COMMITTEE SUBSTITUTE
FOR
H. B. 4488
(By Mr. Speaker, Mr. Kiss, and Delegates Martin,
Michael, Douglas, Trump and L. White)
(Originating in the Committee on Government Organization)
[February 29, 2000]
A BILL to amend and reenact section two, article twenty-two,
chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; to amend and
reenact section two, article twenty-three of said chapter;
to amend and reenact section four, article twenty-four of
said chapter; to amend and reenact section six, article
twenty-five of said chapter; to amend and reenact section
twenty-four, article twenty-five-a of said chapter; to amend
and reenact sections one and two, article forty-one of said
chapter; to further amend said article by adding thereto ten
new sections, designated sections four, five, six, seven,
eight, nine, ten, eleven, twelve, and thirteen; and to amend
chapter sixty-one of said code by adding thereto a new
article, designated article five-b, all relating to
insurance fraud; 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; defining terms; establishing an
insurance fraud unit within the division of insurance;
authorizing the promulgation of rules and requiring the
filing of annual reports; establishing powers and duties of
the unit; outlining investigative powers and procedures;
providing confidentiality and immunity of the unit
operations; prohibiting insurance fraud; establishing
criminal penalties and fines; authorizing prosecution for
fraudulent acts; authorizing special prosecutors; specifying
duties of insurers; authorizing funding by an assessment of
insurers; establishing the West Virginia insurance fraud
prevention act; defining legislative intent and terms;
creating misdemeanor and felony offenses for the commission
of fraudulent acts; and creating penalties, exceptions and
immunities.
Be it enacted by the Legislature of West Virginia:
That section two, article twenty-two, chapter thirty-three
of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted; that section
two, article twenty-three of said chapter be amended and
reenacted; that section four, article twenty-four of said chapter
be amended and reenacted; that section six, article twenty-five
of said chapter be amended and reenacted; that section twenty-
four, article twenty-five-a of said chapter be amended and reenacted; that sections one and two, article forty-one of said
chapter be amended and reenacted; that said article forty-one be
further amended by adding thereto ten new sections, designated
sections four, five, six, seven, eight, nine, ten, eleven, twelve
and thirteen; and that chapter sixty-one of said code be amended
by adding thereto a new article, designated article five-b, all
to read as follows:
CHAPTER 33. INSURANCE.
ARTICLE 22. FARMERS' MUTUAL FIRE INSURANCE COMPANIES.
§33-22-2. Applicability of other provisions.
Each company to the same extent such provisions are
applicable to domestic mutual insurers shall be governed by and
be subject to the following articles of this chapter: Article one
(definitions); article two (insurance commissioner); article four
(general provisions) except that section sixteen of said article
shall not be applicable thereto; article seven (assets and
liabilities); article ten (rehabilitation and liquidation) except
that under the provisions of section thirty-two of said article
assessments shall not be levied against any former member of a
farmers' mutual fire insurance company who is no longer a member
of the company at the time the order to show cause was issued;
article eleven (unfair trade practices); article twelve (agents,
brokers and solicitors) except that the agent's license fee shall
be five dollars; article twenty-six (West Virginia insurance
guaranty association act); article twenty-seven (insurance holding company systems); article thirty (mine subsidence
insurance) except that under the provisions of section six of
said article, a farmers' mutual insurance company shall have the
option of offering mine subsidence coverage to all of its
policyholders but shall not be required to do so; article
thirty-three (annual audited financial report); article
thirty-four (administrative supervision); article thirty-four-a
(standards and commissioner's authority for companies deemed to
be in hazardous financial condition); article thirty-five
(criminal sanctions for failure to report impairment); article
thirty-six (business transacted with producer-controlled
property-casualty insurer); article thirty-seven (managing
general agents); article thirty-nine (disclosure of material
transactions); article forty (risk-based capital for insurers);
and article forty-one (privileges and immunity) (insurance
fraud); but only to the extent these provisions are not
inconsistent with the provisions of this article.
ARTICLE 23. FRATERNAL BENEFIT SOCIETIES.
