Bill Text: NJ A2158 | 2014-2015 | Regular Session | Introduced
Bill Title: Establishes and enhances certain insurance fraud prevention measures.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Introduced - Dead) 2014-01-16 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A2158 Detail]
Download: New_Jersey-2014-A2158-Introduced.html
Sponsored by:
Assemblywoman CELESTE M. RILEY
District 3 (Cumberland, Gloucester and Salem)
SYNOPSIS
Establishes and enhances certain insurance fraud prevention measures.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning insurance fraud, amending and supplementing P.L.1983, c.320 and amending various parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) Except where a longer limitations period would otherwise apply, and subject to statutory provisions or common law rules extending limitations periods, any action commenced pursuant to any provision of P.L.1983, c.320 (C.17:33A-1 et seq.) shall be commenced within seven years next after the cause of action shall have accrued.
2. Section 73 of P.L.2003, c.89 (C.2C:21-4.6) is amended to read as follows:
73. a. A person is guilty of the crime of insurance fraud if that person knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omits a material fact from, or causes a material fact to be omitted from, any record, bill, claim or other document, in writing, electronically, orally or in any other form, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted as part of, in support of or opposition to or in connection with: (1) a claim for payment, reimbursement or other benefit pursuant to an insurance policy, or from an insurance company or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.); (2) an application to obtain or renew an insurance policy; (3) any payment made or to be made in accordance with the terms of an insurance policy or premium finance transaction; or (4) an affidavit, certification, record or other document used in any insurance or premium finance transaction.
b. A person who operates a motor vehicle on the public highways of this State, which motor vehicle is insured by a policy issued under the laws of another state, is guilty of the crime of insurance fraud if that person maintains a principal residence in this State or has his motor vehicle principally garaged in this State and he has knowingly prepared or made any written, electronic or oral statement, regardless of transmission, and presented to any insurance company or producer licensed to transact the business of insurance under the laws of that other state, and which resulted in obtaining a motor vehicle insurance policy for his motor vehicle in that other state, that the person to be insured: (1) maintains a principal residence in the other state when, in fact, that person's principal residence is in this State; or (2) has his motor vehicle principally garaged in the other state, when, in fact, that person has his motor vehicle principally garaged in this State. This subsection shall not apply to a person who legitimately insures a vehicle in another state based on a second residence, or attendance at an educational institution, in that other state.
c. Insurance fraud constitutes a crime of the second degree if the person knowingly commits five or more acts of insurance fraud, including acts of health care claims fraud pursuant to section 2 of P.L.1997, c.353 (C.2C:21-4.2) and if the aggregate value of property, services or other benefit wrongfully obtained or sought to be obtained is at least $1,000. Otherwise, insurance fraud in violation of subsection a. of this section is a crime of the third degree and insurance fraud in violation of subsection b. of this section is a disorderly persons offense. Each act of insurance fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to this subsection. Multiple acts of insurance fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this [subsection] section.
[c.] d. Proof that a person has signed or initialed an application, bill, claim, affidavit, certification, record or other document may give rise to an inference that the person has read and reviewed the application, bill, claim, affidavit, certification, record or other document.
[d.] e. In order to promote the uniform enforcement of this act, the Attorney General shall develop insurance fraud prosecution guidelines and disseminate them to county prosecutors within 180 days of the effective date of this act.
[e.] f. Nothing in this act shall preclude an indictment and conviction for any other offense defined by the laws of this State.
[f.] g. Nothing in this act shall preclude an assignment judge from dismissing a prosecution of insurance fraud if the assignment judge determines, pursuant to N.J.S.2C:2-11, the conduct charged to be a de minimis infraction.
(cf: P.L.2003, c.89, s.73)
3. Section 2 of P.L.1985, c.179 (C.17:23A-2) is amended to read as follows:
2. [Definitions.] As used in this act:
a. "Adverse underwriting decision" means:
(1) Any of the following actions with respect to insurance transactions involving insurance coverage which is individually underwritten for an individual:
(a) A declination of insurance coverage,
(b) A termination of insurance coverage,
(c) Failure of an agent to apply for insurance coverage with a specific insurance institution which the agent represents and which is requested by an applicant,
(d) In the case of a property or casualty insurance coverage:
(i) Placement by an insurance institution or agent of a risk with a residual market mechanism or an unauthorized insurer, or
(ii) The charging of a higher rate on the basis of information which differs from that which the applicant or policyholder furnished,
(e) In the case of a life, health or disability insurance coverage, an offer to insure at a higher rate than the insurance institution's table of premium rates applicable to the age and class of risk of each person to be covered under that coverage and to the type and amount of insurance provided.
