Bill Text: PA HB846 | 2011-2012 | Regular Session | Introduced

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Bill Title: Further providing for insurance fraud; consolidating Article XI of The Insurance Department Act of 1921, further providing for purpose, for definitions, for Insurance Fraud Prevention Trust Fund, for powers and duties and for duties of insurance licensees and their employees; and making a repeal.

Spectrum: Moderate Partisan Bill (Democrat 18-4)

Status: (Introduced - Dead) 2011-02-28 - Referred to INSURANCE [HB846 Detail]

Download: Pennsylvania-2011-HB846-Introduced.html

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PRINTER'S NO. 875
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 846 Session of2011
INTRODUCED BY BARBIN, DeLUCA, FABRIZIO, PASHINSKI, KOTIK, MATZIE, BOBACK, V. BROWN, CARROLL, DALEY, DEASY, DeWEESE, GOODMAN, HORNAMAN, JOSEPHS, KORTZ, KULA, MURPHY, MURT, READSHAW, STERN AND SWANGER, FEBRUARY 28, 2011
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 28, 2011
AN ACT
Amending Titles 18 (Crimes and Offenses) and 40 (Insurance) of
the Pennsylvania Consolidated Statutes, further providing for
insurance fraud; consolidating Article XI of The Insurance
Department Act of 1921, further providing for purpose, for
definitions, for Insurance Fraud Prevention Trust Fund, for
powers and duties and for duties of insurance licensees and
their employees; and making a repeal.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 4117(a)(1), (2), (3), (4) and (7), (b)
(4), (f) and (k)(1) of Title 18 of the Pennsylvania Consolidated
Statutes are amended to read:
§ 4117. Insurance fraud.
(a) Offense defined.--A person commits an offense if the
person does any of the following:
(1) Knowingly and with the intent to defraud a State or
local government agency files, presents or causes to be filed
with or presented to the government agency a document that
contains false, incomplete or misleading information
concerning any fact or thing material to the agency's
determination in approving or disapproving [a motor vehicle]
an insurance rate filing[, a motor vehicle insurance
transaction] or other [motor vehicle insurance] action
requiring insurance which is [required or] filed in response
to an agency's request.
(2) Knowingly and with the intent to defraud any insurer
[or], self-insured, insurance licensee, person or the public,
presents or causes to be presented [to any insurer or self-
insured] any statement forming a part of, or in support of,
[a claim] an insurance transaction that contains any false,
incomplete or misleading information concerning any fact or
thing material to [the claim.] any of the following:
(i) Issue by an insurer or self-insured of an
insurance policy, rider, endorsement or a certificate of
insurance.
(ii) Determination of insurance premium.
(iii) Payment of any commission, benefit, claim or
other funds, under a policy of insurance or a certificate
of insurance.
(3) Knowingly and with the intent to defraud any insurer
[or], self-insured, insurance licensee, person or the public,
assists, abets, solicits or conspires with another to prepare
or make any statement that is intended to be presented [to
any insurer or self-insured] in connection with, or in
support of, [a claim] an insurance transaction that contains
any false, incomplete or misleading information concerning
any fact or thing material to [the claim, including
information which documents or supports an amount claimed in
excess of the actual loss sustained by the claimant.] any of
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the following:
(i) Issue by an insurer or self-insured of an
insurance policy, rider, endorsement or a certificate of
insurance.
(ii) Determination of insurance premium.
(iii) Payment of any commission, benefit, claim or
other funds under a policy of insurance or a certificate
of insurance.
(4) Engages in unlicensed [agent, broker] or
unauthorized [insurer] insurance activity as defined by the
act of May 17, 1921 (P.L.789, No.285), known as The Insurance
Department Act of one thousand nine hundred and twenty-one,
knowingly and with the intent to defraud an insurer, a self-
insured, an insurance licensee or the public.
* * *
(7) [Borrows] Makes, solicits, negotiates, sells,
distributes, possesses false insurance documents or uses
another person's [financial responsibility or other]
insurance [identification card or permits his financial
responsibility or other insurance identification card to be
used by another] documents, knowingly and with intent to
[present a fraudulent claim to an] defraud any insurer, self-
insured, insurance licensee, person or the public.