§33-23-2. Applicability of other provisions.
Every fraternal benefit society shall be governed and be
subject to the same extent as other insurers transacting like
kinds of insurance, to the following articles of this chapter:
Article one (definitions); article two (insurance commissioner);
article four (general provisions); section thirty, article six
(fee for form and rate filing); article seven (assets and liabilities); article ten (rehabilitation and liquidation);
article eleven (unfair trade practices); article twelve (agents,
brokers, solicitors and excess lines); article thirteen (life
insurance); article fifteen-a (long-term care insurance); article
twenty-seven (insurance holding company systems); article
thirty-three (annual audited financial report); article
thirty-four (administrative supervision); article thirty-four-a
(standards and commissioner's authority for companies deemed to
be in hazardous financial condition); article thirty-five
(criminal sanctions for failure to report impairment); article
thirty-seven (managing general agents); and article thirty-nine
(disclosure of material transactions); and article forty-one
(insurance fraud).
ARTICLE 24. HOSPITAL SERVICE CORPORATIONS, MEDICAL SERVICE
CORPORATIONS, DENTAL SERVICE CORPORATIONS AND
HEALTH SERVICE CORPORATIONS.
§33-24-4. Exemptions; applicability of insurance laws.
Every corporation defined in section two of this article is
hereby declared to be a scientific, nonprofit institution and
exempt from the payment of all property and other taxes. Every
corporation, to the same extent the provisions are applicable to
insurers transacting similar kinds of insurance and not
inconsistent with the provisions of this article, shall be
governed by and be subject to the provisions as hereinbelow
indicated, of the following articles of this chapter: Article two (insurance commissioner), except that, under section nine of
said article, examinations shall be conducted at least once every
four years; article four (general provisions), except that
section sixteen of said article shall not be applicable thereto;
section thirty-four, article six (fee for form and rate filing);
article six-c (guaranteed loss ratio); article seven (assets and
liabilities); article eleven (unfair trade practices); article
twelve (agents, brokers and solicitors), except that the agent's
license fee shall be twenty-five dollars; section two-a, article
fifteen (definitions); section two-b, article fifteen (guaranteed
issue); section two-d, article fifteen (exception to guaranteed
renewability); section two-e, article fifteen (discontinuation of
coverage); section two-f, article fifteen (certification of
creditable coverage); section two-g, article fifteen
(applicability); section four-e, article fifteen (benefits for
mothers and newborns); section fourteen, article fifteen
(individual accident and sickness insurance); section sixteen,
article fifteen (coverage of children); section eighteen, article
fifteen (equal treatment of state agency); section nineteen,
article fifteen (coordination of benefits with medicaid); article
fifteen-a (long-term care insurance); article fifteen-c (diabetes
insurance); section three, article sixteen (required policy
provisions); section three-a, article sixteen (mental health);
section three-c, article sixteen (group accident and sickness
insurance); section three-d, article sixteen medicare supplement insurance); section three-f, article sixteen (treatment of
temporomandibular joint disorder and craniomandibular disorder);
section three-j, article sixteen (benefits for mothers and
newborns); section three-k, article sixteen (preexisting
condition exclusions); section three-l, article sixteen
(guaranteed renewability); section three-m, article sixteen
(creditable coverage); section three-n, article sixteen
(eligibility for enrollment); section eleven, article sixteen
(coverage of children); section thirteen, article sixteen (equal
treatment of state agency); section fourteen, article sixteen
(coordination of benefits with medicaid); section sixteen,
article sixteen (diabetes insurance); article sixteen-a (group
health insurance conversion); article sixteen-c (small employer
group policies); article sixteen-d (marketing and rate practices
for small employers); article twenty-six-a (West Virginia life
and health insurance guaranty association act), after the first
day of October, one thousand nine hundred ninety-one; article
twenty-seven (insurance holding company systems); article
twenty-eight (individual accident and sickness insurance minimum
standards); article thirty-three (annual audited financial
report); article thirty-four (administrative supervision);
article thirty-four-a (standards and commissioner's authority for
companies deemed to be in hazardous financial condition); article
thirty-five (criminal sanctions for failure to report
impairment); article thirty-seven (managing general agents); and article forty-one (privileges and immunity) (insurance fraud);
and no other provision of this chapter may apply to these
corporations unless specifically made applicable by the
provisions of this article. If, however, the corporation is
converted into a corporation organized for a pecuniary profit or
if it transacts business without having obtained a license as
required by section five of this article, it shall thereupon
forfeit its right to these exemptions.
