123.135 to prohibit health care service plans and disability insurers from using an AI system, algorithm, or software tool to make or replace medical-necessity determinations in utilization review; a licensed physician or qualified healthcare provider must make every determination; AI tools may not base decisions solely on a group dataset; insurer must allow regulatory inspection of AI algorithms; DMHC and CDI administer.
Who is protected: California health insurance enrollees and patients subject to utilization review and prior-authorization decisions
Who must comply: Health care service plans and disability insurers (and specialized plans and specialized health insurers) operating in California that use AI in utilization review
Key facts
| Jurisdiction | California |
|---|---|
| Level | State |
| Status | In effect |
| Protection strength | Moderate protection |
| Effective date | 2025-01-01 |
| Enacted | 2024-09-28 |
| Citation | Cal. Health & Safety Code § 1367.01; Cal. Insurance Code § 10123.135 (SB 1120, Stats. 2024, ch. 1020) |
| Enforced by | California Department of Managed Health Care (DMHC); California Department of Insurance (CDI) |
| Private right of action | No — agency enforcement only |
| Penalties | Administrative penalties under DMHC and CDI enforcement authority for failure to meet UR timeframes or improper AI use |
| Topics | insurance AI · healthcare AI · automated decision-making |
| Last verified | 2026-06-16 |
| Official source | Governor Signs Physicians Make Decisions Act — CA Sen. Becker press release ↗ |
More AI rules in California
- CA EO N-6-26 (AI Workforce) · In effect
- California AB 489 (AI healthcare chatbot misrepresentation ban) · In effect
- X.AI v. Bonta (AB 2013 training-data disclosure) · Blocked / in litigation
- CA SB 1298 (2012 AV authorization) · In effect
- CA AB 856 (2015 drone trespass) · In effect
- California Bot Disclosure Act (bots must self-identify in sales/election messaging) · In effect
Related insurance AI rules elsewhere
- Georgia SB 544 (health insurer AI) · Enacted (not yet in effect)
- Indiana HB 1271 (AI claims downcoding) · In effect
- Utah SB 319 (health insurer AI) · Enacted (not yet in effect)
- NYDFS CL 7 (2024) — Insurance AI Anti-Discrimination · In effect
- NAIC AI Evaluation Tool Pilot (12 states, 2026) · Proposed / pending
- AZ HB 2175 (AI Insurance Denial — Physician Review) · In effect
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