Bill Text: PA HB425 | 2011-2012 | Regular Session | Introduced

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Bill Title: Further providing for powers and duties of the Insurance Fraud Prevention Authority and for the Insurance Fraud Prevention Trust Fund.

Spectrum: Slight Partisan Bill (Republican 6-2)

Status: (Introduced - Dead) 2011-02-03 - Referred to INSURANCE [HB425 Detail]

Download: Pennsylvania-2011-HB425-Introduced.html

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PRINTER'S NO. 391
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 425 Session of2011
INTRODUCED BY GODSHALL, MICOZZIE, CALTAGIRONE, CLYMER, DeLUCA, HENNESSEY, SWANGER AND J. TAYLOR, FEBRUARY 3, 2011
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 3, 2011
AN ACT
Amending the act of May 17, 1921 (P.L.789, No.285), entitled, as
amended, "An act relating to insurance; establishing an
insurance department; and amending, revising, and
consolidating the law relating to the licensing,
qualification, regulation, examination, suspension, and
dissolution of insurance companies, Lloyds associations,
reciprocal and inter-insurance exchanges, and certain
societies and orders, the examination and regulation of fire
insurance rating bureaus, and the licensing and regulation of
insurance agents and brokers; the service of legal process
upon foreign insurance companies, associations or exchanges;
providing penalties, and repealing existing laws," further
providing for powers and duties of the Insurance Fraud
Prevention Authority and for the Insurance Fraud Prevention
Trust Fund.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 1122 and 1123 of the act of May 17, 1921
(P.L.789, No.285), known as The Insurance Department Act of
1921, added December 6, 2002 (P.L.1183, No.147), are amended to
read:
Section 1122. Powers and duties.
The authority shall have the powers necessary and convenient
to carry out and effectuate the purposes and provisions of this
article and the purposes of the authority and the powers
delegated by other laws, including, but not limited to:
(1) Employ administrative, professional, clerical and
other personnel as may be required and organize the staff as
may be appropriate to effectuate the purposes of this
article.
(2) Have a seal and alter the same at pleasure, have
perpetual succession, make, execute and deliver contracts,
conveyances and other instruments necessary or convenient to
the exercise of its powers and make and amend bylaws.
(3) Procure insurance against any loss in connection
with its property, assets or activities.
(4) Apply for, solicit, receive, establish priorities
for, allocate, disburse, contract for, administer and spend
funds in the fund and other funds that are made available to
the authority from any source consistent with the purposes of
this article.
(5) Make grants to and provide financial support for the
Section of Insurance Fraud, the unit of insurance fraud in
the Philadelphia District Attorney's Office, other county
district attorneys' offices, other government agencies,
community, consumer and business organizations consistent
with the purposes of this article and considering the extent
of the insurance fraud problem in each county of this
Commonwealth.
(6) Advise the State Treasurer in relation to the
investment of any money held in the fund and any funds held
in reserve or sinking funds and any money not required for
immediate use or disbursement and to advise the State
Treasurer in relation to the use of depositories for moneys
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of the fund.
(7) Assess the scope of the problem of insurance fraud,
including areas of this Commonwealth where the problem is
greatest, and review State and local criminal justice
policies, programs and plans dealing with insurance fraud.
(8) Develop and sponsor the implementation of Statewide
plans, programs and strategies to combat insurance fraud,
improve the administration of the insurance fraud laws and
provide a forum for identification of critical problems for
those persons dealing with insurance fraud. In conjunction
with this power, the authority shall require health care
facilities, health care providers and hospitals to place
posters, created by the authority, in each facility
announcing that a $25,000 reward will be paid to persons
reporting insurance fraud when the report leads to an arrest
and conviction. Rewards pursuant to this provision shall be
paid from the Insurance Fraud Prevention Trust Fund. If the
report leads to an arrest or conviction, the law enforcement
agency that made the arrest shall report the arrest and
conviction, if applicable, to the authority. For the purposes
of this paragraph, the terms "health care providers" and
hospitals" shall have the same meanings as given to them in
section 103 of the act of March 20, 2002 (P.L.154, No.13),
known as the Medical Care Availability and Reduction of Error
(Mcare) Act.
(9) Coordinate the development, adoption and
implementation of plans, programs and strategies relating to
interagency and intergovernmental cooperation with respect to
insurance fraud law enforcement.
(10) Promulgate rules or regulations related to the
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expenditure of moneys held in the fund in order to assist and
support those agencies, units of government, county district
attorneys' offices and other organizations charged with the
responsibility of reducing insurance fraud or interested and
involved in achieving this goal.
(11) Audit at its discretion the plans and programs that
it has funded in whole or in part in order to evaluate the
effectiveness of the plans and programs and withdraw funding
should the authority determine that a plan or program is
ineffective or is no longer in need of further financial
support from the fund.
(12) Report annually on or before the first day of April
to the Governor and the General Assembly on the authority's
activities in the preceding period of operation.
(13) Meet with the Section of Insurance Fraud on at
least a quarterly basis in order to advise and assist it in
implementing its statutory mandate.
(14) Advise the General Assembly on matters relating to
insurance fraud and recommend to the General Assembly on an
annual basis any changes to the operation of the Section of
Insurance Fraud. The report shall be available for public
inspection.
(15) Establish either alone or in cooperation with
authorized insurance companies and licensed agents and
producers a fund to reward persons not connected with the
insurance industry who provide information or furnish
evidence leading to the arrest and conviction of persons
responsible for insurance fraud.
(16) Require as a condition of every application and