(2) Notwithstanding paragraph (1) above, the following actions, if permitted by law, shall not be considered adverse underwriting decisions but the insurance institution or agent responsible for their occurrence shall nevertheless provide the applicant or policyholder with the specific reason or reasons for their occurrence:
(a) The termination of an individual policy form on a class or Statewide basis,
(b) A declination of insurance coverage solely because such coverage is not available on a class or Statewide basis, or
(c) The rescission of a policy.
b. "Affiliate" or "affiliated" means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with another person.
c. "Agent" means any person defined in chapter 22 of Title 17 of the Revised Statutes [, chapter 22 of Title 17B of the New Jersey Statutes] and in R.S.17:35-23. "Agent" includes an insurance producer as defined in section 3 of P.L.2001, c.210 (C.17:22A-28).
d. "Applicant" means a person who seeks to contract for insurance coverage other than a person seeking group insurance that is not individually underwritten.
e. "Commissioner" means the Commissioner of Banking and Insurance.
f. "Consumer report" means any written, oral or other communication of information bearing on a natural person's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is used or expected to be used in connection with an insurance transaction.
g. "Consumer reporting agency" means any person who:
(1) Regularly engages, in whole or in part, in the practice of assembling or preparing consumer reports, for a monetary fee, [and]
(2) Obtains information primarily from sources other than insurance institutions, and
(3) Furnishes consumer reports to other persons.
h. "Control," including the terms "controlled by" or "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract of goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person.
i. "Declination of insurance coverage" means a denial, in whole or in part, by an insurance institution or agent of requested insurance coverage.
j. "Individual" means any natural person who:
(1) In the case of property or casualty insurance, is a past, present or proposed named insured or certificate holder;
(2) In the case of life, health or disability insurance, is a past, present or proposed principal insured or certificate holder;
(3) Is a past, present or proposed policy owner;
(4) Is a past or present applicant; [or]
(5) Is a past or present claimant; or
(6) Derived, derives or is proposed to derive insurance coverage under an insurance policy or certificate subject to this act.
k. "Institutional source" means any person or governmental entity that provides information about an individual to an agent, insurance institution or insurance support organization, other than:
(1) An agent,
(2) The individual who is the subject of the information, or
(3) A natural person acting in a personal capacity rather than in a business or professional capacity.
l. "Insurance institution" means any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person engaged in the business of insurance, including health maintenance organizations, medical service corporations, hospital service corporations, health service corporations, dental service corporations, dental plan organizations and automobile insurance plans [and the New Jersey Automobile Full Insurance Underwriting Association], as defined in section 2 of P.L.1973, c.337 (C.26:2J-2), section 1 of P.L.1940, c.74 (C.17:48A-1), section 1 of P.L.1960, c.1 (C.17:48B-1), section 1 of P.L.1938, c.366 (C.17:48-1), section 1 of P.L.1985, c.236 (C.17:48E-1), section 2 of P.L.1968, c.305 (C.17:48C-2), section 2 of P.L.1979, c.478 (C.17:48D-2), and P.L.1970, c.215 (C.17:29D-1 et seq.) [and P.L.1983, c.65 (C.17:29A-33 et al.)], respectively. "Insurance institution" shall not include agents or insurance-support organizations.
m. "Insurance-support organization" means:
(1) Any person who regularly engages, in whole or in part, in the practice of assembling or collecting information about [natural] persons for the primary purpose of providing the information to an insurance institution or agent for insurance transactions, including:
(a) The furnishing of consumer reports or investigative consumer reports to an insurance institution or agent for use in connection with an insurance transaction, or
(b) The collection of [personal] information from insurance institutions, agents or other insurance-support organizations for the purpose of detecting or preventing fraud, material misrepresentation or material nondisclosure in connection with insurance underwriting or insurance claim activity.
(2) Notwithstanding paragraph (1) of this subsection, the following persons shall not be considered "insurance-support organizations" for the purposes of this act: agents, government institutions, insurance institutions, medical-care institutions, medical professionals and rating organizations as defined in section 1 of P.L.1944, c.27 (C.17:29A-1).
n. "Insurance transaction" means any transaction involving insurance primarily for personal, family or household needs rather than business or professional needs which entails:
(1) The determination of an individual's eligibility for an insurance coverage, benefit or payment, or
(2) The servicing of an insurance application, policy, contract or certificate.
o. "Investigative consumer report" means a consumer report or portion thereof in which information about a natural person's character, general reputation, personal characteristics or mode of living is obtained through personal interviews with the person's neighbors, friends, associates, acquaintances or others who may have knowledge concerning those items of information.
p. "Medical-care institution" means a facility or institution that is licensed to provide health care services to natural persons, including but not limited to hospitals, skilled nursing facilities, nursing facilities, home-health agencies, medical clinics, rehabilitation agencies, public health agencies or health maintenance organizations.
q. "Medical professional" means any person providing health care services to natural persons, including but not limited to a physician, podiatrist, dentist, nurse, optometrist, chiropractor, physical therapist, occupational therapist, pharmacist, psychologist, dietitian, psychiatric social worker or speech therapist.
r. "Medical-record information" means personal information which:
(1) Relates to an individual's physical or mental condition, medical history or medical treatment, and
(2) Is obtained from a medical professional or medical-care institution, from the individual, or from the individual's spouse, parent or legal guardian.
s. "Person" means any natural person, corporation, association, partnership or other legal entity.
t. "Personal information" means any individually identifiable information gathered in connection with an insurance transaction from which judgments can be made about an individual's character, habits, avocations, finances, occupation, general reputation, credit, health or any other personal characteristics. "Personal information" includes an individual's name and address and medical-record information but does not include privileged information.
u. "Policyholder" means any person who:
(1) In the case of individual property or casualty insurance, is a present named insured;
(2) In the case of individual life, health or disability insurance, is a present policy owner; or
(3) In the case of group insurance which is individually underwritten, is a present group certificate holder.
