HB 1578-FN – AS AMENDED BY THE SENATE
06Feb2008… 0284h
05/01/08 1446s
05/01/08 1637s
2008 SESSION
01/04
HOUSE BILL 1578-FN
AN ACT relative to insurance fraud.
SPONSORS: Rep. Reardon, Merr 11; Rep. DeStefano, Merr 13; Rep. Spratt, Hills 3
This bill clarifies the laws relative to insurance fraud, including:
I. Adding a fine for failure to report fraudulent claims.
II. Specifying the commissioner’s use of fraud unit information.
III. Adding insurance producers to the laws regarding theft by misapplication of property.
IV. Defining insurance document for the purposes of forgery.
This bill is a request of the insurance department.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
06Feb2008… 0284h
05/01/08 1446s
05/01/08 1637s
08-2397
01/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eight
AN ACT relative to insurance fraud.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Insurance Companies; Request for Information. Amend RSA 402:78, I to read as follows:
I. Any law enforcement investigator may request an insurance company to release any information in its possession relative to the disappearance, theft or loss of any motor vehicle, or other personal property, or relative to the violation of RSA 260:10, RSA 261:30, RSA 261:46, RSA 261:52, RSA 261:178, RSA 262:1 I(d), RSA 263:5-a, VI, RSA 263:5-e, or RSA 263:12, V. The insurance company shall release the information and cooperate with any official authorized to request such information pursuant to this section. The information may include but not be limited to:
(a) Any relevant insurance policy;
(b) Policy premium payments records;
(c) History of previous claims made by the insured for the theft, loss or disappearance of any motor vehicle or other personal property;
(d) Any other material relating to the investigation of the theft, loss or disappearance, or violation of the RSA provisions listed in paragraph I.
2 Insurance; Producer Licensing. RSA 402-J:3, II is repealed and reenacted to read as follows:
II. A person is guilty of a class A misdemeanor if a natural person, or guilty of a felony if any other person, if the person shall knowingly sell, solicit, or negotiate an insurance policy in this state:
(a) Without a license under RSA 402-J unless specifically exempted from licensure under RSA 402-J; or
(b) On behalf of an insurer who is neither licensed under RSA 402 or RSA 405 and not exempt from licensure under RSA 406-B:16.
3 Reporting of Fraudulent Claims. Amend RSA 417:28 to read as follows:
417:28 Reporting of Fraudulent Claims by Insurers.
I. Any person or entity regulated under title XXXVII which has reason to believe that an insurance fraud or insurance-related criminal activity has been committed shall make a report to the unit within 60 days or within a shorter period under such circumstances as the commissioner may prescribe by rule. No waiver of any such regulated person’s or entity’s applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of such disclosure to the unit. Such report shall be made on a form prescribed by the unit and shall contain the information requested and such additional information as the unit may require. The unit shall review such report and select such claims as, in its judgment, warrant further investigation. In the absence of fraud or malice, no public official or insurance company or person who furnishes information on behalf of the insurance company shall be liable for damages in a civil action or subject to criminal prosecution for any oral or written statement made or any other action taken that is necessary to supply information required pursuant to this section.
II. If the commissioner finds that any person or entity regulated under Title XXXVII has failed to comply with this section, the commissioner may issue a fine of up to $2,500 for each violation or suspend, revoke, or refuse to renew the right of the insurer to do business in this state.
4 Insurance Fraud; Fraud Unit Material Information Disclosure. Amend RSA 417:29 to read as follows:
417:29 Fraud Unit Material Information Disclosure.
I. Except as provided in paragraph II, the unit’s papers, documents, reports, or evidence relative to the subject of a pending investigation under this section shall remain confidential and shall not be subject to public inspection or disclosure. Further, such papers, documents, reports, or evidence relative to the subject of [an] a pending investigation under this section shall be privileged and shall not be subject to subpoena, discovery, or disclosure in any proceeding other than the action initiated by the unit, except as specifically authorized in this subdivision. For the purposes of this section, investigative materials shall include the testimony of unit personnel concerning any matter of which they have knowledge pursuant to a pending insurance fraud investigation by the unit. Any aggrieved person in any trial, hearing, or proceeding in or before any court, department, agency, regulatory body, or other authority of the state, or a political subdivision thereof, may move to have access to the unit’s papers, documents, reports, or evidence relative to the subject of a closed investigation under this section. The judge, upon the filing of such motion by the aggrieved person, may, in the judge’s discretion, make available to the aggrieved person or such person’s counsel for inspection of such portions of the relative contents derived therefrom as the judge determines to be in the interests of justice.
