Chapter 054
2010 -- S 2401 SUBSTITUTE A
Enacted 06/12/10
A N A C T
RELATING TO INSURANCE - INSURANCE FRAUD PREVENTION
Introduced By: Senators Miller, Bates, Jabour, Picard, and Gallo
Date Introduced: February 11, 2010
It is enacted by the General
Assembly as follows:
SECTION 1. Title 27 of the General Laws entitled
"INSURANCE" is hereby amended
by adding thereto the following chapter:
CHAPTER
54.1
ANTI-FRAUD
ACT
27-54.1-1.
Definitions. -- As used in this chapter:
(1) "Business of
insurance" means the writing of insurance or the reinsuring of risks by
an insurer, including acts necessary or incidental to
writing insurance or reinsuring risks and the
activities of persons who act as or are officers, directors,
agents or employees of insurers, or who
are other persons authorized to act on their behalf.
(2)
"Commissioner" means the director of the department of business
regulation or his or
her designee or the division of insurance.
(3) "Fraudulent
insurance act" means an act or omission committed by a person who,
knowingly and with intent to defraud, commits, or conceals any
material information concerning,
one or more of the following:
(i)
Presenting, causing to be presented or preparing with knowledge or belief that
it will
be presented to or by an insurer, a reinsurer, broker or
its agent, false information as part of, in
support of or concerning a fact material to one or more of
the following:
(A) An application
for the issuance or renewal of an insurance policy or reinsurance
contract;
(B) The rating of an
insurance policy or reinsurance contract;
(C) A claim for
payment or benefit pursuant to an insurance policy or reinsurance
contract;
(D) Premiums paid on
an insurance policy or reinsurance contract;
(E) Payments made in
accordance with the terms of an insurance policy or reinsurance
contract;
(F) A document filed
with the commissioner or the chief insurance regulatory official of
another jurisdiction;
(G) The financial
condition of an insurer or reinsurer;
(H) The formation,
acquisition, merger, reconsolidation, dissolution or withdrawal from
one or more lines of insurance or reinsurance in all or
part of this state by an insurer or reinsurer;
(I) The issuance of written evidence of insurance; or
(J) The reinstatement
of an insurance policy;
(ii)
Solicitation of acceptance of new or renewal insurance risks on behalf of an
insurer,
reinsurer or other person engaged in the business of insurance
by a person who knows or should
know that the insurer or other person responsible for the
risk is insolvent at the time of the
transaction;
(iii) Removal, concealment,
alteration or destruction of the assets or records of an insurer,
reinsurer or other person engaged in the business of insurance;
(iv)
Willful embezzlement, abstracting, purloining, or conversion of
monies, funds,
premiums, credits or other property of an insurer, reinsurer
or person engaged in the business of
insurance;
(v) Transaction of
the business of insurance in violation of laws requiring a license,
certificate of authority or other legal authority for the transaction
of the business of insurance; or
(vi)
Attempt to commit, aiding or abetting in the commission of, or
conspiracy to commit
the acts or omissions specified in this subsection.
(4)
"Insurance" means a contract or arrangement in which one undertakes
to:
(i)
Pay or indemnify another as to loss from certain contingencies called “risks,”
including through reinsurance;
(ii) Pay or grant a
specified amount or determinable benefit to another in connection with
ascertainable risk contingencies;
(iii) Pay an annuity
to another; or
(iv)
Act as surety.
(5)
"Insurer" means a person entering into arrangements or contracts of
insurance or
reinsurance and who agrees to perform any of the acts set forth
in subdivision (4) of this section
or fraternal benefit societies, medical and hospital
service corporations, dental service
corporations and/or health maintenance organizations. A person is
an insurer regardless of
whether the person is acting in violation of laws requiring a
certificate of authority or regardless
of whether the person denies being an insurer.
(6) "NAIC"
means the National Association of Insurance Commissioners.
(7)
"Person" means an individual, a corporation, a partnership, an
association, a joint
stock company, a trust, an unincorporated organization, or
any similar entity or any combination
of the foregoing.
(8)
"Policy" means an individual or group policy, group certificate,
contract or
arrangement of insurance or reinsurance affecting the rights of a
resident of this state or bearing a
reasonable relation to this state, regardless of whether
delivered or issued for delivery in this
state.
(9)
"Reinsurance" means a contract, binder of coverage (including
placement slip) or
arrangement under which an insurer procures insurance for itself
in another insurer as to all or
part of an insurance risk of the originating insurer.
27-54.1-2. Fraudulent insurance acts, interference and participation of
convicted
felons prohibited. -- (a) A person shall not commit a fraudulent insurance act.
(b) A person shall
not knowingly or intentionally interfere with the enforcement of the
provisions of this chapter or investigations of suspected or
actual violations of this chapter.
(c)(1) A person
convicted of a felony involving dishonesty or breach of trust shall not
participate in the business of insurance without the written
consent of the commissioner.
(2) A person in the
business of insurance shall not knowingly or intentionally permit a
person convicted of a felony involving dishonesty or breach
of trust to participate in the business
of insurance without the written consent of the
commissioner.
27-54.1-3. Fraud
warning required. -- (a) Notwithstanding
any similar requirements in
title 28, every claim form and application for insurance,
regardless of the form of transmission,
shall contain the following statement or a substantially
similar statement:
"Any person who
knowingly presents a false or fraudulent claim for payment of a loss or
benefit or knowingly presents false information in an
application for insurance is guilty of a crime
and may be subject to fines and confinement in
prison."
(b) The lack of a
statement as required in subsection (a) of this section does not constitute
a defense in any prosecution for a fraudulent insurance
act.
(c) The requirements
of this section shall not apply to reinsurance claims forms or
reinsurance applications.
(d) The requirements
of this section shall not apply to any claim form for health
insurance which is on a form promulgated by the centers for
Medicare and Medicaid services or
in electronic format pursuant to 45 CFR Part 162.
27-54.1-4. Other law enforcement or regulatory authority. -- This
chapter shall not:
(1) Preempt the
authority or relieve the duty of other law enforcement or regulatory
agencies to investigate, examine and prosecute suspected
violations of law;
(2) Prevent or
prohibit a person from disclosing voluntarily information concerning
insurance fraud to a law enforcement or regulatory agency; or
(3) Limit the powers
granted elsewhere by the laws of this state to investigate and
examine possible violations of law and to take appropriate
action against wrongdoers.
27-54.1-5.
Insurer anti-fraud initiatives. -- (a) Insurers
shall have antifraud initiatives
reasonably calculated to detect, report, prosecute and prevent
fraudulent insurance acts, antifraud
initiatives may include:
(1) Fraud
investigators, who may be insurer employees or independent contractors; or
(2) An antifraud
plan.
(b) A person engaged
in the business of insurance having knowledge or a reasonable
belief that a fraudulent insurance act is being, will be or
has been committed shall provide such
information to the governmental unit responsible for
investigation of such act, or if no such unit
exists to the commissioner.
27-54.1-6.
Penalties. -- A person who violates this
chapter is subject to suspension or
revocation of license or certificate of authority or
administrative penalties per
general laws section 42-14-16 or both. Suspension or
revocation of license or certificate of
authority and imposition of administrative penalties shall be
pursuant to an order of the
commissioner issued under
commissioner's order may require a person found to be in violation
of this chapter to make
restitution to persons aggrieved by violations of this chapter.
SECTION 2. This act shall take effect on January 1, 2011.
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LC01560/SUB A/2
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