ARTICLE 25. HEALTH CARE CORPORATIONS.
§33-25-6. Supervision and regulation by insurance commissioner;
exemption from insurance laws.
Corporations organized under this article are subject to
supervision and regulation of the insurance commissioner. The
corporations organized under this article, to the same extent
these provisions are applicable to insurers transacting similar
kinds of insurance and not inconsistent with the provisions of
this article, shall be governed by and be subject to the
provisions as hereinbelow indicated of the following articles of
this chapter: Article four (general provisions), except that
section sixteen of said article shall not be applicable thereto;
article six-c (guaranteed loss ratio); article seven (assets and
liabilities); article eight (investments); article ten
(rehabilitation and liquidation); section two-a, article fifteen
(definitions); section two-b, article fifteen (guaranteed issue);
section two-d, article fifteen (exception to guaranteed renewability); section two-e, article fifteen (discontinuation of
coverage); section two-f, article fifteen (certification of
creditable coverage); section two-g, article fifteen
(applicability); section four-e, article fifteen (benefits for
mothers and newborns); section fourteen, article fifteen
(individual accident and sickness insurance); section sixteen,
article fifteen (coverage of children); section eighteen, article
fifteen (equal treatment of state agency); section nineteen,
article fifteen (coordination of benefits with medicaid); article
fifteen-c (diabetes insurance); section three, article sixteen
(required policy provisions); section three-a, article sixteen
(mental health); section three-j, article sixteen (benefits for
mothers and newborns); section three-k, article sixteen
(preexisting condition exclusions); section three-l, article
sixteen (guaranteed renewability); section three-m, article
sixteen (creditable coverage); section three-n, article sixteen
(eligibility for enrollment); section eleven, article sixteen
(coverage of children); section thirteen, article sixteen (equal
treatment of state agency); section fourteen, article sixteen
(coordination of benefits with medicaid); section sixteen,
article sixteen (diabetes insurance); article sixteen-a (group
health insurance conversion); article sixteen-c (small employer
group policies); article sixteen-d (marketing and rate practices
for small employers); article twenty-six-a (West Virginia life
and health insurance guaranty association act); article twenty-seven (insurance holding company systems); article
thirty-three (annual audited financial report); article
thirty-four-a (standards and commissioner's authority for
companies deemed to be in hazardous financial condition); article
thirty-five (criminal sanctions for failure to report
impairment); article thirty-seven (managing general agents); and
article forty-one (privileges and immunity) (insurance fraud);
and no other provision of this chapter may apply to these
corporations unless specifically made applicable by the
provisions of this article.
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-24. Statutory construction and relationship to other
laws.
(a) Except as otherwise provided in this article, provisions
of the insurance laws and provisions of hospital or medical
service corporation laws are not applicable to any health
maintenance organization granted a certificate of authority under
this article. The provisions of this article shall not apply to
an insurer or hospital or medical service corporation licensed
and regulated pursuant to the insurance laws or the hospital or
medical service corporation laws of this state except with
respect to its health maintenance corporation activities
authorized and regulated pursuant to this article. The
provisions of this article shall not apply to an entity properly
licensed by a reciprocal state to provide health care services to employer groups, where residents of West Virginia are members of
an employer group, and the employer group contract is entered
into in the reciprocal state. For purposes of this subsection,
a "reciprocal state" means a state which physically borders West
Virginia and which has subscriber or enrollee hold harmless
requirements substantially similar to those set out in section
seven-a of this article.