* * *
(b) Additional offenses defined.--
* * *
[(4) A person may not knowingly and with intent to
defraud any insurance company, self-insured or other person
file an application for insurance containing any false
information or conceal for the purpose of misleading
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information concerning any fact material thereto.]
* * *
(f) [Immunity.--An insurer, and any agent, servant or
employee thereof acting in the course and scope of his
employment, shall be immune from civil or criminal liability
arising from the supply or release of written or oral
information to any entity duly authorized to receive such
information by Federal or State law, or by Insurance Department
regulations] (Reserved).
* * *
(k) Insurance forms and verification of services.--
(1) All applications for insurance and all claim forms
shall contain or have attached thereto a notice substantially
similar to the following notice:
Any person who knowingly and with intent to defraud
any [insurance company or other] insurer, self-
insured, insurance licensee, person or the public
files an application for insurance or statement of
claim containing any materially false information or
conceals for the purpose of misleading, information
concerning any fact material thereto commits a
fraudulent insurance act, which is a crime and
subjects such person to criminal and civil penalties.
* * *
Section 2. Part II heading of Title 40 is amended to read:
PART II
REGULATION OF INSURERS AND RELATED
PERSONS GENERALLY
[(Reserved)]
Section 3. Title 40 is amended by adding an article to read:
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ARTICLE A
INSURANCE FRAUD
Chapter
11. Insurance Fraud Prevention Authority
CHAPTER 11
INSURANCE FRAUD PREVENTION AUTHORITY
Subchapter
A. Preliminary Provisions
B. Insurance Fraud Prevention Authority
C. Section of Insurance Fraud
D. Antifraud Plans and Reporting
E. (Reserved)
F. Miscellaneous Provisions
SUBCHAPTER A
PRELIMINARY PROVISIONS
Sec.
1101. Scope of chapter.
1102. Purpose.
1103. Definitions.
§ 1101. Scope of chapter.
This chapter deals with insurance fraud prevention.
§ 1102. Purpose.
The purpose of this chapter is to do all of the following:
(1) Establish, coordinate and fund activities in this
Commonwealth to prevent, combat and reduce insurance fraud.
(2) To require insurers to implement antifraud plans
increasing the prevention, detection, investigation and
reporting of insurance fraud.
(3) To require insurers to annually certify antifraud
plans and report activity under those plans to the
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commissioner.
(4) To improve and support insurance fraud law
enforcement and administration.
(5) To improve and support insurance fraud prosecution.
§ 1103. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Antifraud plan" or "plan." The written procedures of an
insurer for preventing, detecting, investigating and reporting
insurance fraud.
"Authority." The Insurance Fraud Prevention Authority.
"Board." The board of directors of the Insurance Fraud
Prevention Authority.
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Fund." The Insurance Fraud Prevention Trust Fund.
"Identified fraud cost." The dollar amount of loss caused by
insurance fraud as admitted by a fraud suspect, alleged by an
insurer in civil or criminal legal proceedings or found by a
court of law, including insurer losses associated with insurance
premium, commission, policy benefits, claim payments or
policyholder or insurer funds.
"Insurance fraud." An activity defined as an offense under
18 Pa.C.S. § 4117 (relating to insurance fraud).
"Insurance licensee." A person holding a license to engage
in the business of insurance.
"Insurance producer." A person that sells, solicits or
negotiates contracts of insurance.
"Insurer." An insurance company, association, exchange,
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interinsurance exchange, health maintenance organization,
preferred provider organization, a hospital plan corporation
subject to Chapter 61 (relating to hospital plan corporations),
professional health services plan corporation subject to Chapter
63 (relating to professional health services plan corporations),
fraternal benefits society, beneficial association, Lloyd's
insurer or health plan corporation.
"Section of Insurance Fraud." The Section of Insurance Fraud
in the Office of Attorney General.
SUBCHAPTER B
INSURANCE FRAUD PREVENTION AUTHORITY
Sec.
1121. Establishment of authority.
1122. Powers and duties.
1123. Insurance Fraud Prevention Trust Fund.
1124. Immunity.
§ 1121. Establishment of authority.