v. "Pretext interview" means an interview whereby a person, in an attempt to obtain information about a natural person, performs one or more of the following acts:
(1) Pretends to be someone he is not,
(2) Pretends to represent a person he is not in fact representing,
(3) Misrepresents the true purpose of the interview, or
(4) Refuses to identify himself upon request.
w. "Privileged information" means any individually identifiable information that:
(1) Relates to a claim for insurance benefits or a civil or criminal proceeding involving [an individual] any person concerning an insurance transaction, and
(2) Is collected in connection with or in reasonable anticipation of a claim for insurance benefits or civil or criminal proceeding involving [an individual] any person concerning an insurance transaction; except that information otherwise meeting the requirements of this subsection shall nevertheless be considered personal information under this act if it is disclosed in violation of section 13 of this act.
x. "Residual market mechanism" means any insurance pooling mechanism, joint underwriting association, or reinsurance facility created pursuant to law or regulation which provides insurance coverage for any risk that is not insurable in the voluntary market.
y. "Termination of insurance coverage" or "termination of an insurance policy" means either a cancellation or nonrenewal of an insurance policy, in whole or in part, for any reason other than the failure to pay a premium as required by the policy.
z. "Unauthorized insurer" means an insurance institution that has not been granted a certificate of authority by the commissioner to transact the business of insurance in this State.
(cf: P.L.1985, c.179, s.2)
4. Section 13 of P.L.1985, c.179 (C.17:23A-13) is amended to read as follows:
13. [Disclosure limitations and conditions.] An insurance institution, agent or insurance-support organization shall not disclose any personal or privileged information [about an individual] collected or received in connection with, or in reasonable anticipation of, an insurance transaction, unless the disclosure is:
a. With the written authorization of the individual to whom the information relates, provided:
(1) If the authorization is submitted by another insurance institution, agent or insurance-support organization, the authorization meets the requirements of section 6 of this act, or
(2) If the authorization is submitted by a person other than an insurance institution, agent or insurance-support organization, the authorization is:
(a) Dated,
(b) Signed by the individual, and
(c) Obtained one year or less prior to the date a disclosure is sought pursuant to this subsection;
b. To a person other than an insurance institution, agent or insurance-support organization, provided the disclosure is reasonably necessary:
(1) To enable the person to perform a business, professional or insurance function for the disclosing insurance institution, agent or insurance-support organization, and the person agrees not to disclose the information further without the individual's written authorization unless the further disclosure:
(a) Would otherwise be permitted by this section if made by an insurance institution, agent or insurance-support organization, or
(b) Is reasonably necessary for the person to perform its function for the disclosing insurance institution, agent or insurance-support organization; or
(2) To enable the person to provide information to the disclosing insurance institution, agent or insurance-support organization for the purpose of:
(a) Determining an individual's eligibility for an insurance benefit or payment, or
(b) Detecting or preventing criminal activity, fraud, material misrepresentation or material nondisclosure in connection with, or in reasonable anticipation of, an insurance transaction;
c. To an insurance institution, agent, insurance-support organization or self-insurer, if the information disclosed is limited to that which is reasonably necessary:
(1) To detect or prevent criminal activity, fraud, material misrepresentation or material nondisclosure in connection with, or in reasonable anticipation of, insurance transactions, or
(2) For either the disclosing or receiving insurance institution, agent or insurance-support organization to perform its functions in connection with an insurance transaction involving the individual;
d. To a medical-care institution or medical professional for the purpose of:
(1) Verifying insurance coverage or benefits;
(2) Informing an individual of a medical problem of which the individual may not be aware; or
(3) Conducting an operations or services audit, provided only that information is disclosed as is reasonably necessary to accomplish the foregoing purposes; [or]
e. To an insurance regulatory authority; [or]
f. To a law enforcement or other governmental authority:
(1) To protect the interests of the insurance institution, agent or insurance-support organization in preventing or prosecuting the perpetration of fraud upon it, or
(2) If the insurance institution, agent or insurance-support organization reasonably believes that illegal activities have been conducted by [the individual] any person;
g. Otherwise permitted or required by law;
h. In response to a facially valid administrative or judicial order, including a search warrant or subpena;
i. Made for the purpose of conducting actuarial or research studies, provided:
(1) No individual may be identified in any actuarial or research report,
(2) Materials allowing the individual to be identified are returned or destroyed as soon as they are no longer needed, and
(3) The actuarial or research organization agrees not to disclose the information unless the disclosure would otherwise be permitted by this section if made by an insurance institution, agent or insurance-support organization;
j. To a party or a representative of a party to a proposed or consummated sale, transfer, merger or consolidation of all or part of the business of the insurance institution, agent or insurance-support organization, except that:
(1) Prior to the consummation of the sale, transfer, merger or consolidation only such information is disclosed as is reasonably necessary to enable the recipient to make business decisions about the purchase, transfer, merger or consolidation, and
(2) The recipient agrees not to disclose the information unless the disclosure would otherwise be permitted by this section if made by an insurance institution, agent or insurance-support organization;
k. To a person whose only use of such information will be in connection with the marketing of a product or service, if:
(1) No medical-record information, privileged information, or personal information relating to an individual's character, personal habits, mode of living or general reputation is disclosed, and no classification derived from that information is disclosed,
(2) The individual has been given an opportunity to indicate that he does not want personal information disclosed for marketing purposes and has given no indication that he does not want the information disclosed, and
(3) The person receiving the information agrees not to use it except in connection with the marketing of a product or service;
l. To an affiliate whose only use of the information will be in connection with an audit of the insurance institution or agent or the marketing of an insurance product or service, if the affiliate agrees not to disclose the information for any other purpose or to unaffiliated persons;
m. By a consumer reporting agency, if the disclosure is to a person other than an insurance institution or agent;
n. To a group policyholder for the purpose of reporting claims experience or conducting an audit of the insurance institution's or agent's operations or services, if the information disclosed is reasonably necessary for the recipient to conduct the review or audit;
o. To a professional peer review organization for the purpose of reviewing the services or conduct of a medical-care institution or medical professional;
p. To a governmental authority for the purpose of determining the individual's eligibility for health benefits for which the governmental authority may be liable;
q. To a certificateholder or policyholder for the purpose of providing information regarding the status of an insurance transaction; or
r. To a lienholder, mortgagee, assignee, lessor or other person shown on the records of an insurance institution or agent as having a legal or beneficial interest in a policy of insurance, provided:
(1) No medical-record information is disclosed unless the disclosure would otherwise be permitted by this section of this act; and
(2) The information disclosed is limited to that reasonably necessary to permit the person to protect its interests in the policy.