(b) Factually accurate advertising or solicitation regarding
the range of services provided, the premiums and copayments
charged, the sites of services and hours of operation, and any
other quantifiable, nonprofessional aspects of its operation by
a health maintenance organization granted a certificate of
authority, or its representative shall not be construed to
violate any provision of law relating to solicitation or
advertising by health professions: Provided, That nothing
contained in this subsection shall be construed as authorizing
any solicitation or advertising which identifies or refers to any
individual provider or makes any qualitative judgment concerning
any provider.
(c) Any health maintenance organization authorized under
this article shall not be considered to be practicing medicine
and is exempt from the provisions of chapter thirty of this code,
relating to the practice of medicine.
(d) The provisions of sections fifteen and twenty, article
four (general provisions); section seventeen, article six (noncomplying forms); article six-c (guaranteed loss ratio);
article seven (assets and liabilities); article eight
(investments); article nine (administration of deposits); article
twelve (agents, brokers, solicitors and excess line); section
fourteen, article fifteen (individual accident and sickness
insurance); section sixteen, article fifteen (coverage of
children); section eighteen, article fifteen (equal treatment of
state agency); section nineteen, article fifteen (coordination of
benefits with medicaid); article fifteen-b (uniform health care
administration act); section three, article sixteen (required
policy provisions); section three-f, article sixteen (treatment
of temporomandibular disorder and craniomandibular disorder);
section eleven, article sixteen (coverage of children); section
thirteen, article sixteen (equal treatment of state agency);
section fourteen, article sixteen (coordination of benefits with
medicaid); article sixteen-a (group health insurance conversion);
article sixteen-d (marketing and rate practices for small
employers); article twenty-five-c (health maintenance
organization patient bill of rights); article twenty-seven
(insurance holding company systems); article thirty-four-a
(standards and commissioner's authority for companies deemed to
be in hazardous financial condition); article thirty-five
(criminal sanctions for failure to report impairment); article
thirty-seven (managing general agents); article thirty-nine
(disclosure of material transactions); article forty-one (privileges and immunity) (insurance fraud); and article
forty-two (women's access to health care) shall be applicable to
any health maintenance organization granted a certificate of
authority under this article. In circumstances where the code
provisions made applicable to health maintenance organizations by
this section refer to the "insurer", the "corporation" or words
of similar import, the language shall be construed to include
health maintenance organizations.
(e) Any long-term care insurance policy delivered or issued
for delivery in this state by a health maintenance organization
shall comply with the provisions of article fifteen-a of this
chapter.
(f) A health maintenance organization granted a certificate
of authority under this article shall be exempt from paying
municipal business and occupation taxes on gross income it
receives from its enrollees, or from their employers or others on
their behalf, for health care items or services provided directly
or indirectly by the health maintenance organization. This
exemption applies to all taxable years through the thirty-first
day of December, one thousand nine hundred ninety-six. The
commissioner and the tax department shall conduct a study of the
appropriations of imposition of the municipal business and
occupation tax or other tax on health maintenance organizations,
and shall report to the regular session of the Legislature, one
thousand nine hundred ninety-seven, on their findings, conclusions and recommendations, together with drafts of any
legislation necessary to effectuate their recommendations.
ARTICLE 41. INSURANCE FRAUD.
§33-41-1. Legislative purpose and findings.
