ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 4004
(By
Mr. Speaker, Mr. Kiss, and Delegate Trump)
[By Request of the Executive
]Delegates Name
[Month and DayPassed March 13, 2004; in effect ninety days from passage.]
AN ACT to amend the code of West Virginia, 1931, as amended, by
adding thereto two new sections, designated §33-2-15b and
§33-2-15c; to amend said code by adding thereto a new section,
designated §33-2-20; to amend and reenact §33-6A-4 of said
code; to amend said code by adding thereto three new sections,
designated §33-6A-4a, §33-6A-4b and §33-6A-4c; to amend said
code by adding thereto a new section, designated §33-22-2a; to
amend said code by adding thereto a new section, designated
§33-23-2a; to amend said code by adding thereto a new section,
designated §33-24-4b; to amend said code by adding thereto a
new section, designated §33-25-6a; to amend said code by
adding thereto a new section, designated §33-25A-24b; to amend
and reenact §33-41-1, §33-41-2 and §33-41-3 of said code; and
to amend said code by adding thereto nine new sections, designated §33-41-4, §33-41-5, §33-41-6, §33-41-7, §33-41-8,
§33-41-9, §33-41-10, §33-41-11 and §33-41-12, all relating to
insurance generally; requiring the insurance commissioner to
submit a report to the legislature on the impact of third
party causes of actions on rates and availability and to make
recommendations; authorizing the commissioner to request
information from insurers; providing that certain information
provided by insurers is not subject to disclosure; requiring
the insurance commissioner to submit a report to the
legislature on the office of the consumer advocate; requiring
the commissioner to make recommendations regarding the office
of the consumer advocate; permitting additional reasons for
nonrenewal of automobile liability or physical damage
policies; requiring the submission of withdrawal plans in
certain instances; providing that a certain percentage of
existing policies or any policies issued or renewed after the
effective date of the bill may be nonrenewed by an insurer for
any reason with proper notice to the insured; providing that
a certain percentage of policies may be nonrenewed for
underwriting reasons; allowing insurers to elect a method of
nonrenewal; requiring renewal in certain instances when there
are restrictive endorsements; authorizing the commissioner of
insurance to act regarding withdrawal of insurers from the state; authorizing the commissioner to allow certain insurers
to withdraw from the state; requiring insurers and the
insurance commissioner to submit information regarding the
impact of legislation on rates and availability; prevention
and investigation of insurance fraud generally; subjecting
farmers' mutual insurance companies, fraternal benefit
societies, certain hospital, medical, dental and health
services corporations, health care corporations, and health
maintenance organizations to insurance fraud provisions;
creating the West Virginia insurance fraud prevention act;
legislative intent; defining terms; requiring fraud warning on
forms; use of special assistant prosecutor; establishing an
insurance fraud unit within agency of insurance commissioner;
authorizing promulgation of rules; establishing powers and
duties of the unit; establishing investigative powers and
procedures; providing confidentiality of fraud unit records;
immunity for providing information provided to law enforcement
regarding fraud; exceptions; creating offense of insurance
fraud; establishing penalties and fines; authorizing
prosecution for insurance fraud; authorizing fraud unit
attorneys to act as special prosecutors at request of county
prosecutors; specifying duties of insurers; creating
misdemeanor and felony offenses for the commission of fraudulent acts; creating civil penalties; granting authority
to commissioner to administratively sanction regulated persons
and insureds for violations of the article; and exceptions and
immunities.
Be it enacted by the Legislature of West Virginia:
That the code of West Virginia, 1931, as amended, be amended
by adding thereto two new sections designated § 33-2-15b and § 33-
2-15c; that said code be amended by adding thereto a new section,
designated §33-2-20;
that §33-6A-4 of said code be amended and
reenacted; that said code be amended by adding thereto three new
sections, designated §33-6A-4a, §33-6A-4b and §33-6A-4c; that said
code be amended by adding thereto a new section, designated §33-22-
2a; that said code be amended by adding thereto a new section,
designated §33-23-2a; that said code be amended by adding thereto
a new section, designated §33-24-4b; that said code be amended by
adding thereto a new section, designated §33-25-6a; that said code
be amended by adding thereto a new section, designated §33-25A-24b;
that §33-41-1, §33-41-2 and §33-41-3 of said code be amended and
reenacted; and that said code be amended by adding thereto nine new
sections, designated §33-41-4, §33-41-5, §33-41-6, §33-41-7, §33-
41-8, §33-41-9, §33-41-10, §33-41-11 and §33-41-12, all to read as
follows:
CHAPTER 33. INSURANCE
.
ARTICLE 2. INSURANCE COMMISSIONER.
§33-2-15b. Reports to the Legislature.