(cf: P.L.1985, c.179, s.13)
5. Section 20 of P.L.1985, c.179 (C.17:23A-20) is amended to read as follows:
20. [Individual remedies.] a. If any insurance institution, agent or insurance-support organization fails to comply with section 8, 9 or 10 of this act with respect to the rights granted under those sections, any person whose rights are violated may apply to the Superior Court of this State, or any other court of competent jurisdiction, for appropriate equitable relief.
b. An insurance institution, agent or insurance-support organization which discloses information in violation of section 13 of this act shall be liable for damages sustained by the [individual] person about whom the information relates; except that no [individual] person shall be entitled to a monetary award which exceeds the actual damages sustained by the [individual] person as a result of a violation of section 13 of this act.
c. In any action brought pursuant to this section, the court may award the costs of the action and reasonable attorney's fees to the prevailing party.
d. An action under this section shall be brought within two years from the date the alleged violation is or should have been discovered.
e. Except as specifically provided in this section, there shall be no remedy or recovery available to [individuals] persons, in law or in equity, for occurrences constituting a violation of any provision of this act.
(cf: P.L.1985, c.179, s.20)
6. Section 21 of P.L.1985, c.179 (C.17:23A-21) is amended to read as follows:
21. [Immunity.] No civil liability shall be imposed and no cause of action [in the] of any nature [of defamation, invasion of privacy or negligence] shall arise against any person for disclosing personal or privileged information in accordance with this act, [nor shall such a cause of action arise] or against any person for furnishing personal or privileged information to an insurance institution, agent or insurance-support organization; except this section shall provide no immunity for disclosing or furnishing [false] information with malice or willful intent to injure any person.
(cf: P.L.1985, c.179, s.21)
7. Section 3 of P.L.1983, c.320 (C.17:33A-3) is amended to read as follows:
3. As used in this act:
"Attorney General" means the Attorney General of New Jersey or his designated representatives.
"Bureau" means the Bureau of Fraud Deterrence established by section 8 of P.L.1983, c.320 (C.17:33A-8).
"Commissioner" means the Commissioner of Banking and Insurance.
"Hospital" means any general hospital, mental hospital, convalescent home, nursing home or any other institution, whether operated for profit or not, which maintains or operates facilities for health care.
"Insurance company" means:
a. Any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person engaged in the business of insurance pursuant to Subtitle 3 of Title 17 of the Revised Statutes (C.17:17-1 et seq.), or Subtitle 3 of Title 17B of the New Jersey Statutes (C.17B:17-1 et seq.);
b. Any medical service corporation operating pursuant to P.L.1940, c.74 (C.17:48A-1 et seq.);
c. Any hospital service corporation operating pursuant to P.L.1938, c.366 (C.17:48-1 et seq.);
d. Any health service corporation operating pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.);
e. Any dental service corporation operating pursuant to P.L.1968, c.305 (C.17:48C-1 et seq.);
f. Any dental plan organization operating pursuant to P.L.1979, c.478 (C.17:48D-1 et seq.);
g. Any insurance plan operating pursuant to P.L.1970, c.215 (C.17:29D-1);
h. The New Jersey Insurance Underwriting Association operating pursuant to P.L.1968, c.129 (C.17:37A-1 et seq.); and
i. (Deleted by amendment, P.L.2010, c.32)
j. Any risk retention group or purchasing group operating pursuant to the "Liability Risk Retention Act of 1986," 15 U.S.C.3901 et seq.
"Knowingly" means acting knowingly with respect to the nature or result of a person's own conduct or the attendant circumstances. A person acts knowingly with respect to the nature of his conduct or the attendant circumstances if he is aware that his conduct is of that nature, or that such circumstances exist, or he is aware of a high probability of their existence. A person acts knowingly with respect to a result of his conduct if he is aware that it is practically certain that his conduct will cause such a result.
"Pattern" means five or more related violations of P.L.1983, c.320 (C.17:33A-1 et seq.). Violations are related if they involve either the same victim, or same or similar actions on the part of the person or practitioner charged with violating P.L.1983, c.320 (C.17:33A-1 et seq.).
"Person" means a person as defined in R.S.1:1-2, and shall include, unless the context otherwise requires, a practitioner.