request for financial support, including every application
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for ongoing renewal of a multiyear grant under section
1123(f), that the applicant describe both the nature of and
the amount of funding for the activities, if any, devoted to
the investigation and prosecution of insurance fraud at the
time of the application or request.
(17) Require as a condition of every application and
request for financial support that every recipient of funding
report annually within four months of the close of each
funding cycle to the authority on the use of the funds
obtained from the authority during the previous year,
including a description of programs implemented and results
obtained. The authority will include this information on the
use of funds by grantees in its annual report under paragraph
(12) and send a copy specifically to the chairman and the
minority chairman of the standing committees of the Senate
and the chairman and the minority chairman of the standing
committees of the House of Representatives with jurisdiction
over insurance matters.
Section 1123. Insurance Fraud Prevention Trust Fund.
(a) Establishment.--There is hereby established a separate
account in the State Treasury to be known as the Insurance Fraud
Prevention Trust Fund. This fund shall be administered by the
State Treasurer with the advice of the authority. All interest
earned from the investment or deposit of moneys accumulated in
the fund shall be deposited in the fund for the same use.
(b) Funds.--All moneys deposited into the fund shall be held
in trust and shall not be considered general revenue of the
Commonwealth but shall be used only to effectuate the purposes
of this article as determined by the authority and shall be
subject to audit by the Auditor General.
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(c) Assessment.--
(1) Annually on or before the first day of April, each
insurer engaged in the writing of the insurance coverages
listed below, as a condition of its authorization to transact
business in this Commonwealth, shall pay into the fund in
trust an amount equal to the product obtained by multiplying
$8,000,000 by a fraction, the numerator of which is the
direct premium collected for those coverages listed below by
that insurer in this Commonwealth during the preceding
calendar year and the denominator of which is the direct
premium written on such coverages in this Commonwealth by all
insurers in the same period.
(2) The following coverages, as listed in the Annual
Statistical Report of the Insurance Department, shall be
considered in determining assessments: all fire and casualty
direct business written and accident and health and credit
accident and health written under life/annuity/accident and
health direct business written. Assessments made under this
section shall not be considered burdens and prohibitions
under section 212.
(3) Assessments for health plan corporations and
professional health services plan corporations when added
together shall not be more than 10% of the total assessment
authorized by this subsection. If the total assessment for
these organizations is more than 10%, such organizations will
share the assessment up to the 10% limit among themselves in
the same proportion as they would otherwise have shared their
calculated assessment absent this limit. Any deficiency in
the total assessment caused by the application of this limit
will be shared by all other entities being assessed in the
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same proportions as they are sharing the rest of the
assessment.
(d) Base amount.--In succeeding years the authority may vary
the base amount of $8,000,000, provided, however, that any
increase which on an annual basis exceeds the increase in the
Consumer Price Index for this Commonwealth must be approved by
three of the four insurance representatives on the board.
(d.1) Forfeiture proceedings.--In addition to other sources
of moneys set forth in this section, the fund shall receive the
proceeds derived from forfeiture proceedings relating to
insurance fraud.
(e) Expenditures.--Moneys in the fund may be expended by the
authority for the following purposes:
(1) Effectuate the powers, duties and responsibilities
of the authority as set forth in this article.
(2) Pay the costs of administration and operation of the
Section of Insurance Fraud and the unit for insurance fraud
in the Philadelphia District Attorney's Office.
(3) Provide financial support to law enforcement,
correctional agencies and county district attorneys' offices
for programs designed to reduce insurance fraud and to
improve the administration of insurance fraud laws.
(4) Provide financial support for other governmental
agencies, community, consumer and business organizations for
programs designed to reduce insurance fraud and to improve
the administration of insurance fraud laws.
(5) Provide financial support to programs designed to
inform insurance consumers about the costs of insurance fraud
to individuals and to society and to suggest methods for
preventing insurance fraud.
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(6) Provide financial support for reward programs
leading to the arrest and conviction of persons and
organizations engaged in insurance fraud.
(7) Provide financial support for other plans, programs
and strategies consistent with the purposes of this article.
(f) Multiyear grants.--In funding the Section of Insurance
Fraud, the Unit for Insurance Fraud in the Philadelphia District
Attorney's Office and in funding grant requests, the authority
may consider and approve requests for multiyear grants of not
more than four years in length, although extensions of such
multiyear commitments may be renewed from year to year. No
funding reduction under subsection (d) can be imposed by the
authority in any given year which would operate to reduce
funding for any multiyear approved program for which persons
have been hired for full-time positions to a funding level where
such positions must be terminated unless the organization
employing such persons certifies either that other equivalent
positions are available or that such positions with the
antifraud program can be funded from other sources.
(g) Dissolution.--In the event that the trust fund is
discontinued or the authority is dissolved by operation of law,
any balance remaining in the fund, after deducting
administrative costs for liquidation, shall be returned to
insurers in proportion to their financial contributions to the
fund in the preceding calendar year.
Section 2. This act shall take effect in 60 days.
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