It is the finding of the Legislature that the business of
insurance involves many transactions that have potential for
fraud, abuse and other illegal activities. It is the further
finding of the Legislature that insurance fraud is a crime
pursuant to state and federal statutes. The Legislature further
finds that state, local and federal law enforcement and
regulatory agencies may prosecute fraud in accordance with these
statutes, thereby ultimately reducing the cost of insurance fraud
to insurers and consumers. It is the purpose of this article to
encourage the detection, investigation and prosecution of persons
engaging in insurance fraud by providing certain privileges and
immunity. It is the purpose of this article to permit full
utilization of the expertise of the commissioner by the
establishment of an insurance fraud unit within the division of
insurance and to provide it with the responsibility and authority
for detecting, investigating and controlling fraudulent insurance
acts more effectively, halting fraudulent insurance acts, and
assisting and receiving assistance from state, local and federal
law-enforcement and regulatory agencies in enforcing laws
prohibiting fraudulent insurance acts and thereby ultimately
reducing the costs of insurance fraud to insurers and consumers. §33-41-2. 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 division of public safety of this state, the police
department of any municipality, any 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) (e) "Insurance fraud" includes, but is not limited to,
means instances where any person who, with the intent to injure,
defraud or deceive any person, insurer, or agency intentionally:
(1) (i) 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 mesleading
information concerning any fact or thing material to the
application, claim or benefit which contains any false
representation or concealment as to any material fact or thing,
with knowledge that it is not true and correct and with the
intent that the representation or concealment be relied upon by
the insurer;
(2) (iii) Solicits, offers or receives any remuneration,
including any kickback, rebate or bribe, directly or indirectly,
with the intent of causing an expenditure of moneys from any
person or insurer which would not otherwise be payable under an
applicable insurance policy; and
(3) (ii) 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 this
chapter;
(5) (iv) Assists, abets, solicits or conspires with another
to commit insurance fraud; or
(6) Solicits, offers or receives any remuneration, including
any payment, kickback, rebate or bribe, directly or indirectly,
with the intent of causing an expenditure of moneys from any
person or insurer knowing that the benefits or any part of the
benefits for which the solicitation, offer or receipt of
remuneration was made will not be available or provided.
(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 coverage
pursuant to the terms of the policy.
(j) "Insurer" means any person 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 engaging in any of these activities 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.
(l) (f) "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. A statement also includes any of the above recorded by
electronic or other media.
(n) "Unit" means the insurance fraud unit established
pursuant to the provisions of this article acting collectively or
by its duly authorized representatives.
§33-41-4. Insurance fraud unit established; director to be appointed; office space and staff provisions;
promulgation of rules; annual report.
(a) There is hereby established an insurance fraud unit
within the division of insurance. The commissioner shall appoint
a full-time director of the insurance fraud unit who shall report
to the commissioner. The director shall serve at the pleasure
of the commissioner and shall be qualified by training and
experience to perform the duties of the position. The
commissioner shall provide the clerical and other staff
appropriate for the unit to fulfill its responsibilities under
this article.
(b) The insurance commissioner shall provide office space,
hearing rooms, equipment and supplies for the insurance fraud
unit and its staff.
(c) The commissioner may propose legislative rules for
legislative approval pursuant to article three, chapter
twenty-nine-a of this code in order to effect the purposes of
this article.
(d) On or before the first day of each regular session of
the Legislature, the commissioner shall file with the governor,
the clerk of the Senate and the clerk of the House of Delegates
a report detailing the finalized actions taken by the insurance
fraud unit in the preceding fiscal year.
§33-41-5. Powers and duties.
(a) The insurance fraud unit created pursuant to this article shall have the following powers and duties:
(1) To 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 herein;
(2) To initiate independent inquiries and conduct
independent investigations when the director has cause to believe
that an act of insurance fraud has been, or is currently being
committed;
(3) To review reports or complaints of alleged insurance
fraud from federal, state and local police, other law-enforcement
authorities, governmental agencies or units, insurers and the
general public; determine whether the reports require further
investigation; and conduct the investigations;
(4) To administer oaths or affirmations;
(5) To issue subpoenas for witnesses and documents relevant
to an investigation, including information concerning the
existence, description, nature, custody, condition and location
of any book, record, document or other tangible thing and the
identity and location of persons having knowledge of relevant
facts or any matter reasonably calculated to lead to the
discovery of admissible evidence;
(6) To refer to the appropriate prosecuting authority all
violations of applicable state and federal laws which govern or relate to insurance fraud;
(7) Subject to the provisions of section nine of this
article, To petition any judge or court in this state for the
appointment of a special prosecutor on a case-by-case basis as
the need arises;
(8) To cooperate with federal or state government officials
and insurers to investigate, detect, deter and prosecute
insurance fraud and abuse in this state; and
(9) To communicate and exchange data and information with
federal or state agencies, divisions, departments or officers and
with health care providers, insurers or other interested parties
regarding insurance fraud issues.