"Principal residence" means that residence at which a person spends the majority of his time. Principal residence may be an abode separate and distinct from a person's domicile. Mere seasonal or weekend residence within this State does not constitute principal residence within this State.
"Practitioner" means a licensee of this State authorized to practice medicine and surgery, psychology, chiropractic, or law or any other licensee of this State whose services are compensated, directly or indirectly, by insurance proceeds, or a licensee similarly licensed in other states and nations or the practitioner of any nonmedical treatment rendered in accordance with a recognized religious method of healing.
"Producer" means an insurance producer as defined in section 3 of P.L.2001, c.210 (C.17:22A-28), licensed to transact the business of insurance in this State pursuant to the provisions of the "New Jersey Insurance Producer Licensing Act of 2001," P.L.2001, c.210 (C.17:22A-26 et seq.).
"Statement" includes, but is not limited to, any application, writing, notice, expression, statement, proof of loss, bill of lading, receipt, invoice, account, estimate of property damage, bill for services, diagnosis, prescription, hospital or physician record, X-ray, test result or other evidence of loss, injury or expense.
(cf: P.L.2010, c.32, s.2)
8. Section 4 of P.L.1983, c.320 (C.17:33A-4) is amended to read as follows:
4. a. A person or a practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if he:
(1) Presents or [causes] allows to be presented any written, electronic, or oral statement, regardless of transmission, as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.), knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or
(2) Prepares or makes any written, electronic, or oral statement, regardless of transmission, that is intended to be presented to any insurance company, the Unsatisfied Claim and Judgment Fund or any claimant thereof in connection with, or in support of or opposition to any claim for payment or other benefit pursuant to an insurance policy or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.), knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or
(3) Conceals or knowingly fails to disclose the occurrence of an event which affects any person's initial or continued right or entitlement to (a) any insurance benefit or payment or (b) the amount of any benefit or payment to which the person is entitled;
(4) Prepares or makes any written, electronic, or oral statement, regardless of transmission, intended to be presented to any insurance company or producer for the purpose of obtaining:
(a) a motor vehicle insurance policy, that the person to be insured maintains a principal residence in this State when, in fact, that person's principal residence is in a state other than this State; or
(b) an insurance policy, knowing that the statement contains any false or misleading information concerning any fact or thing material to an insurance application or contract; or
(5) Conceals or knowingly fails to disclose any evidence, written or oral, which may be relevant to a finding that a violation of the provisions of paragraph (4) of this subsection a. has or has not occurred.
b. A person or practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if he knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.).
c. A person or practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if, due to the assistance, conspiracy or urging of any person or practitioner, he knowingly benefits, directly or indirectly, from the proceeds derived from a violation of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.).
d. A person or practitioner who is the owner, administrator or employee of any hospital violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if he knowingly allows the use of the facilities of the hospital by any person in furtherance of a scheme or conspiracy to violate any of the provisions of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.).
e. A person or practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if, for pecuniary gain, for himself or another, he directly or indirectly solicits any person or practitioner to engage, employ or retain either himself or any other person to manage, adjust or prosecute any claim or cause of action, against any person, for damages for negligence, or, for pecuniary gain, for himself or another, directly or indirectly solicits other persons to bring causes of action to recover damages for personal injuries or death, or for pecuniary gain, for himself or another, directly or indirectly solicits other persons to make a claim for personal injury protection benefits pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.); provided, however, that this subsection shall not apply to any conduct otherwise permitted by law or by rule of the Supreme Court.
f. A person or practitioner violates P.L.1983, c.320 (C.17:33A-1 et seq.) if he uses a business entity, including a corporation, partnership or limited liability company, which he owns, operates or otherwise controls, to violate any of the provisions of P.L.1983, c.320 (C.17:33A-1 et seq.).
g. A person or practitioner violates P.L.1983, c.320 (C.17:33A-1 et seq.) if he knowingly possesses, displays, distributes, or manufactures a fictitious motor vehicle insurance identification card or any other fictitious certificate of insurance.
h. A person or practitioner violates P.L.1983, c.320 (C.17:33A-1 et seq.) if he commits workers' compensation fraud as defined in section 1 of P.L.1998, c.74 (C.34:15-57.4).
i. A person or practitioner violates P.L.1983, c.320 (C.17:33A-1 et seq.) if he knowingly solicits or receives, for himself or another, any kickback, bribe, or rebate in cash or in kind, either: (1) in return for referring an individual to a person or practitioner for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under any insurance policy; or (2) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service or item for which payment may be made in whole or in part under any insurance policy; provided, however, that this subsection shall not apply to:
(1) any conduct otherwise permitted by law or by rule of the Supreme Court, including any arrangement, agreement or referral made pursuant to an exception available under 42 U.S.C. s.1320a-7b(b)(3) or a "safe harbor" available pursuant to Section 1001.952 of Title 42, Code of Federal Regulations; or
(2) the waiver of an individual's deductible, copayment, or coinsurance by a person or practitioner after the practitioner makes a determination that the individual has a medical or financial hardship.
j. A person who operates a motor vehicle on the public highways of this State, which motor vehicle is insured by a policy issued under the laws of another state, and who maintains a principal residence in this State or who has his motor vehicle principally garaged in this State violates the provisions of P.L.1983, c.320 (C.17:33A-1 et seq.) if he has knowingly prepared or made any written, electronic or oral statement, regardless of transmission, presented to any insurance company or producer licensed to transact the business of insurance under the laws of that other state, and which resulted in obtaining a motor vehicle insurance policy for his motor vehicle in that other state, that the person to be insured:
(1) Maintains a principal residence in the other state when, in fact, that person's principal residence is in this State; or
(2) Has his vehicle principally garaged in the other state, when, in fact, that person has his motor vehicle principally garaged in this State.