(a) Establishment.--There is established a body corporate
and politic to be known as the Insurance Fraud Prevention
Authority. The purposes, powers and duties of the authority
shall be vested in and exercised by a board of directors.
(b) Composition.--The board of the authority shall consist
of the following members composed and appointed in accordance
with the following:
(1) The Attorney General or his designee.
(2) A representative of the Philadelphia Federal
Insurance Fraud Task Force.
(3) Four representatives of insurers, one of whom shall
be appointed by the President pro tempore of the Senate, one
of whom shall be appointed by the Minority Leader of the
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Senate, one of whom shall be appointed by the Speaker of the
House of Representatives and one of whom shall be appointed
by the Minority Leader of the House of Representatives. Each
of the four members shall be, respectively, a representative
of an insurer writing workers compensation, accident and
health, automobile or general commercial liability insurance
in this Commonwealth.
(4) One representative of purchasers of insurance in
this Commonwealth who is not employed by or connected with
the business of insurance and is appointed by the Governor.
(c) Terms.--With the exception of the Attorney General and
the representative of the Philadelphia Federal Insurance Fraud
Task Force, members of the board shall serve for terms of four
years. No appointed member shall be eligible to serve more than
two full consecutive terms.
(d) Compensation.--Members of the board shall serve without
compensation but shall receive reimbursement for all reasonable
and necessary expenses incurred in connection with their duties
in accordance with the rules of the executive board.
(e) Quorum.--A majority of the members of the board shall
constitute a quorum for the transaction of business at a meeting
or the exercise of a power or function of the authority.
Notwithstanding any other provision of law, action may be taken
by the board at a meeting upon a vote of the majority of its
members present in person or through the use of amplified
telephonic equipment if authorized by the bylaws of the board.
The board shall meet at the call of the chairperson or as may be
provided in the bylaws of the board. The board shall meet at
least quarterly. Meetings of the board may be held anywhere
within this Commonwealth. The board shall elect its own
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chairperson.
§ 1122. Powers and duties.
The authority shall have the powers necessary and convenient
to carry out and effectuate the purposes and provisions of this
chapter and the purposes of the authority and the powers
delegated by other laws, including:
(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
chapter.
(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 chapter.
(5) Make grants to and provide financial support for the
Section of Insurance Fraud, the Unit for 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 chapter and consider the extent of
the insurance fraud problem in each county of this
Commonwealth.
(6) Advise the State Treasurer in relation to the
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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 money 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.
(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
expenditure of money 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.
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(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
for ongoing renewal of a multiyear grant under section
1123(f) (relating to Insurance Fraud Prevention Trust Fund),
that the applicant described 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,
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including a description of programs implemented and results
obtained. The authority shall 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.
§ 1123. Insurance Fraud Prevention Trust Fund.
(a) Establishment.--There is 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 money accumulated in
the fund shall be deposited in the fund for the same use.
(b) Funds.--All money 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 chapter as determined by the authority and shall be
subject to audit by the Auditor General.
(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
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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 and accident
and health direct business written. Assessments made under
this section shall not be considered burdens and prohibitions
under section 212 of the act of May 17, 1921 (P.L.789,
No.285), known as The Insurance Department Act of 1921.
(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%, the 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
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, except 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.
(e) Expenditures.--Money in the fund may be expended by the
authority for the following purposes:
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(1) Effectuate the powers, duties and responsibilities
of the authority as set forth under this chapter.
(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.
(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 chapter.
(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 the
multiyear commitments may be renewed from year to year. No
funding reduction under subsection (d) may be imposed by the
authority in any given year which would operate to reduce
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funding for any multiyear approved program for which persons
have been hired for full-time positions to a funding level where
the positions must be terminated unless the organization
employing the persons certifies either that other equivalent
positions are available or that the positions with the antifraud
program can be funded from other sources.
(g) Dissolution.--If 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.
§ 1124. Immunity.
In the absence of malice, no board member and no employee of
the authority may be subject to any civil or criminal liability
for receiving or disclosing information related to insurance
fraud or the activities of the authority. In the absence of
malice, persons or organizations shall not be subject to civil
or criminal liability for providing information relating to
insurance fraud to the authority, its employees, agents or
designees. This section shall not abrogate or modify in any way
any common law or statutory privilege or immunity heretofore
enjoyed by any person.
