Senate Bill No. 622
(By Senator Craigo)
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[Introduced February 21, 2000; referred to the Committee
on the Judiciary; and then to the Committee on Finance.]
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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 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 herein
below 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 state police 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 replacement
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.
(e) (h) "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:
(i) (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;
(iii) (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; and
(ii) (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 this
chapter;
(iv) (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 insured 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.
(f) (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 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) In the absence of fraud or malice, 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 three 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.
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 police 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, 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 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 insured 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 thirty-three of this code.
§61-5B-4. Fraudulent acts prohibited; penalties.
(a) Any person who commits an act of insurance fraud as
defined in subdivision (1), subsection (h) or subdivision (2),
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 (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.
(c) Any person who commits an act of insurance fraud as
defined in subdivision (3), subsection (h) or subdivision (4),
subsection (h), 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 a state correctional facility 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 a state
correctional facility 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.
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 creates a new fraud unit within the division
of the insurance commissioner. The goal of the fraud unit is to
protect the public from fraudulent acts relating to the insurance
industry. Information gathering abilities and penalty provisions
are established to speak to the concern.
Strike-throughs indicate language that would be deleted from
present law and underscoring indicates language that would be
added.
Sections four to thirteen, article forty-one, chapter
thirty-three and article five-b, chapter sixty-one are new;
therefore strike-throughs and underscoring have been omitted.