This subsection j. shall not apply to a person who legitimately insures a vehicle in another state based on a second residence, or attendance at an educational institution, in that other state.
(cf: P.L.1997, c.151, s.3)
9. Section 7 of P.L.1983, c.320 (C.17:33A-7) is amended to read as follows:
7. a. Any insurance company damaged as the result of a violation of any provision of this act may sue therefor in any court of competent jurisdiction to recover compensatory damages, which shall include reasonable investigation expenses, costs of suit and attorneys fees.
b. A successful claimant under subsection a. shall recover treble damages if the court determines that the defendant has engaged in a pattern of violating this act.
c. A claimant under this section shall mail a copy of the initial claim, amended claim, counterclaims, briefs and legal memoranda to the commissioner at the time of filing of such documents with the court wherein the matter is pending. A successful claimant shall report to the commissioner, on a form prescribed by the commissioner, the amount recovered and such other information as is required by the commissioner.
d. Upon receipt of notification of the filing of a claim by an insurer, the commissioner may join in the action for the purpose of seeking judgment for the payment of a civil penalty authorized under section 5 of this act. If the commissioner prevails, the court may also award court costs and reasonable attorney fees actually incurred by the commissioner.
e. [No action shall be brought by an insurance company under this section more than six years after the cause of action has accrued.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
(P.L.1997, c.151, s.5)
10. Section 9 of P.L.1983, c.320 (C.17:33A-9) is amended to read as follows:
9. a. (1) Any person who believes that a violation of this act has been or is being made shall notify the bureau and the Office of the Insurance Fraud Prosecutor immediately after discovery of the alleged violation of this act and shall send to the bureau and office, on a form and in a manner jointly prescribed by the commissioner and the Insurance Fraud Prosecutor, the information requested and such additional information relative to the alleged violation as the bureau or office may require. The bureau and the office shall jointly review the reports and select those alleged violations as may require further investigation by the office for possible criminal prosecution, and those that may warrant investigation and possible civil action or enforcement proceeding by the bureau in lieu of or in addition to criminal prosecution. The Insurance Fraud Prosecutor and the assistant commissioner shall meet monthly to ensure that reports are handled in an expedited fashion.
(2) Whenever the Bureau of Fraud Deterrence or any employee of the bureau obtains information or evidence of a reasonable possibility of criminal wrongdoing not previously known or disclosed to the Office of the Insurance Fraud Prosecutor, the bureau shall immediately refer that information or evidence to that office. In determining whether a referral to the office is appropriate, the bureau shall utilize appropriate levels of internal review, which shall include but not be limited to approval at the assistant commissioner level. Upon referral, the bureau shall provide the office with all documents related to the referral consistent with section 39 of P.L.1998, c.21 (C.17:33A-23).
b. No person shall be subject to civil liability [for libel, violation of privacy or otherwise] or to a cause of action of any nature by virtue of the filing of reports or furnishing of other information, in good faith and without malice, required by this section or required by the bureau or the Office of the Insurance Fraud Prosecutor as a result of the authority conferred upon it by law.
c. The commissioner may, by regulation, require insurance companies licensed to do business in this State to keep such records and other information as he deems necessary for the effective enforcement of this act.
(cf: P.L.2010, c.32, s.4)
11. (New section) a. In addition to the civil immunity provided to a person by subsection b. of section 9 of P.L.1983, c.320 (C.17:33A-9), a person shall also be immune from any civil liability and not subject to a cause of action of any nature for making a report or otherwise providing information to, or receiving information from, any of the following, when any party involved in the information sharing believes that a violation of the "New Jersey Insurance Fraud Prevention Act," P.L.1983, c.320 (C.17:33A-1 et seq.), has been or is being made:
(1) the commissioner, or any employee, agent, or representative of the commissioner;
(2) federal, State, or local law enforcement, including the Bureau of Fraud Deterrence, Office of the Insurance Fraud Prosecutor, or other governmental authority;
(3) any person performing a business, professional, or insurance function concerning the detection or prevention of criminal activity, fraud, material misrepresentation, or material nondisclosure which violates the provisions of the "New Jersey Insurance Fraud Prevention Act," P.L.1983, c.320 (C.17:33A-1 et seq.);
(4) the National Association of Insurance Commissioners, or its successor organization, and its affiliates or subsidiaries, or any agency or committee thereof; or
(5) the National Insurance Crime Bureau, or its successor organization, and its affiliates or subsidiaries, or any agency or committee thereof.
b. (1) This section shall not abrogate or modify any existing statutory or common law privilege or immunity enjoyed by any person described in subsection a. of this section.
(2) This section shall not provide any immunity to any person for disclosing or furnishing information with malice or willful intent to injure another person.