SUBCHAPTER C
SECTION OF INSURANCE FRAUD
Sec.
1141. Establishment.
1142. Powers and duties.
1143. Document confidentiality.
1144. Duties of insurance licensees and their employees.
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1145. Persons not connected with insurance industry.
1146. Refusal to cooperate with investigation.
§ 1141. Establishment.
(a) Establishment.--There is established within the Office
of Attorney General a Section of Insurance Fraud to investigate
and prosecute insurance fraud in accordance with jurisdictional
mandates as specified under the act of October 15, 1980
(P.L.950, No.164), known as the Commonwealth Attorneys Act, and
18 Pa.C.S. § 4117 (relating to insurance fraud).
(b) Funding.--All costs of administration and operation of
the Section of Insurance Fraud shall be borne by the fund. Any
money or other property awarded to the Section of Insurance
Fraud as costs of investigation or as a fine shall be credited
to the fund.
§ 1142. Powers and duties.
The Section of Insurance Fraud shall have the powers
necessary and convenient to carry out and effectuate the
purposes and provisions of this chapter and the powers delegated
under other laws, including the power:
(1) To 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
chapter.
(2) To initiate inquiries and conduct investigations if
the Section of Insurance Fraud has reason to believe that
insurance fraud may have been or is being committed.
(3) To respond to notifications or complaints of
suspected insurance fraud generated by State and local
police, other law enforcement authorities, governmental
units, including the Federal Government, and the general
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public.
(4) To review notices and reports of insurance fraud and
to select those incidents of suspected fraud as, in its
judgment, require further investigation, undertake the
investigation and issue subpoena for records and testimony
relating to insurance fraud.
(5) To conduct independent examination of insurance
fraud, conduct studies to determine the extent of insurance
fraud, deceit or intentional misrepresentation of any kind in
the insurance process and publish information and reports on
the examinations or studies.
(6) To prosecute, both on its own and in conjunction
with other sections and divisions within the Office of
Attorney General, any incidents of insurance fraud involving
more than one county of this Commonwealth or involving any
county of this Commonwealth and another state disclosed by
its investigations and to assemble evidence, prepare charges,
bring charges or, upon request of any other prosecutorial
authority, otherwise assist that prosecutory authority having
jurisdiction over the incidents.
(7) To report incidents of insurance fraud disclosed by
its investigations to any other appropriate law enforcement,
administrative, regulatory or licensing agency.
(8) To pay over all civil and criminal fines and
penalties collected for violations and acts subject to
investigation and prosecution into the fund.
(9) To undertake programs to investigate insurance fraud
and to meet, at least on a quarterly basis, with the
Insurance Fraud Prevention Authority.
(10) To employ investigators trained in accordance with
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53 Pa.C.S. Ch. 21 Subch. D (relating to municipal police
education and training). The laws applicable to law
enforcement officers of this Commonwealth shall be applicable
to the investigators. Investigators of the Section of
Insurance Fraud shall have the following additional powers:
(i) To make arrests in accordance with existing
jurisdictional rules for criminal violations established
as a result of their investigations.
(ii) To execute arrest and search warrants in
accordance with existing jurisdictional rules for the
same criminal violations.
(11) To designate, if evidence, documentation and
related materials sought are located outside of this
Commonwealth, representatives, including officials of the
state where the matter is located, to secure the matter or
inspect the matter on its behalf. The person so requested
shall either make the matter available to the Section of
Insurance Fraud or shall make the matter available for
inspection or examination by a designated representative of
the Section of Insurance Fraud.
§ 1143. Document confidentiality.
Papers, records, documents, reports, materials or other
evidence relative to the subject of an insurance fraud
investigation shall remain confidential and shall not be subject
to public inspection.
§ 1144. Duties of insurance licensees and their employees.
Every insurer, every employee of an insurer, every producer
and its employees and any other insurance licensee and its
employees shall cooperate fully with the Section of Insurance
Fraud. If an insurer, producer, any other insurance licensee or
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employee of an insurer or insurance licensee who believes that
an insurance fraud has been or is being committed notifies the
Section of Insurance Fraud, the notification shall toll any
applicable time period in the act of July 22, 1974 (P.L.589,
No.205), known as the Unfair Insurance Practices Act, or any
other law or regulation.