(b) The insurance fraud unit is further empowered to perform
other duties as may be necessary to effect the purposes of the
unit or as may be prescribed by the insurance commissioner.
§33-41-6. Investigations; procedures; subpoena powers.
(a) When the unit has reasonable cause to believe that a
person has engaged in an act or activity which is subject to
prosecution under this article, the unit shall make an
investigation to determine if the act has been committed and
report the findings of the investigation to the director.
(b) If the unit seeks evidence, documentation or related
materials located within this state pertinent to an investigation
or examination, the unit may by request or subpoena gain access
to the material. The material shall be made available to the unit or shall be made available for inspection, examination and
copying by a designated representative of the unit.
(c) If documents necessary to an investigation of the unit
shall appear to be located outside the state, the documents shall
be made available by the person or entity within the jurisdiction
of the state having control over the documents either at a
convenient location within the state or, if no such person or
entity within this state exists at the place outside the state
where the documents are maintained.
(d) Upon failure of a person to comply with a subpoena or
subpoena duces tecum or failure of a person to give testimony
without lawful excuse and upon reasonable notice to all persons
affected thereby, the unit may apply to the circuit court of the
county in which compliance is sought for appropriate orders to
compel obedience with the provisions of this section.
§33-41-7. Confidentiality, immunity from subpoena, and immunity
of commissioner and staff.
(a) The unit may not make public the name or identity of a
person whose acts or conduct is investigated pursuant to this
section or the facts disclosed in the investigation except as the
same may be used in any legal action or enforcement proceeding
brought pursuant to this article or any other provision of this
code.
(b) All papers, records, documents, reports, materials or
other evidence relevant to an insurance fraud investigation or examination shall remain confidential and may not be subject to
public inspection so long as the director determines it is
reasonably necessary to protect the privacy of the person or
matter investigated or examined, to protect the person furnishing
the material, or to be in the public interest.
(c) The papers, records, documents, reports, materials or
other evidence relevant to an insurance fraud investigation or
examination may not be subject to subpoena until opened for
public inspection by the director.
(d) The commissioner, the director, and any employee, agent,
representative or staff member are not subject to civil liability
of any nature arising out of any official activities of their
respective offices: Provided, That nothing herein abrogates or
modifies in any manner any constitutional immunity or common law
or statutory privilege or immunity heretofore enjoyed by any
person identified in this subsection.
§33-41-8. Penalties.
Any person who commits an act of insurance fraud is guilty
of a felony or misdemeanor, as determined by the provisions of
sections three, four, and five, article five-b, chapter sixty-one
of this code and, upon conviction thereof, shall be fined,
imprisoned or both, as more particularly provided in those
sections. In addition to any fine or imprisonment, any person
found to be in violation of the provisions of this section is
required to make full restitution to the person injured or damaged by the fraudulent act in a manner to be determined by the
court.
§33-41-9. Prosecution for fraudulent acts; special prosecutors;
director's report to the commissioner.
(a) If, upon review of any report submitted by the unit, the
director determines that adequate evidence exists to believe that
an act of insurance fraud has been committed, the director shall
present any evidence of alleged insurance fraud to the prosecutor
in the jurisdiction where the alleged acts of insurance fraud
took place and request appropriate criminal prosecution.
(b) Upon receipt of the report and request from the
director, the prosecutor may, where deemed appropriate,
criminally prosecute any person for insurance fraud or other
appropriate criminal offenses.
(c) Upon application of the prosecutor or the director, the
court of appropriate jurisdiction may appoint a special
prosecutor to criminally prosecute any person for insurance fraud
or other appropriate criminal offenses.
(d) The director shall annually report to the insurance
commissioner as to all referred fraud cases and the results or
status of the cases. The commissioner shall include the
director's report in the annual report to the governor and the
Legislature required pursuant to section three of this article.