II.(a) If the unit’s papers, documents, reports, or evidence relative to the subject of a pending investigation under this section have been disclosed in a criminal action, the commissioner may use those papers, documents, reports, evidence or other investigative materials of the unit disclosed in the criminal action in the furtherance of a non-criminal regulatory or legal action brought as part of the commissioner’s duties. Any of the unit’s papers, documents, reports, evidence or other investigative materials not disclosed in the criminal action shall remain, pursuant to paragraph I, confidential and privileged and shall not be subject to subpoena, discovery, public inspection pursuant to RSA 91-A, or any other disclosure;
(b) If a substantial need exists and disclosure will not jeopardize the unit’s evidence-gathering ability or any ongoing criminal investigation or criminal action, the commissioner may use the unit’s papers, documents, reports, evidence or other investigative materials in the furtherance of a non-criminal regulatory or legal action brought as part of the commissioner’s duties. Any of the unit’s papers, documents, reports, evidence, or other investigative materials not used in the furtherance of a non-criminal regulatory or legal action shall remain, pursuant to paragraph I, confidential and privileged and shall not be subject to subpoena, discovery, public inspection pursuant to RSA 91-A, or any other disclosure; and
(c) The recipient of any information furnished pursuant to this paragraph shall hold the information in confidence until such time as its release is required pursuant to a civil or regulatory proceeding or pursuant to any statutory requirement.
5 Insurance Fraud; Insurer Antifraud Initiatives. Amend RSA 417:30, IV to read as follows:
IV. If the commissioner finds that an insurer licensed to do business in New Hampshire has failed to submit a plan, as required under paragraph I of this section, reasonably calculated to detect, prosecute, and prevent fraudulent insurance acts, or has submitted but failed to execute that plan, the commissioner may issue a fine of up to $2,500 for each violation or suspend the right of the insurer to do business in this state until such time as that insurer comes into compliance with the provisions of this chapter.
6 Theft; Theft by Misapplication of Property. Amend RSA 637:10, III to read as follows:
III. An insurance producer or an officer or employee of the government or of a financial institution is presumed:
(a) To know of any legal obligation relevant to his or her liability under this section, and
(b) To have dealt with the property as his or her own if he or she fails to pay or account upon lawful demand, or if an audit reveals a shortage or falsification of his or her accounts.
7 New Subparagraph; Definition Added. Amend RSA 637:10, IV by inserting after subparagraph (b) the following new subparagraph:
(c) “Insurance producer” means any person licensed, or required to be licensed, under RSA 402-J.
8 Fraud; Forgery. Amend RSA 638:1, I-III to read as follows:
I. A person is guilty of forgery if, with purpose to defraud anyone, or with knowledge that he or she is facilitating a fraud to be perpetrated by anyone, he or she:
(a) Alters any writing of another without his or her authority or utters any such altered writing; or
(b) Makes, completes, executes, authenticates, issues, transfers, publishes or otherwise utters any writing so that it purports to be the act of another, or purports to have been executed at a time or place or in a numbered sequence other than was in fact the case, or to be a copy of an original when no such original existed, or that purports to be a valid insurance document when it is not.
II. As used in this section:
(a) “Insurance document” means an insurance application or any supporting documentation, an insurance policy or contract or any supporting documentation, a policy amendment or change form, an illustration, a delivery receipt, a declaration page, or a certificate, or any other document related to a contract for insurance or that demonstrates the existence of an insurance policy.
(b) “Writing’’ includes printing or any other method of recording information, checks, tokens, stamps, seals, credit cards, badges, trademarks, and other symbols of value, right, privilege, or identification.
III. Forgery is a class B felony if the writing is or purports to be:
(a) A security, revenue stamp, or any other instrument issued by a government, or any agency thereof; [or]
(b) A check, an issue of stocks, bonds, or any other instrument representing an interest in or a claim against property, or a pecuniary interest in or claim against any person or enterprise; or
(c) An insurance document.
9 Fraud; Insurance Fraud. Amend RSA 638:20, I-IV to read as follows:
I. For the purposes of this section, “statement’’ includes, but is not limited to, any notice, statement, proof of loss, bill of lading, receipt of payment, invoice, account, estimate of property damages, bill for service, diagnosis, prescription, hospital or doctor records, x-rays, test results, or other evidence of loss, injury or expense.
I-a. For purposes of this section, “insurer’’ includes any insurance company, health maintenance organization, or reinsurance company, or [broker or agent] producer thereof, or insurance claims adjuster, or other person or entity regulated under Title XXXVII.
II. A person is guilty of insurance fraud, if, such person knowingly and with [intent] a purpose to injure, defraud or deceive any insurer, conceals or causes to be concealed from any insurer a material statement or fact, or presents or causes to be presented to any insurer, or prepares with knowledge or belief that it will be so presented, any written or oral statement including computer-generated documents, knowing that such statement contains any false, incomplete or misleading information which is material to:
(a) An application for the issuance, renewal or reinstatement of any insurance policy.