(a) By the first of February, two thousand five, the
commissioner shall submit to the Legislature a report
on third
party causes of action;
(b) The report shall contain the following information:
(1) The legal history of the creation of a third party causes
of action brought pursuant to Unfair Trade Practices Act
as
codified in article eleven of this chapter;
(2) An analysis of the impact of third party causes of action
upon insurance rates and the availability of insurance in this
state
;
(3)
A summary of the types of data which the commissioner
utilized in preparing the analysis: Provided, That the commissioner
will not disclose information which is otherwise confidential:
Provided, however, That if the commissioner is unable to obtain
data which he or she considers necessary to preparing a full
analysis, the commissioner shall state in the report:
(A) The reasons that he or she was not able to obtain the
data;
(B) Recommendations or proposed legislation for facilitating
the collection of necessary data and protecting proprietary
information;
(4) Information on what other states have this cause of
action;
(5) Based upon the findings of the commissioner, and if the
findings so suggest, proposed legislation to address any reforms
needed for third party claims under the Unfair Trade Practices Act;
(c) For purpose of preparing the report, the commissioner may
request from companies authorized to conduct business in this state
any information that he or she believes is necessary to determine
the economic effect of third-party lawsuits on insurance premiums.
The companies shall not be required to provide the information.
Any information which the company agrees to provide, shall be
considered confidential by law and privileged, is exempt from
disclosure pursuant to chapter twenty-nine-b of this code, is not
open to public inspection, is not subject to subpoena, and is not
subject to discovery or admissible in evidence in any criminal,
private civil or administrative action and is not subject to
production pursuant to court order. Notwithstanding any other
provisions in this section, while the commissioner is to provide
his or her general conclusions based upon the review of the data,
the commissioner is not to disclose the information in a manner so
as to violate the confidentiality provisions of this section.
§33-2-15c. Reports to the Legislature
(a) By the first of February, two thousand five, the commissioner shall submit to the Legislature a report
relating to
the office of the consumer advocate.
(b) The report shall contain the following information:
(1) An overview of the function of the office of the consumer
advocacy and how the office addresses consumer complaints;
(2) The number of staff in the office of the consumer advocate
and the structure of the existing office;
(3) Statistics reflecting the number of consumer complaints
and types handled by the office from the first of January, two
thousand one, until the first of January, two thousand four;
(4) The number of states which have consumer advocates and the
lines of insurance for which the advocates are authorized to act on
behalf of consumers;
(5) The recommendation of the commissioner in regard to
whether this state would benefit by having the role of the consumer
advocate expanded to other lines of insurance;
(6) Based upon the findings and recommendations, of the
commissioner, and if the findings so suggest,
proposed legislation
for expanding the office of the consumer advocate to other lines of
insurance.
§33-2-20. Authority of commission to allow withdrawal of insurance
carriers from doing business in the state.
(a) Notwithstanding any provision of the code to the contrary, the commissioner may, consistent with the provisions of this
section, authorize an insurer to withdraw from the line of
automobile liability insurance for personal, private passenger
automobiles covered by article six-a of this chapter, or from doing
business entirely in this state if:
(1) The insurer has submitted and received approval from the
commissioner of a withdrawal plan; and
(2) The insurer demonstrates to the satisfaction of the
commissioner that allowing the insurer to withdraw would be in the
best interest of the insurer, its policyholders and the citizens of
this state.
(b) Any insurer that elects to nonrenew or cancel the
particular type or line of insurance coverage provided for by
section five, article seventeen-a of this chapter shall submit to
the insurance commissioner a withdrawal plan for informational
purposes only prior to cancellation or nonrenewal of all its
business in this state.
(c) The commissioner shall promulgate rules pursuant to
chapter twenty-nine-a of this code setting forth the criteria for
withdrawal plans.
ARTICLE 6A. CANCELLATION OR NONRENEWAL OF AUTOMOBILE LIABILITY
POLICIES.
§33-6A-4. Advance notice of nonrenewal required; assigned risk policies; reasons for nonrenewal; hearing and review after
nonrenewal.
(a) No insurer shall fail to renew an outstanding automobile
liability or physical damage insurance policy unless the nonrenewal
is preceded by at least forty-five days advance notice to the named
insured of the insurer's election not to renew the policy:
Provided, That subject to this section, nothing contained in this
article shall be construed to prevent an insurer from refusing to
issue an automobile liability or physical damage insurance policy
upon application to the insurer, nor shall any provision of this
article be construed to prevent an insurer from refusing to renew
a policy upon expiration, except as to the notice requirements of
this section, and except further as to those applicants lawfully
submitted pursuant to the West Virginia assigned risk plan.
