H. B. 2444


(By Delegates R. M. Thompson and H. White)
[Introduced January 20, 2003; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact section two, article forty-one, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to further amend said article by adding thereto a new section, designated section four; and to amend chapter sixty-one of said code by adding thereto a new article, designated article five-b, all relating to insurance fraud; prohibiting insurance fraud; establishing criminal penalties and fines; 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 forty-one, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that said article forty-one be further amended by adding thereto a new section, designated section four; 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 41. PRIVILEGES AND IMMUNITIES.
§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 West Virginia 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) "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.
(f) "Health care provider" means any person, firm or corporation rendering health care services or goods.
(e) (g) "Insurance fraud" includes, but it 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 the 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 the 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.
(h) "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.
(i) "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.
(j) "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) (k) "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.
(l) "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.
§33-41-4. 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.
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 fraudulent 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 West Virginia 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 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) "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.
(f) "Health care provider" means any person, firm or corporation providing health care services or goods.
(g) "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 the 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 document knowing that the 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.
(h) "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.
(i) "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.
(j) "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.
(k) "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.
(l) "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.
§61-5B-4. Fraudulent acts prohibited; penalties.
(a) Any person who commits an act of insurance fraud as defined in subdivision (1) or (2), subsection (g), 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 (g), 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) or (4), subsection (g), section three of this article is guilty of a felony and, upon conviction thereof, shall be fined not more than five thousand dollars, or imprisoned in a state correctional facility for a definite term of years 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 imprisoned in the 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, the person is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than five hundred dollars, or confined in the county or regional jail for a term not to exceed one year, or both fined and confined. In addition to any fine, confinement 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 and 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 makes insurance fraud a crime.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

§33-41-4 and §61-5B are new; therefore, strike-throughs and underscoring have been omitted.

This bill was recommended by the interim committee on Insurance Fraud and Banking Issues for introduction and passage at the 2001 legislative session.