12. Section 45 of P.L.1998, c.21 (C.17:33A-29) is amended to read as follows:
45. Every state and local law enforcement agency, including the New Jersey State Police, shall make available to: (1) investigators and claims representatives employed by insurers; (2) vehicle owners, operators, and passengers listed in the accident report; (3) any person, or attorney who can provide documentation that the attorney has been retained to represent a person, who claims to have suffered personal injury or property damage as a result of the motor vehicle accident; and (4) any representative of the bureau, the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety, or local county or State law enforcement, upon presentation of appropriate identification, information from any accident report, as set forth in this section, no later than 24 hours following the time of occurrence. The information may include, but need not be limited to, the names and addresses of the owners of the vehicles, insurance information recorded on the accident report, and the names and addresses of passengers in the vehicles at the time of the occurrence and, if applicable, the name of any pedestrian injured in an accident. Every accident report form shall contain the names and addresses of any person occupying a vehicle involved in an accident, and any pedestrian injured in an accident. No State or local law enforcement agency, including the New Jersey State Police, shall make available an accident report, nor any information contained in it, to any other person until 30 days have elapsed from the date of the accident.
(cf: P.L.1998, c.21, s.45)
13. Section 1 of P.L.1998, c.74 (C.34:15-57.4) is amended to read as follows:
1. a. A person shall be guilty of a crime of the fourth degree if the person purposely or knowingly:
(1) Makes, when making a claim for benefits pursuant to R.S.34:15-1 et seq., a false or misleading statement, representation or submission concerning any fact that is material to that claim for the purpose of wrongfully obtaining the benefits;
(2) Makes a false or misleading statement, representation or submission, including a misclassification of employees, or engages in a deceptive leasing practice, for the purpose of evading the full payment of benefits or premiums pursuant to R.S.34:15-1 et seq.; or
(3) Coerces, solicits or encourages, or employs or contracts with a person to coerce, solicit or encourage, any individual to make a false or misleading statement, representation or submission concerning any fact that is material to a claim for benefits, or the payment of benefits or premiums, pursuant to R.S.34:15-1 et seq. for the purpose of wrongfully obtaining the benefits or of evading the full payment of the benefits or premiums.
b. Any person who wrongfully obtains benefits or evades the full payment of benefits or premiums by means of a violation of the provisions of subsection a. of this section shall be civilly liable to any person injured by the violation for damages and all reasonable costs and attorney fees of the injured person.
c. (1) If a person purposely or knowingly makes, when making a claim for benefits pursuant to R.S.34:15-1 et seq., a false or misleading statement, representation or submission concerning any fact which is material to that claim for the purpose of obtaining the benefits, the division may order the immediate termination or denial of benefits with respect to that claim and a forfeiture of all rights of compensation or payments sought with respect to the claim.
(2) Notwithstanding any other provision of law, and in addition to any other remedy available under law, if that person has received benefits pursuant to R.S.34:15-1 et seq. to which the person is not entitled, he is liable to repay that sum plus simple interest to the employer or the carrier or have the sum plus simple interest deducted from future benefits payable to that person, and the division shall issue an order providing for the repayment or deduction.
(3) Notwithstanding any other provision of law, and in addition to any other remedy available under law, a person who evades the full payment of premiums pursuant to R.S.34:15-1 et seq. or improperly denies or delays benefits pursuant to R.S.34:15-1 et seq. is liable to pay the sum due and owing plus simple interest.
d. Nothing in this section shall preclude, if the evidence so warrants, indictment and conviction for a violation of any provision of chapter 20, 21 or 28 of Title 2C of the New Jersey Statutes or any other law. For the purpose of this section,"purposely," "knowingly" and "purposely or knowingly" have the same meaning as is provided in chapter 2 of Title 2C of the New Jersey Statutes.
e. The penalties provided for pursuant to this section shall be in addition to, and shall not preclude, any additional penalties provided for under the "New Jersey Insurance Fraud Prevention Act," P.L.1983, c.320 (C.17:33A-1 et seq.) if a violation of this section is also a violation of the "New Jersey Insurance Fraud Prevention Act," P.L.1983, c.320 (C.17:33A-1 et seq.).
(cf: P.L.1998, c.74, s.1)
14. This act shall take effect on the first day of the fourth month next following enactment, except that the Commissioner of Banking and Insurance may take any anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.
STATEMENT
This bill establishes and enhances certain insurance fraud prevention measures. The bill broadens the scope of information sharing between insurance carriers and law enforcement, makes "reverse rate evasion" a violation of the "New Jersey Insurance Fraud Prevention Act," P.L.1983, c.320 (C.17:33A-1 et seq.), and provides for certain additional anti-fraud measures to be added to the "New Jersey Insurance Fraud Prevention Act."
Section 1 of the bill applies a 7-year statute of limitations to insurance fraud cases brought under the "New Jersey Insurance Fraud Prevention Act."
Section 2 of the bill makes reverse rate evasion a disorderly persons offense. Reverse rate evasion occurs when New Jersey residents fraudulently obtain automobile insurance in another state even though New Jersey is their principal residence or they principally garage the insured vehicle in New Jersey.
A person who maintains a principal residence in New Jersey or has a motor vehicle principally garaged in New Jersey and who drives on the public highways of New Jersey, but has the motor vehicle insured by a policy issued under the laws of another state commits the crime of reverse rate evasion under this bill if that person obtained the insurance by knowingly preparing or making any written, electronic or oral statement, regardless of transmission, to any insurance company or producer licensed in that other state falsely indicating that the person to be insured:
(1) maintains a principal residence in the other state when, in fact, that person's principal residence is in this State; or
(2) has his motor vehicle principally garaged in the other state, when, in fact, that person has his motor vehicle principally garaged in this State.
