Bill Text: IA SF2305 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act relating to workers’ compensation and insurance fraud and other prohibited health service provider practices, providing penalties, and including effective date and applicability provisions. (Formerly SSB 3165.)
Spectrum: Committee Bill
Status: (Engrossed - Dead) 2018-03-07 - Subcommittee: Wills, Cownie and Meyer. H.J. 515. [SF2305 Detail]
Download: Iowa-2017-SF2305-Introduced.html
Senate File 2305 - Introduced SENATE FILE BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 3165) A BILL FOR 1 An Act relating to workers' compensation and insurance fraud 2 and other prohibited health service provider practices, 3 providing appropriations and penalties, and including 4 effective date and applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5360SV (2) 87 asf/rj PAG LIN 1 1 Section 1. NEW SECTION. 507F.1 Definitions. 1 2 As used in this chapter, unless the context otherwise 1 3 requires: 1 4 1. "Business entity" means a corporation, association, 1 5 partnership, limited liability company, limited liability 1 6 partnership, or other legal entity. 1 7 2. a. "Insurer" means a person entering into arrangements 1 8 or contracts of insurance or reinsurance agreeing to perform 1 9 any of the following acts: 1 10 (1) Pay or indemnify another as to loss from certain 1 11 contingencies called risks, including through reinsurance. 1 12 (2) Pay or grant a specified amount or determinable benefit 1 13 to another in connection with ascertainable risk contingencies. 1 14 (3) Pay an annuity to another. 1 15 (4) Act as surety. 1 16 b. "Insurer" includes but is not limited to an insurance 1 17 company, a self=insured business, or a group or self=insured 1 18 plan as described in section 87.4. 1 19 3. "Statement" includes but is not limited to any notice, 1 20 statement, proof of loss, receipt for payment, invoice, 1 21 account, bill for services, diagnosis, prescription, hospital 1 22 or physician record, X ray, test result, or other evidence of 1 23 loss, injury, or expense. 1 24 Sec. 2. NEW SECTION. 507F.2 Purpose. 1 25 A workers' compensation fraud unit is created within the 1 26 insurance fraud bureau within the insurance division. Upon a 1 27 reasonable determination by the workers' compensation fraud 1 28 unit, by its own inquiries or as a result of complaints filed 1 29 with the insurance fraud bureau or the workers' compensation 1 30 fraud unit, that a person has engaged in, is engaging in, 1 31 or may be engaging in an act or practice that violates this 1 32 chapter, the workers' compensation fraud unit may administer 1 33 oaths and affirmations, issue and serve subpoenas ordering the 1 34 attendance of witnesses, collect evidence related to such act 1 35 or practice, commence a suit, and prosecute a violation of this 2 1 chapter. 2 2 Sec. 3. NEW SECTION. 507F.3 Workers' compensation attorney 2 3 fraud ==== penalty. 2 4 1. An attorney or an attorney's agent who acts unilaterally 2 5 without an attorney's knowledge commits workers' compensation 2 6 attorney fraud if the person, for the purpose of obtaining any 2 7 benefit under chapter 85, 85A, 85B, 86, or 87 for oneself or on 2 8 behalf of another person, knowingly does any of the following: 2 9 a. Presents or causes to be presented to an insurer any 2 10 oral or written statement, knowing the statement contains false 2 11 information concerning a material fact. 2 12 b. Employs any deception device, scheme, or artifice to 2 13 defraud. 2 14 c. Misrepresents, conceals, or suppresses any material fact 2 15 to defraud. 2 16 d. Makes a false entry in, fabricates, alters, conceals, or 2 17 destroys a document to defraud. 2 18 e. Assists, abets, solicits, or conspires with another in 2 19 committing a violation of this chapter. 2 20 2. An attorney or an attorney's agent who commits workers' 2 21 compensation attorney fraud is, upon conviction, guilty 2 22 of a class "D" felony. An attorney convicted of workers' 2 23 compensation attorney fraud shall forfeit the ability to 2 24 collect any attorney fees not already collected and shall 2 25 refund attorney fees already collected from the client who was 2 26 the subject of the worker's compensation attorney fraud, unless 2 27 the client commits workers' compensation benefit fraud, in 2 28 which case the attorney fees shall be forfeited to the victim 2 29 compensation fund established in section 915.94. 