(b) An insurer may not fail to renew an outstanding automobile
liability or physical damage insurance policy which has been in
existence for two consecutive years or longer except for the
following reasons:
(1) The named insured fails to make payments of premium for
the policy or any installment of the premium when due;
(2) The policy is obtained through material misrepresentation;
(3) The insured violates any of the material terms and
conditions of the policy;
(4) The named insured or any other operator, either residing
in the same household or who customarily operates an automobile
insured under the policy:
(A) Has had his or her operator's license suspended or revoked
during the policy period; or
(B) Is or becomes subject to a physical or mental condition
that prevents the insured from operating a motor vehicle, and the
individual cannot produce a certificate from a physician testifying
to his or her ability to operate a motor vehicle;
(5) The named insured or any other operator, either residing
in the same household or who customarily operates an automobile
insured under the policy, is convicted of or forfeits bail during
the policy period for any of the following reasons:
(A) Any felony or assault involving the use of a motor
vehicle;
(B) Negligent homicide arising out of the operation of a motor
vehicle;
(C) Operating a motor vehicle while under the influence of
intoxicating liquor or of any narcotic drug;
(D) Leaving the scene of a motor vehicle accident in which the
insured is involved without reporting it as required by law;
(E) Theft of a motor vehicle or the unlawful taking of a motor
vehicle; or
(F) Making false statements in an application for a motor
vehicle operator's license;
(6) The named insured or any other operator, either residing
in the same household or who customarily operates an automobile
insured under the policy, is convicted of or forfeits bail during
the policy period for two or more moving traffic violations
committed within a period of twelve months, each of which results
in three or more points being assessed on the driver's record by
the division of motor vehicles, whether or not the insurer renewed
the policy without knowledge of all of the violations: Provided,
That an insurer that makes an election pursuant to section four-b
of this article to issue all nonrenewal notices pursuant to this
section, may nonrenew an automobile liability or physical damage
insurance policy if the named insured, or any other operator,
either residing in the same household or who customarily operates
an automobile insured under the policy is convicted of or forfeits
bail during the policy period for two or more moving traffic
violations committed within a period of twenty-four months, each of
which occurs on or after the first day of July, two thousand four,
and after the date that the insurer makes an election pursuant to
section four-b of this article, and results in three or more points
being assessed on the driver's record by the division of motor
vehicles, whether or not the insurer renewed the policy without knowledge of all of the violations. Notice of any nonrenewal made
pursuant to this subdivision shall be mailed to the named insured
either during the current policy period or during the first full
policy period following the date that the second moving traffic
violation is recorded by the division of motor vehicles;
(7) The named insured or any other operator either residing in
the same household or who customarily operates an automobile
insured under the policy has had a second at-fault motor vehicle
accident within a period of twelve months, whether or not the
insurer renewed the policy without knowledge of all of the
accidents: Provided, That an insurer that makes an election
pursuant to section four-b of this article to issue all nonrenewal
notices pursuant to this section, may nonrenew an automobile
liability or physical damage insurance policy under this subsection
if the named insured or any other operator either residing in the
same household or who customarily operates an automobile insured
under such policy has had two at-fault motor vehicle accidents
within a period of thirty-six months, each of which occurs after
the first day of July, two thousand four, and after the date that
the insurer makes an election pursuant to section four-b of this
article, and results in a claim paid by the insurer for each
accident, whether or not the insurer renewed the policy without
knowledge of all of the accidents. Notice of any nonrenewal made pursuant to this subsection shall be mailed to the named insured
either during the current policy period or during the first full
policy period following the date of the second accident; or
(8) The insurer ceases writing automobile liability or
physical damage insurance policies throughout the state after
submission to and approval by the commissioner of a withdrawal plan
or discontinues operations within the state pursuant to a
withdrawal plan approved by the commissioner.
(c) An insurer that makes an election pursuant to section
four-b of this article to issue all nonrenewal notices pursuant to
this section shall not fail to renew an automobile liability or
physical damage insurance policy when an operator other than the
named insured has violated the provisions of subdivision (6) or
(7), subsection (b) of this section, if the named insured, by
restrictive endorsement, specifically excludes the operator who
violated the provision. An insurer issuing a nonrenewal notice
informing the named insured that the policy will be nonrenewed for
the reason that an operator has violated the provisions of
subdivision (6) or (7), subsection (b) of this section, shall at
that time inform the named insured of his or her option to
specifically exclude the operator by restrictive endorsement and
shall further inform the named insured that upon obtaining the
restrictive endorsement, the insurer will renew the policy or rescind the nonrenewal absent the existence of any other basis for
nonrenewal set forth in this section.
(d) A notice provided under this section shall state the
specific reason or reasons for nonrenewal and shall advise the
named insured that nonrenewal of the policy for any reason is
subject to a hearing and review as provided for in section five of
this article. Cost of the hearing shall be assessed against the
losing party but shall not exceed seventy-five dollars. The notice
must also advise the insured of possible eligibility for insurance
through the West Virginia assigned risk plan.
(e) Notwithstanding the provisions of subsection (a) of this
section, the insurer shall reinstate any automobile liability or
physical damage insurance policy that has not been renewed due to
the insured's failure to pay the renewal premium when due if:
(1) None of the other grounds for nonrenewal as set forth in
this section exist; and
(2) The insured makes an application for reinstatement within
forty-five days of the original expiration date of the policy. If
a policy is reinstated as provided for in this paragraph, then the
coverage afforded shall not be retroactive to the original
expiration date of the policy: Provided, That such policy shall be
effective on the reinstatement date at the current premium levels
offered by the company and shall not be afforded the protections of this section relating to renewal of an outstanding automobile
liability or physical damage insurance policy that has been in
existence for at least two consecutive years.