§ 1145. Persons not connected with insurance industry.
Any person having knowledge of or who believes that an
insurance fraud is being or has been committed may send to the
Section of Insurance Fraud a report or information pertinent to
the knowledge and belief.
§ 1146. Refusal to cooperate with investigation.
It is unlawful for any person to resist an arrest authorized
under this chapter or in any manner to interfere either by
abetting or assisting the resistance or otherwise interfere with
Section of Insurance Fraud investigators in the duties imposed
upon them under this chapter or under any other applicable law.
SUBCHAPTER D
ANTIFRAUD PLANS AND REPORTING
Sec.
1151. Scope.
1151.1. Definition.
1152. Filing of plans.
1153. Content of plans.
1154. Review by department.
1155. Report on antifraud activities.
1156. Penalties.
1157. Confidentiality of plans and reports.
1158. Reporting of insurance fraud.
1159. Civil immunity.
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§ 1151. Scope.
This subchapter provides for implementation of antifraud
plans by insurers not presently required to develop antifraud
plans.
§ 1151.1. Definition.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Insurer." A company or health insurance entity licensed in
this Commonwealth to issue an individual or group health,
sickness or accident policy or subscriber contract or
certificate or plan that provides medical or health care
coverage by a health care facility or licensed health care
provider that is offered or governed under the act of May 17,
1921 (P.L.682, No.284), known as The Insurance Company Law of
1921, or any of the following:
(1) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(2) The act of May 18, 1976 (P.L.123, No.54), known as
the Individual Accident and Sickness Insurance Minimum
Standards Act.
(3) Chapter 61 (relating to hospital plan corporations)
or 63 (relating to professional health services plan
corporations).
(4) Article XXIV of The Insurance Company Law of 1921.
§ 1152. Filing of plans.
Each insurer shall institute and maintain an insurance
antifraud plan. The antifraud plan of insurers licensed on the
effective date of this subchapter shall be filed with the
department on or before December 31, 2011. Insurers licensed
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after the effective date of this subchapter shall file within
six months of licensure. Changes to the antifraud plan shall be
filed with the department within 30 days after it has been
modified.
§ 1153. Content of plans.
The antifraud plans of each insurer shall establish specific
procedures:
(1) To prevent insurance fraud, including internalfraud
involving employees or company representatives, fraud
resulting from misrepresentation on applications for
insurance coverage and claims fraud.
(2) To review claims in order to detect evidence of
possible insurance fraud and to investigate claims where
fraud is suspected.
(3) To report fraud to appropriate law enforcement
agencies and to cooperate with the agencies in their
prosecution of fraud cases.
(4) To undertake civil actions against persons who have
engaged in fraudulent activities.
(5) To report fraud-related data to comprehensive
databased systems approved by the department.
(6) To ensure that costs incurred as a result of
detected insurance fraud are not included in a rate base
affecting the premiums of policyholders, subscribers and
certificate holders.
§ 1154. Review by department.
Antifraud plans shall be filed with the department. If, after
review, the department finds that the antifraud plan does not
comply with section 1153 (relating to content of plans), the
antifraud plan may be disapproved. Notice of disapproval shall
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include a statement of the specific reasons for the disapproval.
A plan disapproved by the department must be refiled within 60
days of the date of the notice of disapproval. The department
may audit insurers to ensure compliance with antifraud plans as
a part of the examinations performed under former sections 213,
214 and 216 of the act of May 17, 1921 (P.L.789, No.285), known
as The Insurance Department Act of 1921.
§ 1155. Report on antifraud activities.
Insurers shall annually provide to the department a summary
report on actions taken under the plan to prevent and combat
insurance fraud, including, but not limited to, measures taken
to protect and ensure the integrity of electronic data-
processing-generated data and manually compiled data,
statistical data on the amount of resources committed to
combating fraud and the amount of fraud identified and recovered
during the reporting period.
§ 1156. Penalties.
