H. B. 2285
(By Delegate Douglas)
[Introduced January 19, 1999; referred to the
Committee on Government Organization then the
Judiciary.]
A BILL to amend chapter sixty-one of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article five-b, relating
to insurance fraud; defining terms; setting criminal
penalties; requiring restitution; and providing exceptions.
Be it enacted by the Legislature of West Virginia:
That chapter sixty-one of the code of West Virginia, one
thousand nine hundred and thirty-one, as amended, be amended by
adding thereto a new article, designated article five-b, to read
as follows:
ARTICLE 5B. WEST VIRGINIA INSURANCE FRAUD PREVENTION ACT.
§61-5B-1. Short title.
This article may be known and cited as the "West Virginia
Insurance Fraud Prevention Act."
§61-5B-2. Legislative intent.
The Legislature of the state of West Virginia hereby
recognizes that insurance fraud results in increased insurance
costs which are ultimately borne by the consumers of this state.
The intent of the "West Virginia Insurance Fraud Act" is to
prohibit the giving of false or fraudulent information by any
person in any capacity; to assist public officials, government
agencies and insurers in the detection and investigation of
fraudulent activities; reduce the occurrence of fraud through
administrative enforcement and deterrence; require restitution of
fraudulently obtained insurance benefits; and establish penalties
for violation of this article, all in an effort to deter the
activities and reduce costs to the consumers of this state.
§61-5B-3. Definitions.
The following words when used in this article shall have the
meanings set forth in this section, unless the context clearly
indicates otherwise:
(a) "Authorized agency" means:
(1) The state police, the police department of any
municipality, and county sheriff's department and any duly
constituted criminal investigative department or agency of the
United States or of this state;
(2) The prosecuting attorney of any county of this state or
of the United States or any district thereof;
(3) The state insurance commissioner or the commissioner's employees, agents or representatives;
(4) The national association of insurance commissioners; or
(5) A person or agency involved in the prevention and
detection of fraud or that person's or agency's agents, employees
or representatives.
(b) "Benefits" means money payments, goods, services or any
other thing of value.
(c) "Claim" means an application or request for payment or
benefits provided under an insurance policy.
(d) "Commissioner" means the insurance commissioner of the
state of West Virginia.
(e) "Director" means the director of the insurance fraud
unit established pursuant to this article.
(f) "Financial loss" includes, but is not limited to, loss
of earnings, out-of-pocket and other expenses, repair and
replacements costs and claims payments made by any insurer,
provider or person.
(g) "Health care provider" means any person, firm or
corporation providing health care services or goods.
(h) "Insurance fraud" means instances in which any person
who, with the intent to injure, defraud or deceive any person,
insurer, or agency:
(1) Presents or causes to be presented to any insurer or
insurance representative any written or oral statement as part of or in support of an application for insurance or a claim for
payment or other benefit pursuant to an insurance policy, knowing
that such statement contains any false, incomplete or misleading
information concerning any fact or thing material to the
application, claim or benefit;
(2) Solicits, offers or receives any remuneration, including
any kickback, rebate or bribe, directly or indirectly, with the
intent of causing an expenditure of moneys form any person or
insurer which would not otherwise be payable under an applicable
insurance policy;
(3) Submits or causes to be submitted to any authorized
agency any written or oral statement as part of or in support of
any application, audit, claim, report, investigation, valuation,
statement, appraisal, estimation of loss, publication,
certificate, actuarial report or study, filing, financial
statement, tax return, rate request, petition or any other such
document knowing that such statement contains any false,
incomplete or misleading information concerning any fact or thing
material thereto;
(4) Removes, conceals, alters or destroys the assets or
records of an insurer, reinsurer or other person engaged in the
business of insurance with the intent to interfere with or to
obstruct any investigation or examination conducted under chapter
thirty-three of this code; or
(5) Assists, abets, solicits or conspires with another to
commit insurance fraud.
(i) "Insured" means any person, as defined herein, who is
entitled to insurance coverage, benefits or protection pursuant
to a policy of insurance issued by any insurer, including, but
not limited to, the policyholder, family members included as
insureds or beneficiaries and any person entitled to health,
property or liability coverage pursuant to the terms of the
policy.
(j) "Insurer" means any engaging in or proposing or
attempting to engage in any transaction or kind of insurance or
surety business and any person or group of persons who may
otherwise be subject to the administrative, regulatory or taxing
authority of the commissioner, including, but 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.
(k) "Insurance representative" means any person, firm or
corporation acting on an insurer's behalf, including, but not
limited to, any agent, adjuster, officer, director, employee or
investigator.
(1) "Person" means any individual, partnership, firm,
association, corporation, company, insurer, organization,
society, reciprocal, business trust or any other legal entity.
"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.
(m) "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.
(n) "Unit" means the insurance fraud unit established
pursuant to the provisions of this article acting collectively or
by its duly authorized representatives.
§61-5B-4. Fraudulent acts prohibited; penalties.
(a) Any person who commits an act of insurance fraud as
defined in subdivision (1), (2) or (5), subsection (h), section
three of this article is guilty of a misdemeanor or felony, as
determined by the provisions of section five of this article and,
upon conviction thereof, shall be fined, imprisoned or both, as
more particularly provided in section five.
(b) Any person who commits an act of insurance fraud as
defined in subdivision (h)(3) or (h)(4) of section three of this
article is guilty of a felony and, upon conviction thereof, shall
be fined not more than five thousand dollars, or confined in the
penitentiary for a definite term of years of not less than one
year nor more than five years, or both fined and imprisoned.
§61-5B-5. Penalties.
(a) Except as otherwise provided, if any person violates the
provisions of this article or of article forty-one, chapter
thirty-three of this code, and the act results in a payment,
benefit or loss to any person with a value of one thousand
dollars or more, the person is guilty of a felony and, upon conviction thereof, shall be fined not less than five hundred
dollars nor more than five thousand dollars or imprisoned in a
state correctional facility not less than one year nor more than
five years, or both fined and imprisoned.
(b) Except as otherwise provided, if any person violates the
provisions of this article or of article forty-one, chapter
thirty-three of this code, and the act results in a payment,
benefit or loss to any person with a value of less than one
thousand dollars, such person is guilty of a misdemeanor and,
upon conviction thereof, shall be fined not more than five
hundred dollars, or confined in the county jail for a term not to
exceed one year, or both fined and imprisoned.
(c) In addition to any fine or imprisonment, any person
subject to the provisions of this section shall be required to
make full restitution to the person injured or damaged by the
fraudulent insurance act in a manner to be determined by the
court.
§61-5B-6. Immunities and exceptions.
The provisions of section four of this article are not
applicable to a person in the relation of husband or wife, parent
or grandparent, child or grandchild, brother or sister, by
consanguinity or affinity, of an accused in any criminal case,
when the person, after the commission of an offense, shall aid or
assist the accused to avoid or escape from prosecution or punishment.
NOTE: This bill establishes criminal penalties for
insurance fraud and requires restitution to be made to the person
damaged.
Article five-b is new; therefore, strike-throughs and
underscoring have been omitted.