§33-6A-4a. Alternative method for nonrenewal for automobile
liability and physical damage insurance.
(a) On or after the first day of July, two thousand four, an
insurer may nonrenew an automobile liability or physical damage
insurance policy for any reason which is consistent with its
underwriting standards.
(b) Notwithstanding any other provisions in this section, race,
religion, nationality, ethnic group, age, sex, marital status, or
other reason prohibited by the provisions of this chapter may not
be considered as a reason for nonrenewal;
(c) Notwithstanding the provisions of section four of this
article, a nonrenewal may only be issued pursuant to the provisions
of this section upon forty-five days advance notice to the named
insured of the insurer's election not to renew the policy.
(d) The total number of nonrenewal notices issued each year,
commencing on the first day of July, two thousand four, by the
insurer, resulting in nonrenewal, pursuant to this section may not
exceed one percent per year of the total number of the policies of
the insurer in force at the end of the previous calendar year in
this state: Provided, That the total number of nonrenewal notices issued each year to insureds within any given county in this state
resulting in nonrenewal may not exceed one percent per year of the
total number of the policies of the insurer in force in that county
at the end of the previous calendar year: Provided, however, That
an insurer may nonrenew one policy per year in any county if the
applicable percentage limitation results in less than one policy.
(e) A notice issued pursuant to this section shall state the
specific reason or reasons for refusal to renew and shall advise
the named insured that nonrenewal of the policy for any reason is
subject to a hearing and review as provided for in section five of
this article: Provided, That the hearing shall relate to whether
the nonrenewal of the policy was issued for a discriminatory
reason, was based upon inadequate notice, an underwriting standard
by the commissioner found to be in violation of this chapter or
causes the insurer to exceed the percentage limitations, or
percentage limitations by county, of nonrenewal notices set forth
in this section. Cost of the hearing shall be assessed against the
losing party but shall not exceed seventy-five dollars. The notice
shall also advise the insured of possible eligibility for insurance
through the West Virginia assigned risk plan.
(f) Each insurer licensed to write automobile liability and
physical damage insurance policies in this state shall file with
the commissioner a copy of its underwriting standards, including any amendments or supplements. The commissioner shall review and
examine the underwriting standards to ensure that they are
consistent with generally accepted underwriting principles. The
underwriting standards filed with the commissioner shall
be
considered confidential by law and privileged, are exempt from
disclosure pursuant to chapter twenty-nine-b of this code, are not
open to public inspection, are not subject to subpoena, and are not
subject to discovery or admissible in evidence in any criminal,
private civil or administrative action and are not subject to
production pursuant to court order.
The commissioner shall
promulgate legislative rules pursuant to chapter twenty-nine-a of
this code to implement the provisions of this section.
(g) Each insurer that has elected to issue nonrenewal notices
pursuant to the percentage limitations provided in this section
shall report to the commissioner, on a form prescribed by the
commissioner, on or before the thirtieth day of September of each
year the total number of nonrenewal notices issued in this state
and in each county of this state for the preceding year. The
insurer shall also report to the commissioner the specific reason
or reasons for the nonrenewals by county which have been issued
pursuant to this section.
§33-6A-4b. Manner of making election relating to nonrenewals.
(a) Each insurer licensed to write automobile liability or physical damage insurance policies in this state, as of the first
day of July, two thousand four, may elect to issue all nonrenewal
notices either pursuant to section four or section four-a of this
article. Each insurer may notify the commissioner of its election
any time after the first day of July, two thousand four, and shall
remain bound by the election for a period of five years. For each
subsequent five-year period each insurer shall notify the
commissioner of its election to issue all nonrenewal notices either
pursuant to section four or section four-a of this article.
(1) If no election is made by the first day of July, two
thousand four, then, until the first day of July, two thousand five,
the insurer shall continue to issue all nonrenewal notices pursuant
to the existing nonrenewal provisions in section four prior to the
amendments enacted therein by the acts of the Seventy-Sixth
Legislature during the second session, two thousand four.
(2) As of the first day of July, two thousand five,
each
insurer licensed to write automobile liability or physical damage
insurance policies in this state, and that has not previously made
an election under this section, shall elect to issue all nonrenewal
notices either pursuant to section four or section four-a of this
article. Each insurer which has not previously made an election
must notify the commissioner of its election no later than the first
day of July, two thousand five, and shall remain bound by the election for a period of five years. For each subsequent five-year
period each insurer shall notify the commissioner of its election
to issue all nonrenewal notices either pursuant to section four or
section four-a of this article.