2 30 3. Fifty percent of the criminal penalty collected under 2 31 this section shall be deposited in the workers' compensation 2 32 fraud penalty fund created in section 507F.10. Fifty percent 2 33 of the criminal penalty collected under this section shall be 2 34 deposited pursuant to section 602.8108. 2 35 Sec. 4. NEW SECTION. 507F.4 Workers' compensation benefit 3 1 fraud ==== penalty. 3 2 1. A person commits the offense of workers' compensation 3 3 benefit fraud if the person, for the purpose of obtaining any 3 4 benefit under chapter 85, 85A, 85B, 86, or 87 for oneself or on 3 5 behalf of another person, knowingly does any of the following: 3 6 a. Presents or causes to be presented to an insurer, any 3 7 oral or written statement, knowing that such statement contains 3 8 false information concerning a material fact. 3 9 b. Misrepresents, conceals, or suppresses any material fact 3 10 to defraud. 3 11 c. Makes a false entry in, fabricates, alters, conceals, or 3 12 destroys a document to defraud. 3 13 d. Assists, abets, solicits, or conspires with another in 3 14 committing a violation of this chapter. 3 15 2. A person who commits workers' compensation benefit 3 16 fraud is, upon conviction, guilty of a class "D" felony. Upon 3 17 conviction of this offense, a person shall forfeit all right to 3 18 compensation under chapters 85, 85A, and 85B for the alleged 3 19 injury which is the subject matter of the conviction. 3 20 3. Fifty percent of the criminal penalty collected under 3 21 this section shall be deposited in the workers' compensation 3 22 fraud penalty fund created in section 507F.10. Fifty percent 3 23 of the criminal penalty collected under this section shall be 3 24 deposited pursuant to section 602.8108. 3 25 Sec. 5. NEW SECTION. 507F.5 Workers' compensation health 3 26 service provider fraud ==== penalty. 3 27 1. A health service provider or a health service provider's 3 28 agent who acts unilaterally without a health service 3 29 providers's knowledge commits workers' compensation health 3 30 service provider fraud if the person, for the purpose of 3 31 obtaining any benefit or payment under chapter 85, 85A, 85B, 3 32 86, or 87 for oneself or on behalf of another person, knowingly 3 33 does any of the following: 3 34 a. Presents or causes to be presented to an insurer any 3 35 oral or written statement, knowing that such statement contains 4 1 false information concerning a material fact. 4 2 b. Misrepresents, conceals, or suppresses any material fact 4 3 to defraud. 4 4 c. Makes a false entry in, fabricates, alters, conceals, or 4 5 destroys a document to defraud. 4 6 d. Bills for services not rendered, services rendered for 4 7 a person other than the person identified on the bill, or 4 8 services rendered for an injury or person not covered by the 4 9 workers' compensation laws. 4 10 e. Assists, abets, solicits, or conspires with another in 4 11 committing a violation of this chapter. 4 12 2. A health service provider or health service provider's 4 13 agent who commits workers' compensation health service provider 4 14 fraud is, upon conviction, guilty of a class "D" felony. 4 15 3. Fifty percent of the criminal penalty collected under 4 16 this section shall be deposited in the workers' compensation 4 17 fraud penalty fund created in section 507F.10. Fifty percent 4 18 of the criminal penalty collected under this section shall be 4 19 deposited pursuant to section 602.8108. 4 20 Sec. 6. NEW SECTION. 507F.6 Workers' compensation insurance 4 21 carrier fraud ==== penalty. 4 22 1. An employee, agent, or contractor of an insurer commits 4 23 workers' compensation insurance carrier fraud if the person, 4 24 for the purpose of obtaining any benefit or payment under 4 25 chapter 85, 85A, 85B, 86, or 87 for oneself or on behalf of 4 26 another person, knowingly does any of the following in the 4 27 course of processing an insurance claim: 4 28 a. Creates fraudulent claims and authorizes the payment of 4 29 such claims to defraud the insurer. 4 30 b. Authorizes the payment of claims known by the employee, 4 31 agent, or contractor to be fraudulent to assist, abet, solicit, 4 32 or conspire with another to defraud the insurer. 4 33 2. An employee, agent, or contractor of an insurer who 4 34 commits workers' compensation insurance carrier fraud is, upon 4 35 conviction, guilty of a class "D" felony. 5 1 3. Fifty percent of the criminal penalty collected under 5 2 this section shall be deposited in the workers' compensation 5 3 fraud penalty fund created in section 507F.10. Fifty percent 5 4 of the criminal penalty collected under this section shall be 5 5 deposited pursuant to section 602.8108. 5 6 Sec. 7. NEW SECTION. 