Insurers that fail to file timely antifraud plans as required
by sections 1152 (relating to filing of plans) and 1154
(relating to review by department) are subject to the penalty
provisions of section 320 of the act of May 17, 1921 (P.L.682,
No.284), known as The Insurance Company Law of 1921. Insurers
that do not make a good faith attempt to file an antifraud plan
which complies with section 1153 (relating to content of plans)
shall also be subject to the penalty provisions of section 320
of The Insurance Company Law of 1921, provided that no penalty
may be imposed for the first filing made by an insurer under
this subchapter. Insurers that fail to follow the antifraud plan
shall be subject to a civil penalty for each violation, not to
exceed $10,000, at the discretion of the commissioner after
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consideration of relevant factors, including the willfulness of
a violation.
§ 1157. Confidentiality of plans and reports.
The antifraud plans and reports which insurers file with the
department and reports or materials related to the reports are
not public records and shall not be subject to public
inspection.
§ 1158. Reporting of insurance fraud.
Insurers, employees of insurers and providers who have a
reasonable basis to believe insurance fraud has occurred shall
be required to report the incidence of suspected insurance fraud
to Federal, State or local criminal law enforcement authorities.
Licensed insurance providers may elect to report suspected fraud
through the affected insurer with which they have a contractual
relationship. Reports of insurance fraud to law enforcement
authorities shall be made in writing.
§ 1159. Civil immunity.
No person shall be subject to civil liability for libel,
violation of privacy or otherwise by virtue of the filing of
reports or furnishing of other information, in good faith and
without malice, required by this subchapter.
SUBCHAPTER E
(RESERVED)
SUBCHAPTER F
MISCELLANEOUS PROVISIONS
Sec.
1181. Other law enforcement authority.
§ 1181. Other law enforcement authority.
This chapter shall not:
(1) Preempt the authority of or relieve the duty of any
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other law enforcement agencies to investigate and prosecute
suspected violations of law.
(2) Prevent or prohibit a person from voluntarily
disclosing any information concerning insurance fraud to any
law enforcement agency other than the Section of Insurance
Fraud.
(3) Limit any of the powers granted to the commissioner
to investigate possible violations of law and to take
appropriate action against wrongdoers.
Section 4. Repeals are as follows:
(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the addition of 40
Pa.C.S. Ch. 11 Subchs. A, B, C and F.
(2) Article XI of the act of May 17, 1921 (P.L.789,
No.285), known as The Insurance Department Act of 1921, is
repealed.
Section 5. 40 Pa.C.S. Ch. 11 Subchs. A, B, C and F is a
continuation of Article XI of the act of May 17, 1921 (P.L.789,
No.285), known as The Insurance Department Act of 1921. The
following apply:
(1) Except as otherwise provided under 40 Pa.C.S. Ch. 11
Subchs. A, B, C and F, all activities initiated under Article
XI of The Insurance Department Act of 1921, shall continue
and remain in full force and effect and may be completed
under 40 Pa.C.S. Ch. 11 Subchs. A, B, C and F. Orders,
regulations, rules and decisions which were made under
Article XI of The Insurance Department Act of 1921 and which
are in effect on the effective date of this section shall
remain in full force and effect until revoked, vacated or
modified under 40 Pa.C.S. Ch. 11 Subchs. A, B, C and F.
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Contracts, obligations and collective bargaining agreements
entered into under Article XI of The Insurance Department Act
of 1921 are not affected nor impaired by the repeal of
Article XI of The Insurance Department Act of 1921.
(2) Except as set forth in paragraph (3), any difference
in language between 40 Pa.C.S. Ch. 11 Subchs. A, B, C and F
and the Article XI of The Insurance Department Act of 1921 is
intended only to conform to the style of the Pennsylvania
Consolidated Statutes and is not intended to change or affect
the legislative intent, judicial construction or
administration and implementation of Article XI of The
Insurance Department Act of 1921.
(3) Paragraph (2) does not apply to the addition of the
following:
(i) 40 Pa.C.S. § 1102.
(ii) 40 Pa.C.S. § 1103, except for the definition of
"authority."
(iii) 40 Pa.C.S. § 1123(c) and (d).
(iv) 40 Pa.C.S. § 1142(4).
(v) 40 Pa.C.S. § 1144.
Section 6. This act shall take effect in 60 days.
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