(b) An insurer that is not licensed to write automobile
liability or physical damage insurance policies in this state, as
of the first day of July, two thousand four, but becomes licensed
to write such policies after that date shall, no later than two
years after the date the insurer becomes licensed to write such
policies, make an election to issue all nonrenewal notices either
pursuant to section four or section four-a of this article, and
shall notify the commissioner of its election. If the insurer
elects to issue all nonrenewal notices pursuant to section four-a
of this article, the total number of nonrenewals may not exceed the
percentage limitations set forth in section four-a of this article.
An insurer first becoming licensed to issue automobile liability and
physical damage insurance policies in this state after the first day
of July, two thousand four, shall be bound by its election for a
period of five years, and for each subsequent five-year period shall
notify the commissioner of its election to issue all nonrenewal
notices either pursuant to section four or section four-a of this
article.
(c) Notwithstanding any provision of this article to the contrary, a named insured by restrictive endorsement may
specifically exclude from automobile liability or physical damage
insurance policy an operator who has violated the provisions of
subdivision (6) or (7), subsection (b), section four of this
article.
§33-6A-4c. Report to the Legislature.
By the first day of January, two thousand nine, the
commissioner shall submit a report to the Legislature. The report
shall contain the following:
(1) An analysis of the impact of legislation enacted during
the two thousand four legislative session upon rates and insurance
availability in the state;
(2) Statistics reflecting the rate history of insurers
conducting business in West Virginia from the first day of July, two
thousand four, until the first day of July, two thousand eight.
ARTICLE 22. FARMERS' MUTUAL FIRE INSURANCE COMPANIES.
§33-22-2a. Applicability of insurance fraud prevention act.
Notwithstanding any provision of this code to the contrary,
article forty-one of this chapter is applicable to farmers' mutual
fire insurance companies.
ARTICLE 23. FRATERNAL BENEFIT SOCIETIES.
§33-23-2a. Applicability of insurance fraud prevention act.
Notwithstanding any provision of this code to the contrary,
article forty-one of this chapter is applicable to fraternal benefit
societies.
ARTICLE 24. HOSPITAL SERVICE CORPORATIONS, MEDICAL SERVICE
CORPORATIONS, DENTAL SERVICE CORPORATIONS AND
HEALTH SERVICE CORPORATIONS.
§33-24-4b. Applicability of insurance fraud prevention act.
Notwithstanding any provision of this code to the contrary,
article forty-one of this chapter is applicable to hospital service
corporations, medical service corporations, dental service
corporations and health service corporations.
ARTICLE 25. HEALTH CARE CORPORATIONS.
§33-25-6a. Applicability of insurance fraud prevention act.
Notwithstanding any provision of this code to the contrary,
article forty-one of this chapter is applicable to health care
corporations.
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-24b. Applicability of insurance fraud prevention act.
Notwithstanding any provision of this code to the contrary,
article forty-one of this chapter is applicable to health
maintenance organizations.
ARTICLE 41. INSURANCE FRAUD PREVENTION ACT.
§33-41-1. Short title; legislative findings and purpose.
(a) This article may be cited as the "West Virginia Insurance
Fraud Prevention Act".
(b) The Legislature finds that the business of insurance
involves many transactions of numerous types that have potential for
fraud and other illegal activities. This article is intended to
permit use of the expertise of the commissioner to investigate and
help prosecute insurance fraud and other crimes related to the
business of insurance more effectively, and to assist and receive
assistance from state, local and federal law-enforcement and
regulatory agencies in enforcing laws prohibiting crimes relating
to the business of insurance.
§33-41-2. Definitions.
As used in this article:
(1) "Benefits" mean money payments, goods, services or other
thing of value paid in response to a claim filed with an insurer
based upon a policy of insurance;
(2) "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;
(3) "Claim" means an application or request for payment or
benefits provided under the terms of a policy of insurance;
(4) "Commissioner" means the insurance commissioner of West
Virginia or his or her designee;
(5) "Health care provider" means a person, partnership,
corporation, facility or institution licensed by, or certified in,
this state or another state, to provide health care or professional
health care services, including, but not limited to, a physician,
osteopathic physician, hospital, dentist, registered or licensed
practical nurse, optometrist, pharmacist, podiatrist, chiropractor,
physical therapist or psychologist;
(6) "Insurance" means a contract or arrangement in which a
person undertakes to:
(A) Pay or indemnify another person as to loss from certain
contingencies called "risks," including through reinsurance;
(B) Pay or grant a specified amount or determinable benefit to
another person in connection with ascertainable risk contingencies;
(C) Pay an annuity to another person; or
(D) Act as surety.
(7) "Insurer" means a person entering into arrangements or
contracts of insurance or reinsurance. Insurer includes, but is not
limited to, any domestic or foreign stock company, mutual company,
mutual protective association, farmers' mutual fire companies, fraternal benefit society, reciprocal or interinsurance exchange,
nonprofit medical care corporation, nonprofit health care
corporation, nonprofit hospital service association, nonprofit
dental care corporation, health maintenance organization, captive
insurance company, risk retention group or other insurer, regardless
of the type of coverage written, benefits provided or guarantees
made by each. 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;
(8) "Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a joint stock
company, a trust, trustees, an unincorporated organization, or any
similar business entity or any combination of the foregoing.