(b) The rating of any insurance policy.
(c) A claim for payment or benefit pursuant to any insurance policy.
(d) Premiums on any insurance policy.
(e) Payments made in accordance with the terms of any insurance policy.
(f) The origin or cause of a loss claimed pursuant to any insurance policy.
(g) Payment of or eligibility for a commission, perk, bonus, trip, stock option, or any other producer incentive.
III. A person is guilty as an accomplice to insurance fraud, if, with a purpose to injure, defraud or deceive any insurer, the person assists, abets, solicits or conspires with another to commit insurance fraud, as defined in paragraph II of this section.
IV.(a) Insurance fraud is:
(1) A class A felony if:
(A) The value of the fraudulent portion of the claim for payment or other benefit pursuant to an insurance policy is more than $1,000[.];
(B) The difference between the premium actually charged and the premium amount that would have been charged if accurate information had been provided is more than $1,000; or
(C) The violation involves subparagraph II(a).
(2) A class B felony if:
(A) The value of the fraudulent portion of the claim for payment or other benefit pursuant to an insurance policy is more than $500, but not more than $1,000.
(B) The difference between the premium actually charged and the premium amount that would have been charged if accurate information had been provided is more than $500 but not more than $1,000.
(3) A misdemeanor in all other cases.
(b) The value shall be determined according to the provisions of RSA 637:2, V.
10 Effective Date. This act shall take effect upon its passage.
LBAO
08-2397
12/13/07
HB 1578-FN - FISCAL NOTE
AN ACT relative to insurance fraud.
FISCAL IMPACT:
The Department of Corrections, the Judicial Branch, the Judicial Council, and the New Hampshire Association of Counties state this bill may increase state and county expenditures by an indeterminable amount in FY 2009 and each year thereafter. There will be no fiscal impact on local expenditures or state, county and local revenue.
METHODOLOGY:
The Department of Corrections states this bill clarifies the laws relative to insurance fraud. The Department of Corrections states this bill may increase state expenditures by an indeterminable amount. The Department is not able to predict the number of individuals that might be impacted by this bill. The average annual cost of incarcerating an individual in the general prison population for the fiscal year ending June 30, 2006 is $31,140. The cost to supervise an individual by the Department’s division of field services for the fiscal year ending June 30, 2006 is $1,174.
The Judicial Branch states it has no information to estimate how many misdemeanor or class B felony charges would be brought as a result of this bill to determine the fiscal impact on expenditures. The table below contains the Branch’s cost of processing the different types of charges contained in this bill.
Type of Charge |
FY 2009 |
FY 2010 |
FY 2011 |
FY 2012 |
Class B felony |
$327.59 |
$335.98 |
$335.98 |
$335.98 |
Class A misdemeanor |
$49.60 |
$51.14 |
$51.14 |
$51.14 |
Unspecified misdemeanor |
$34.68 |
$35.75 |
$35.75 |
$35.75 |
The Branch states the bill also contains administrative fines which may result in appeals to the Supreme Court pursuant to RSA 541-A. In addition, appeals could occur after a trial. The Branch indicates the appeal of a single case to the New Hampshire Supreme Court could have a fiscal impact in excess of $10,000.
The Judicial Council states this bill may result in increased general fund expenditures but is unable to determine the fiscal impact. The Council states if an individual is found to be indigent, the flat fee of $275 per misdemeanor and $756.24 per felony is charged by a public defender or contract attorney. If an assigned counsel attorney is used the fee is $60 per hour with a cap of $1,400 for a misdemeanor charge and $4,100 for a felony charge, with both caps effective January 1, 2008. The Council also states additional costs could be incurred if an appeal is filed. The public defender, contract attorney and assigned counsel rates for Supreme Court appeals will be $2,000 per case (effective January 1, 2008), with many assigned counsel attorneys seeking permission to exceed the fee cap. However, such motions to exceed the fee cap are seldom granted. Finally, expenditures would increase if services other than counsel are requested and approved by the court during the defense of a case or during an appeal.
The New Hampshire Association of Counties states to the extent any individual is prosecuted, convicted, and sentenced to incarceration, the counties may have increased expenditures. The Association is unable to determine the number of individuals who might be detained or incarcerated as a result of this bill. The average cost to incarcerate an individual in a county facility is $29,000 a year.
The Insurance Department states this bill will have no fiscal impact upon the Department. The Department indicates the bill clarifies the legal elements necessary to prove a criminally fraudulent act occurred to a court of law.