507F.7 Workers' compensation insurance 5 7 coverage fraud ==== penalty. 5 8 1. A person commits the offense of workers' compensation 5 9 insurance coverage fraud if the person, in connection with 5 10 any application or renewal of an insurance policy providing 5 11 workers' compensation insurance coverage or to avoid payment 5 12 of or reduce premiums due for that coverage, for oneself or 5 13 another, knowingly does any of the following: 5 14 a. Presents or causes to be presented to an insurer, any 5 15 oral or written statement, knowing that such statement contains 5 16 false information concerning a material fact to defraud. 5 17 b. Misrepresents, conceals, or suppresses any material fact 5 18 to defraud. 5 19 c. Makes a false entry in, fabricates, alters, conceals, or 5 20 destroys a document to defraud. 5 21 2. A person who commits workers' compensation insurance 5 22 coverage fraud is, upon conviction, guilty of a class "D" 5 23 felony. 5 24 3. Fifty percent of the criminal penalty collected under 5 25 this section shall be deposited in the workers' compensation 5 26 fraud penalty fund created in section 507F.10. Fifty percent 5 27 of the criminal penalty collected under this section shall be 5 28 deposited pursuant to section 602.8108. 5 29 Sec. 8. NEW SECTION. 507F.8 Workers' compensation employer 5 30 fraud == penalty. 5 31 1. A person commits the offense of workers' compensation 5 32 employer fraud if the person, for the purpose of obstructing an 5 33 employee's workers' compensation claim under chapter 85, 85A, 5 34 85B, 86, or 87, knowingly does any of the following: 5 35 a. Presents or causes to be presented to an insurer any 6 1 oral or written statement, knowing that such statement contains 6 2 false information concerning a material fact. 6 3 b. Misrepresents, conceals, or suppresses any material fact 6 4 to defraud. 6 5 c. Makes a false entry in, fabricates, alters, conceals, or 6 6 destroys a document to defraud. 6 7 d. Assists, abets, solicits, or conspires with another in 6 8 committing a violation of this chapter. 6 9 2. A person who commits workers' compensation employer 6 10 fraud is, upon conviction, guilty of a class "D" felony. 6 11 3. Fifty percent of the criminal penalty collected under 6 12 this section shall be deposited in the workers' compensation 6 13 fraud penalty fund created in section 507F.10. Fifty percent 6 14 of the criminal penalty collected under this section shall be 6 15 deposited pursuant to section 602.8108. 6 16 Sec. 9. NEW SECTION. 507F.9 Restitution. 6 17 In addition to the criminal penalties established in this 6 18 chapter, the court shall order a person who commits an offense 6 19 under this chapter to pay restitution to persons aggrieved by 6 20 the violation. Restitution shall be ordered in addition to a 6 21 fine and the possibility of imprisonment, but not in lieu of a 6 22 fine and the possibility of imprisonment. 6 23 Sec. 10. NEW SECTION. 507F.10 Fund created. 6 24 A workers' compensation fraud penalty fund is created in 6 25 the state treasury as a separate fund under the control of 6 26 the commissioner of insurance for purposes of this chapter. 6 27 All moneys deposited into the fund are appropriated to the 6 28 insurance division of the department of commerce for the 6 29 workers' compensation fraud unit. Notwithstanding section 6 30 8.33, any balance in the fund on June 30 of each fiscal year 6 31 shall not revert to the general fund of the state, but shall 6 32 be available for purposes of this chapter in subsequent fiscal 6 33 years. The commissioner of insurance may request additional 6 34 full time equivalent positions as needed and the request shall 6 35 be granted so long as sufficient funds are within the workers' 7 1 compensation fraud penalty fund. 7 2 Sec. 11. NEW SECTION. 507F.11 Examination of information 7 3 outside the state. 7 4 As a unit within the insurance fraud bureau, the workers' 7 5 compensation fraud unit, pursuant to section 507E.4, may obtain 7 6 and examine any information that is related to enforcement of 7 7 this chapter in possession of a person located outside the 7 8 state. 7 9 Sec. 12. NEW SECTION. 507F.12 Confidentiality. 7 10 As a unit within the insurance fraud bureau, all of the 7 11 provisions of section 507E.5 shall apply to the workers' 7 12 compensation fraud unit. 7 13 Sec. 13. NEW SECTION. 507F.13 Immunity from liability. 7 14 A person is immune from civil liability for acts under this 7 15 chapter if the person meets the requirements set forth in 7 16 section 507E.7. 