"Person" also includes hospital service corporations, medical
service corporations and dental service corporations as defined in
article twenty-four of this chapter, health care corporations as
defined in article twenty-five of this chapter, or a health
maintenance organization organized pursuant to article twenty-five-a
of this chapter;
(9) "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;
(10) "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;
(11) "Statement" means any written or oral representation made
to any person, insurer or authorized agency. A statement includes,
but is not limited to, any oral report or representation; any
insurance application, policy, notice or statement; any proof of
loss, bill of lading, receipt for payment, invoice, account,
estimate of property damages, or other evidence of loss, injury or
expense; any bill for services, diagnosis, prescription, hospital
or doctor record, X ray, test result or other evidence of treatment,
services or expense; and any application, report, actuarial study,
rate request or other document submitted or required to be submitted
to any authorized agency. A statement also includes any written or
oral representation recorded by electronic or other media; and
(12) "Unit" means the insurance fraud unit established
pursuant to the provisions of this article acting collectively or
by its duly authorized representatives.
§33-41-3. Fraud warning authorized; statement required of
nonadmitted insurers.
(a) Claims forms and applications for insurance, regardless of
the form of transmission, may contain the following warning or a
substantially similar caveat:
"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 warning as authorized by the provisions of
subsection (a) of this section does not constitute a defense in any
prosecution for a fraudulent or illegal act nor shall it constitute
the basis for any type of civil cause of action.
(c) Policies issued by nonadmitted insurers pursuant to article
twelve-c of this chapter shall contain a statement disclosing the
status of the insurer to do business in the state where the policy
is delivered or issued for delivery or the state where coverage is
in force. The requirement of this subsection may be satisfied by
a disclosure specifically required by section five, article twelve-c
of this chapter; section nine, article thirty-two of this chapter;
and section eighteen, article thirty-two of this chapter.
§33-41-4. Authority of the commissioner; use of special assistant
prosecutors.
(a) The commissioner may investigate suspected criminal acts
relating to the business of insurance as authorized by the provisions of this article.
(b) If the prosecuting attorney of the county in which a
criminal violation relating to the business of insurance occurs
determines that his or her office is unable to take appropriate
action, he or she may petition the appropriate circuit court for the
appointment of a special prosecutor or special assistant prosecutor
from the West Virginia Prosecuting Attorney Institute pursuant to
the provisions of section six, article four, chapter seven of this
code. Notwithstanding the provisions of that section, attorneys
employed by the commissioner and assigned to the insurance fraud
unit created by the provisions of section eight of this article may
prosecute or assist in the prosecution of violations of the criminal
laws of this state related to the business of insurance and may act
as special prosecutors or special assistant prosecutors in those
cases if assistance is sought by the prosecuting attorney or special
prosecutor assigned by the institute to prosecute those matters.
(c) Funds allocated for insurance fraud prevention may be
dispersed by the commissioner, at his or her discretion, for the
purpose of insurance fraud enforcement as authorized by the
provisions of this code.
(d) The Insurance Fraud Unit authorized by the provisions of
section eight of this article may assist federal law-enforcement
agencies, the West Virginia state police, the state fire marshal, municipal police departments and the sheriffs of the counties in
West Virginia in investigating crimes related to the business of
insurance.
(e) The commissioner may conduct public outreach, education,
and awareness programs on the costs of insurance fraud to the
public.
§33-41-5. Reporting of insurance fraud or criminal offenses
otherwise related to the business of insurance.
(a) A person engaged in the business of insurance having
knowledge or a reasonable belief that fraud or another crime related
to the business of insurance is being, will be or has been committed
shall provide to the commissioner the information required by, and
in a manner prescribed by, the commissioner.
(b) The commissioner may prescribe a reporting form to
facilitate reporting of possible fraud or other offenses related to
the business of insurance for use by persons other than those
persons referred to in subsection (a) of this section.
§33-41-6. Immunity from liability.
(a) There shall be no civil liability imposed on and no cause
of action shall arise from a person's furnishing information
concerning suspected or anticipated fraud relating to the business
of insurance, if the information is provided to or received from:
(1) The commissioner or the commissioner's employees, agents or representatives;
(2) Federal, state, or local law-enforcement or regulatory
officials or their employees, agents or representatives;
(3) A person involved in the prevention and detection of
insurance fraud or that person's agents, employees or
representatives; or
(4) The national association of insurance commissioners or its
employees, agents or representatives.