§33-41-10. Duties of insurers.
(a) Any insurer which has a reasonable belief that an act of insurance fraud is being, or has been, committed with a payment,
benefit or loss or with a potential payment, benefit or loss of
one thousand dollars or greater shall send to the director, on a
form prescribed by the commissioner, any and all information and
additional information relating to the act as the director or
unit may require.
(b) Insurers are required to give or deliver to insureds and
applicants for insurance in this state or upon claims arising in
this state in a form and manner as prescribed by the commissioner
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 material to an application for insurance is
guilty of a crime and may be subject to fines and confinement in
prison."
§33-41-11. Other law-enforcement authorities.
Nothing in this article preempts the authority or relieves
the duty of any other law-enforcement agency to investigate,
examine and prosecute suspected violations of law; prevents or
prohibits a person from voluntarily disclosing any information
concerning insurance fraud to any law-enforcement agency other
than the unit; or limits any of the powers granted elsewhere by
the laws of this state to the commissioner of insurance or the
state police to investigate and examine possible violations of
law and to take appropriate action.
§33-41-12. Remedies and penalties not exclusive.
The remedies and penalties provided in this article are in
addition to those remedies and penalties provided elsewhere by
law.
§33-41-13. Funding.
All insurers shall annually pay to the commissioner on or
before the first day of July, two thousand, and every first day
of July thereafter, a fraud unit assessment fee of five hundred
dollars. This fee shall be paid to the treasurer of the state to
the credit of a special revolving fund to be known as the
"Commissioner's Fraud Unit Revolving Fund" which is hereby
established. The commissioner may at his or her discretion, upon
notice to the insurers subject to this section, increase this
fraud unit assessment fee by one hundred fifty dollar increments
on an annual basis or levy an additional fraud unit assessment
fee of one hundred fifty dollars in any calendar year. In no
event may the total fraud unit assessment fee levied exceed eight
hundred dollars per insurer in any calendar year.
Any funds
expended or obligated by the commissioner from the
"Commissioner's Fraud Unit Revolving Fund" may be expended or
obligated solely for defrayment of the costs of performing the
duties set forth in this article.
Any balance in the "Commissioner's Fraud Unit Revolving
Fund" at the end of any fiscal year shall remain in the revolving
account for use by the insurance fraud unit within the division of insurance for defrayment of the costs of performing the duties
set forth in this article in the ensuing fiscal year.
CHAPTER 61. CRIMES AND THEIR PUNISHMENT.
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 or payments; 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 division of public safety of this state, the police
department of any municipality, any 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 where any person,
insurer, or agency intentionally:
(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 which
contains any false representation or concealment as to any
material fact or thing, with knowledge that it is not true and
correct and with the intent that the representation or
concealment be relied upon by the insurer;
(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 from 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;
(5) Assists, abets, solicits or conspires with another to
commit insurance fraud; or
(6) Solicits, offers or receives any remuneration, including
any payment, kickback, rebate or bribe, directly or indirectly,
with the intent of causing an expenditure of moneys from any
person or insurer knowing that the benefits or any part of the
benefits for which the solicitation, offer or receipt of
remuneration was made will not be available or provided.
(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 person 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.
(l) "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. A statement also includes any of the above recorded by
electronic or other media.
(n) "Unit" means the insurance fraud unit as defined in
article forty-one, chapter 33 of this code.
§61-5B-4. Fraudulent acts prohibited; penalties.
(a) Any person who commits an act of insurance fraud as
defined in subdivision (h)(1) or (h)(2) of 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)(5) of 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.
(c) 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 financial 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 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.
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
act in a manner to be determined by the court.
(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. 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.
A person in the relation of husband, wife, parent,
grandparent, child, grandchild, brother or sister, by
consanguinity or affinity, of an accused charged with an act of
insurance fraud, who after the commission of an offense aids or
assists the accused to avoid or escape from prosecution or
punishment, has not committed insurance fraud by reason of
providing the aid or assistance, and is not subject to the
penalties set forth in section four of this article.