7 17 Sec. 14. NEW SECTION. 507F.14 Election of prosecution. 7 18 If a person commits an offense under this chapter, the 7 19 prosecuting attorney may elect to proceed under this chapter 7 20 or any other law of this state. 7 21 Sec. 15. NEW SECTION. 507F.15 Prosecuting attorney status. 7 22 1. The workers' compensation fraud unit shall employ at 7 23 least one full=time prosecuting attorney. The prosecuting 7 24 attorney, having specialized knowledge and training, shall 7 25 in all counties in this state prosecute all criminal actions 7 26 which may be brought under this chapter in which the workers' 7 27 compensation fraud unit may be interested, when, in the 7 28 prosecuting attorney's judgment, the interest of the unit 7 29 requires such action. 7 30 2. The prosecuting attorney may request a county attorney 7 31 to assist with or handle the prosecution of a criminal action 7 32 which may be brought under this chapter. 7 33 3. The prosecuting attorney shall report to the 7 34 commissioner of insurance. 7 35 Sec. 16. NEW SECTION. 507F.16 Law enforcement officer 8 1 status. 8 2 As a unit within the insurance fraud bureau, all of the 8 3 provisions of section 507E.8 shall apply to the workers' 8 4 compensation fraud unit. 8 5 Sec. 17. NEW SECTION. 507F.17 Limitation of actions. 8 6 An information or indictment asserting a violation of this 8 7 chapter shall be commenced within five years after the last 8 8 date of its commission. 8 9 Sec. 18. NEW SECTION. 507F.18 Suspension of benefits. 8 10 If a person is currently receiving or has a pending 8 11 application for workers' compensation benefits under chapter 8 12 85, 85A, or 85B and the workers' compensation fraud unit makes 8 13 a determination to file charges in district court alleging a 8 14 violation of this chapter by a person receiving benefits under 8 15 chapter 85, 85A, or 85B, the workers' compensation fraud unit 8 16 shall notify the workers' compensation commissioner, who shall 8 17 suspend benefits or suspend any pending application. 8 18 A person convicted of workers' compensation fraud shall be 8 19 prohibited from receiving benefits under chapters 85, 85A, 8 20 and 85B for the particular claim or injury giving rise to the 8 21 criminal action. If the person is acquitted or the charges 8 22 are dismissed, the workers' compensation fraud unit shall 8 23 notify the workers' compensation commissioner of such action 8 24 and the commissioner shall resume the payment of any benefits 8 25 previously suspended or resume any suspended application. A 8 26 person whose benefits have been suspended and the payment of 8 27 benefits resumed has the option to receive a back payment in a 8 28 lump sum upon resumption of payment of benefits. 8 29 Sec. 19. NEW SECTION. 507F.19 Rulemaking authority. 8 30 The commissioner of insurance may adopt rules pursuant to 8 31 chapter 17A to administer this chapter. 8 32 Sec. 20. Section 85.27, subsections 3 and 4, Code 2018, are 8 33 amended to read as follows: 8 34 3. A medical service provided under this chapter or chapter 8 35 85A or 85B shall not be billed at a rate higher than a health 9 1 service provider's standard retail rate for the medical 9 2 service. A health service provider who bills and receives 9 3 payment in excess of the health service provider's standard 9 4 rate for a medical service provided to treat a workers' 9 5 compensation injury shall reimburse the employer or insurance 9 6 carrier which paid for the medical service for the excess 9 7 payments received by the health service provider. 9 8 Notwithstanding section 85.26, subsection 4, charges believed 9 9 to be excessive or unnecessary may be referred by the 9 10 employer, insurance carrier, or health service provider to the 9 11 workers' compensation commissioner for determination, and the 9 12 commissioner may utilize the procedures provided in sections 9 13 86.38 and 86.39, or set by rule, and conduct such inquiry as 9 14 the commissioner deems necessary. Any health service provider 9 15 charges not in dispute shall be paid directly to the health 9 16 service provider prior to utilization of procedures provided 9 17 in sections 86.38 and 86.39 or set by rule. A health service 9 18 provider rendering treatment to an employee whose injury is 9 19 compensable under this section agrees to be bound by such 9 20 charges as allowed by the workers' compensation commissioner 9 21 and shall not recover in law or equity any amount in excess of 9 22 charges set by the commissioner. When a dispute under this 9 23 chapter, chapter 85A, or chapter 85B