(b) The provisions of subsection (a) of this section are not
applicable to materially incorrect statements made maliciously or
fraudulently by a person designated a mandated reporter pursuant to
the provisions of subsection (a), section five of this article or
made in reckless disregard to the truth or falsity of the statement
by those not mandated to report. In an action brought against a
person for filing a report or furnishing other information
concerning an alleged insurance fraud, the party bringing the action
shall plead with specificity any facts supporting the allegation
that subsection (a) of this section does not apply because the
person filing the report or furnishing the incorrect information did
so maliciously in the case of a mandated reporter or in the case of
a person not designated a mandated reporter, in reckless disregard
for the truth or falsity of the statement.
(c) Nothing in this article shall be construed to limit, abrogate or modify existing statutes or case law applicable to the
duties or liabilities of insurers regarding bad faith or unfair
trade practices.
(d) This section does not abrogate or modify common law or
statutory privileges or immunities.
§33-41-7. Confidentiality.
(a) Documents, materials or other information in the possession
or control of the office of the insurance commissioner that are
provided pursuant to section six of this article or obtained by the
commissioner in an investigation of alleged fraudulent acts related
to the business of insurance shall be confidential by law and
privileged, shall not be subject to the provisions of chapter
twenty-nine-b of this code, shall not be open to public inspection,
shall not be subject to subpoena, and shall not be subject to
discovery or admissible in evidence in any private civil action.
The commissioner may use the documents, materials or other
information in the furtherance of any regulatory or legal action
brought as a part of the commissioner's official duties. The
commissioner may use the documents, materials or other information
if they are required for evidence in criminal proceedings or other
action by the state or federal government and in such context may
be discoverable as ordered by a court of competent jurisdiction
exercising its discretion.
(b) Neither the commissioner nor any person who receives
documents, materials or other information while acting under the
authority of the commissioner may be permitted or required to
testify in any private civil action concerning any confidential
documents, materials or information subject to subsection (a) of
this section except as ordered by a court of competent jurisdiction.
(c) In order to assist in the performance of the commissioner's
duties, the commissioner:
(1) May share documents, materials or other information,
including the confidential and privileged documents, materials or
information subject to subsection (a) of this section with other
state, federal and international regulatory agencies, with the
national association of insurance commissioners and its affiliates
and subsidiaries, and with local, state, federal and international
law-enforcement authorities, provided that the recipient agrees to
maintain the confidentiality and privileged status of the document,
material or other information;
(2) May receive documents, materials or information, including
otherwise confidential and privileged documents, materials or
information, from the national association of insurance
commissioners and its affiliates and subsidiaries, and from
regulatory and law-enforcement officers of other foreign or domestic
jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the
understanding that it is confidential or privileged under the laws
of the jurisdiction that is the source of the document, material or
information; and
(3) May enter into agreements governing sharing and use of
information including the furtherance of any regulatory or legal
action brought as part of the recipient's official duties.
(d) No waiver of any applicable privilege or claim of
confidentiality in the documents, materials or information shall
occur as a result of disclosure to the commissioner under this
section or as a result of sharing as authorized in subsection (c)
of this section.
(e) Nothing in this section shall prohibit the commissioner
from providing information to or receiving information from any
local, state, federal or international law-enforcement authorities,
including any prosecuting authority; or from complying with
subpoenas or other lawful process in criminal actions; or as may
otherwise be provided in this article.
(f) Nothing in this article may be construed to abrogate or
limit the attorney-client or work product privileges existing at
common law or established by statute or court rule.
§33-41-8. Creation of insurance fraud unit; purpose; duties;
personnel qualifications.
(a) There is established the West Virginia insurance fraud unit
within the office of the insurance commissioner of West Virginia.
The commissioner may employ full-time supervisory, legal and
investigative personnel for the unit, who shall be qualified by
training and experience in the areas of detection, investigation or
prosecution of fraud within and against the insurance industry to
perform the duties of their positions. The director of the fraud
unit shall be a full-time position and shall be appointed by the
commissioner and serve at his or her will and pleasure. The
commissioner shall provide office space, equipment, supplies,
clerical and other staff that is necessary for the unit to carry out
its duties and responsibilities under this article.
(b) The fraud unit may in its discretion:
(1) Initiate inquiries and conduct investigations when the unit
has cause to believe violations of the provisions of this chapter
or the provisions of article three, chapter sixty-one of this code
relating to the business of insurance have been or are being
committed;
(2) Review reports or complaints of alleged fraud related to
the business of insurance activities from federal, state and local
law-enforcement and regulatory agencies, persons engaged in the
business of insurance and the general public to determine whether
the reports require further investigation; and
(3) Conduct independent examinations of alleged fraudulent
activity related to the business of insurance and undertake
independent studies to determine the extent of fraudulent insurance
acts.