Section 2 of the bill does not apply to a person who legitimately insures a vehicle in another state based on a second residence, or attendance at an educational institution, in that other state.
Sections 3, 4, 5 and 6 of the bill amend the insurance information practices law by:
- Expanding the definition of "insurance-support organization" regarding insurance information practices, to permit any such organization to collect and report information about any person or entity in connection with an insurance transaction, going beyond the current scope as expressed in the definition, which focuses only on information collecting and reporting concerning an individual insured, applicant, or claimant;
- Expanding the definition of "privileged information" regarding insurance information practices, to indicate that such information may relate to any person or entity concerning an insurance transaction;
- Modifying the scope of permitted information disclosures with respect to insurance information practices, so that an insurance carrier, among other insurance institutions, or an agent or insurance-support organization may disclose privileged information (as defined above) about a person or entity in connection with, or in reasonable anticipation of, an insurance transaction, to: 1) another insurance institution, agent, or insurance-support organization; 2) any other person or entity involved in detecting or preventing criminal activity or insurance fraud; or 3) a law enforcement or other governmental authority; and
- Expanding the existing immunity provided to any person or entity for disclosing information, as well as the existing immunity associated with the mandatory reporting requirements and information furnishings set forth under the "New Jersey Insurance Fraud Prevention Act," to apply to a cause of action of any nature, instead of the current law's more limited immunity against causes of action in the nature of defamation, invasion of privacy, or other related actions.
Section 8 of the bill amends the "New Jersey Insurance Fraud Prevention Act," in several different ways by:
- adding "electronic" statements to the statute to clarify that insurance transactions that are conducted via the Internet or other electronic means are subject to the act;
- providing that it is a violation of the act for a person or practitioner to use a business entity, including a corporation, partnership or limited liability company, which he owns, operates or otherwise controls to violate any of the provisions of this act;
- providing that a person or practitioner violates the act if he knowingly possesses, displays, distributes, or manufactures a fictitious motor vehicle insurance identification card or any other fictitious certificate of insurance;
- providing that a person or practitioner violates the act if he knowingly solicits or receives for himself or another, any kickback, bribe, or rebate in cash or in kind, either: (1) in return for referring an individual to a person or practitioner for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under any insurance policy; or (2) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service or item for which payment may be made in whole or in part under any insurance policy, except that the prohibition against kickbacks, bribes, or rebates shall not apply to certain "safe harbor" activities permitted under federal law, or the waiver of an individual's deductible, copayment, or coinsurance if a practitioner makes a determination of medical or financial hardship; and
- including "reverse rate evasion" as a form of insurance fraud that violates the "New Jersey Insurance Fraud Prevention Act."
Section 9 of the bill makes a technical correction by removing language establishing a six-year statute of limitations for actions commenced by an insurance company under the "New Jersey Insurance Fraud Prevention Act" to be consistent with the 7-year statute of limitations established under the bill.
Section 10 of the bill expands the existing immunity provided to any person or entity for disclosing information, as well as the existing immunity associated with the mandatory reporting requirements and information furnishings set forth under the "New Jersey Insurance Fraud Prevention Act," to apply to a cause of action "of any nature," instead of the current law's more limited immunity against causes of action in the nature of defamation, invasion of privacy, or other related actions.
Section 11 of the bill establishes a new, similarly expansive immunity under the "New Jersey Insurance Fraud Prevention Act" relating to making reports to, or providing information to, or receiving information from: (1) the Commissioner of Banking and Insurance, or any employee, agent, or representative of the commissioner; (2) federal, State, or local law enforcement, including the Office of the Insurance Fraud Prosecutor, or other governmental authority; (3) any person performing a business, professional, or insurance function concerning the detection or prevention of criminal activity, fraud, material misrepresentation, or material nondisclosure which violates the provisions of the "New Jersey Insurance Fraud Prevention Act"; (4) the National Association of Insurance Commissioners, a national nonprofit organization which assists state insurance regulators, individually and collectively, in serving the public interest and achieving insurance regulatory and market goals; or (5) the National Insurance Crime Bureau, a national nonprofit organization dedicated to preventing, detecting, and eliminating insurance fraud. This section does not provide any immunity to any person for disclosing or furnishing information with malice or willful intent to injure.
Section 12 of the bill provides that every State and local law enforcement agency, including the New Jersey State Police, would be required to make information in a police report available within 24 hours to: (1) investigators and claims representatives employed by insurers; (2) vehicle owners, operators, and passengers listed in the accident report, upon presentation of appropriate identification; (3) any person, or attorney who can provide documentation that the attorney has been retained to represent a person, who claims to have suffered personal injury or property damage as a result of the motor vehicle accident; and (4) any representative of the Bureau of Fraud Deterrence, the Office of the Insurance Fraud Prosecution in the Department of Law and Public Safety, or local county or State law enforcement. This section also would prohibit any other person from obtaining such information until 30 days have elapsed from the date of a motor vehicle accident.
Section 13 of the bill clarifies that the penalties for workers' compensation fraud provided for under N.J.S.A.34:15-57.4 are in addition to, and shall not preclude any penalties provided for in the "New Jersey Insurance Fraud Prevention Act."