regarding reasonableness 9 24 of a fee for medical services arises between a health service 9 25 provider and an employer or insurance carrier, the health 9 26 service provider, employer, or insurance carrier shall not seek 9 27 payment from the injured employee. A health service provider 9 28 shall not seek payment for fees in dispute from the insurance 9 29 carrier or employer until the commissioner finds, pursuant to 9 30 informal dispute resolution procedures established by rule by 9 31 the commissioner, that the disputed amount is reasonable. This 9 32 section does not affect the responsibility of an insurance 9 33 carrier or an employer to pay amounts not in dispute or a 9 34 health service provider's right to receive payment from an 9 35 employee's nonoccupational plan as provided in section 85.38, 10 1 subsection 2. 10 2 4. For purposes of this section, the employer is obliged to 10 3 furnish reasonable services and supplies to treat an injured 10 4 employee, and has the right to choose the care. The employer 10 5 retains the right to choose the employee's care throughout the 10 6 course of treatment for all services identified in subsection 10 7 1. The employer is not obliged to authorize a referral for 10 8 care to a specific provider of services by an authorized 10 9 treating medical provider and the employer has the right to 10 10 choose any provider for the care. If the employer chooses the 10 11 care, the employer shall hold the employee harmless for the 10 12 cost of care until the employer notifies the employee that the 10 13 employer is no longer authorizing all or any part of the care 10 14 and the reason for the change in authorization. An employer 10 15 is not liable for the cost of care that the employer arranges 10 16 in response to a sudden emergency if the employee's condition, 10 17 for which care was arranged, is not related to the employment. 10 18 The treatment must be offered promptly and be reasonably 10 19 suited to treat the injury without undue inconvenience to the 10 20 employee. If the employee has reason to be dissatisfied with 10 21 the care offered, the employee should communicate the basis of 10 22 such dissatisfaction to the employer, in writing if requested, 10 23 following which the employer and the employee may agree to 10 24 alternate care reasonably suited to treat the injury. If the 10 25 employer and employee cannot agree on such alternate care, 10 26 the commissioner may, upon application and reasonable proofs 10 27 of the necessity therefor, allow and order other care. In an 10 28 emergency, the employee may choose the employee's care at the 10 29 employer's expense, provided the employer or the employer's 10 30 agent cannot be reached immediately. An application made under 10 31 this subsection shall be considered an original proceeding 10 32 for purposes of commencement and contested case proceedings 10 33 under section 85.26. The hearing shall be conducted pursuant 10 34 to chapter 17A. Before a hearing is scheduled, the parties 10 35 may choose a telephone hearing or an in=person hearing. A 11 1 request for an in=person hearing shall be approved unless the 11 2 in=person hearing would be impractical because of the distance 11 3 between the parties to the hearing. The workers' compensation 11 4 commissioner shall issue a decision within ten working days of 11 5 receipt of an application for alternate care made pursuant to a 11 6 telephone hearing or within fourteen working days of receipt of 11 7 an application for alternate care made pursuant to an in=person 11 8 hearing. The employer shall notify an injured employee of the 11 9 employee's ability to contest the employer's choice of care 11 10 pursuant to this subsection. 11 11 Sec. 21. NEW SECTION. 85.37A Suspension of benefits for 11 12 workers' compensation fraud. 11 13 Section 507F.18 requires the workers' compensation 11 14 commissioner to suspend a person's benefits if the workers' 11 15 compensation fraud unit has probable cause to believe that the 11 16 person has violated chapter 507F. 11 17 Sec. 22. NEW SECTION. 86.39A Criminal penalty for workers' 11 18 compensation attorney fraud. 11 19 Chapter 507F sets forth criminal penalties for engaging in 11 20 workers' compensation fraud, including but not limited to fraud 11 21 committed by an attorney. 11 22 Sec. 23. NEW SECTION. 507E.2A Definition of insurer. 11 23 As used in this chapter, unless the context otherwise 11 24 requires: 11 25 a. "Insurer" means a person entering into arrangements or 11 26 contracts of insurance or reinsurance agreeing to perform any 11 27 of the following acts: 11 28 (1) Pay or indemnify another as to loss from certain 11 29 contingencies called risks, including through reinsurance. 