(c) The insurance fraud unit may:
(1) Employ and train personnel to achieve the purposes of this
article and to employ legal counsel, investigators, auditors and
clerical support personnel and other personnel as the commissioner
determines necessary from time to time to accomplish the purposes
of this article;
(2) Inspect, copy or collect records and evidence;
(3) Serve subpoenas issued by grand juries and trial courts in
criminal matters;
(4) Share records and evidence with federal, state or local
law-enforcement or regulatory agencies, and enter into interagency
agreements;
(5) Make criminal referrals to the county prosecutors;
(6) Conduct investigations outside this state. If the
information the insurance fraud unit seeks to obtain is located
outside this state, the person from whom the information is sought
may make the information available to the insurance fraud unit to
examine at the place where the information is located. The
insurance fraud unit may designate representatives, including officials of the state in which the matter is located, to inspect
the information on behalf of the insurance fraud unit, and the
insurance fraud unit may respond to similar requests from officials
of other states;
(7) The fraud unit may initiate investigations and participate
in the development of, and if necessary, the prosecution of any
health care provider, including a provider of rehabilitation
services, suspected of fraudulent activity related to the business
of insurance;
(8) Specific personnel, designated by the commissioner, shall
be permitted to operate vehicles owned or leased for the state
displaying Class A registration plates;
(9) Notwithstanding any provision of this code to the contrary,
specific personnel designated by the commissioner may carry firearms
in the course of their official duties after meeting specialized
qualifications established by the governor's committee on crime,
delinquency and correction, which shall include the successful
completion of handgun training provided to law-enforcement officers
by the West Virginia state police: Provided, That nothing in this
subsection shall be construed to include any person designated by
the commissioner as a law-enforcement officer as that term is
defined by the provisions of section one, article twenty-nine,
chapter thirty of this code; and
(10) The insurance fraud unit shall not be subject to the
provisions of article nine-a, chapter six of this code and the
investigations conducted by the insurance fraud unit and the
materials placed in the files of the unit as a result of any such
investigation are exempt from public disclosure under the provisions
of chapter twenty-nine-b of this code.
§33-41-9. Other law-enforcement or regulatory authority.
This article does 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 other than the insurance fraud unit; or
(3) Limit the powers granted elsewhere by the laws of this
state to the commissioner or his or her agents to investigate and
examine possible violations of law and to take appropriate action
against violators of law.
§33-41-10. Rules.
The insurance commissioner shall, pursuant to the provisions
of article three, chapter twenty-nine-a of this code, promulgate
such legislative rules as are necessary or proper to carry out the
purposes of this article.
§33-41-11. Fraudulent claims to insurance companies.
(a) Any person who knowingly and willfully and with intent to
defraud submits a materially false statement in support of a claim
for insurance benefits or payment pursuant to a policy of insurance
or who conspires to do so is guilty of a crime and is subject to the
penalties set forth in the provisions of this section.
(b) Any person who commits a violation of the provisions of
subsection (a) of this section, where the benefit sought exceeds one
thousand dollars in value, is guilty of a felony and, upon
conviction thereof, shall be confined in a correctional facility for
not less than one nor more than ten years, fined not more than ten
thousand dollars, or both, or in the discretion of the circuit
court, confined in a county or regional jail for not more than one
year and so fined.
(c) Any person who commits a violation of the provisions of
subsection (a) of this section where the benefit sought is one
thousand dollars or less in value, is guilty of a misdemeanor and,
upon conviction thereof, shall be confined in a county or regional
jail for not more than one year, fined not more than two thousand
five hundred dollars, or both.
(d) Any person convicted of a violation of this section is
subject to the restitution provisions of article eleven-a, chapter
sixty-one of this code.
(e) The circuit court may award to the unit or other law-
enforcement agency investigating a violation of this section or
other criminal offense related to the business of insurance its cost
of investigation.
§33-41-12. Civil penalties; injunctive relief; employment
disqualification.
A person or entity engaged in the business of insurance or a
person or entity making a claim against an insurer who violates any
provision of this article may be subject to the following:
(1) Where applicable, suspension or revocation of license or
certificate of authority or a civil penalty of up to ten thousand
dollars per violation, or where applicable, both. Suspension or
revocation of license or certificate of authority or imposition of
civil penalties may be pursuant to an order of the commissioner
issued pursuant to the provisions of section thirteen, article two
of this chapter. The commissioner's order may require a person
found to be in violation of this article to make reasonable
restitution to persons aggrieved by violations of this article. The
commissioner may assess a person sanctioned pursuant to the
provisions of this section the cost of investigation;
(2) Notwithstanding any other provision of law, a civil penalty
imposed pursuant to the provisions of this section is mandatory and
not subject to suspension;
(3) A person convicted of a felony violation law reasonably
related to the business of insurance shall be disqualified from
engaging in the business of insurance; and
(4) The commissioner may apply for a temporary or permanent
injunction in any appropriate circuit court of this state seeking
to enjoin and restrain a person from violating or continuing to
violate the provisions of this article or rule promulgated under
this article, notwithstanding the existence of other remedies at
law. The circuit court shall have jurisdiction of the proceeding
and have the power to make and enter an order or judgment awarding
temporary or permanent injunctive relief restraining any person from
violating or continuing to violate any provision of this article or
rule promulgated under the article as in its judgment is proper.
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