11 30 (2) Pay or grant a specified amount or determinable benefit 11 31 to another in connection with ascertainable risk contingencies. 11 32 (3) Pay an annuity to another. 11 33 (4) Act as surety. 11 34 b. "Insurer" includes but is not limited to an insurance 11 35 company, a self=insured business, or a group or self=insured 12 1 plan as described in section 87.4. 12 2 Sec. 24. Section 507E.6, Code 2018, is amended to read as 12 3 follows: 12 4 507E.6 Duties of insurer and fraud bureau. 12 5 1. An insurer which believes that a claim or application 12 6 for insurance coverage is being made which is a violation of 12 7 section 507E.3 or believes that a violation of 507E.3A has 12 8 occurred, shall provide, within sixty days ofthe receipt 12 9 of such claim or applicationbecoming aware of a possible 12 10 violation, written notification to the bureau of theclaim or 12 11 applicationsuspected violation on a form prescribed by the 12 12 bureau, including any additional information requested by the 12 13 bureau related to the claim or application or the party making 12 14 the claim or application. 12 15 2. The fraud bureau shall review each notification and 12 16 determine whether further investigation is warranted. 12 17 3. If the bureau determines that further investigation 12 18 is warranted, the bureau shall conduct an independent 12 19 investigation of the facts surrounding theclaim or application 12 20 for insurance coveragenotification to determine the extent, 12 21 if any, to which fraud occurredin the submission of the claim 12 22 or application. If the notification pertains to workers' 12 23 compensation insurance fraud, the bureau shall deliver the 12 24 notice to the workers' compensation fraud unit, which shall 12 25 determine if an investigation and prosecution are warranted. 12 26 Upon formal request made by the bureau, the insurer shall 12 27 provide all additional information related to the notification 12 28 within ten business days or a time period specifically 12 29 identified by the bureau. 12 30 4. The bureau shall report any alleged violation of law 12 31 disclosed by the investigation to the appropriate licensing 12 32 agency or prosecuting authority having jurisdiction with 12 33 respect to such violation. 12 34 Sec. 25. Section 507E.8, Code 2018, is amended to read as 12 35 follows: 13 1 507E.8 Law enforcement officer status. 13 2 1. Bureau investigators shall have the power and status 13 3 of law enforcement officers who by the nature of their duties 13 4 may be required to perform the duties of a peace officer when 13 5 making arrests for criminal violations established as a result 13 6 of their investigations pursuant to this chapter or chapter 13 7 507F. 13 8 2. The general laws applicable to arrests by law enforcement 13 9 officers of the state also apply to bureau investigators. 13 10 Bureau investigators shall have the power to execute arrest 13 11 warrants and search warrants for the same criminal violations, 13 12 serve subpoenas issued for the examination, investigation, and 13 13 trial of all offenses identified through their investigations, 13 14 and arrest upon probable cause without warrant a person found 13 15 in the act of committing a violation of the provisions of this 13 16 chapter or chapter 507F. 13 17 Sec. 26. EFFECTIVE DATE. This Act, being deemed of 13 18 immediate importance, takes effect upon enactment. 13 19 Sec. 27. APPLICABILITY. This Act applies on the effective 13 20 date of this Act to acts of fraud or prohibited health service 13 21 providers' practices committed on or after the effective date 13 22 of this Act. 13 23 EXPLANATION 13 24 The inclusion of this explanation does not constitute agreement with 13 25 the explanation's substance by the members of the general assembly. 13 26 This bill relates to workers' compensation and insurance 13 27 fraud and other prohibited health service provider practices. 13 28 The bill creates new Code chapter 507F dedicated to workers' 13 29 compensation fraud, codified following the existing insurance 13 30 fraud Code chapter 507E. 13 31 The bill establishes a workers' compensation fraud unit 13 32 (unit) within the insurance fraud bureau within the insurance 13 33 division. The purpose of the unit is to investigate and 13 34 prosecute workers' compensation fraud. Unit investigators have 13 35 the power and status of law enforcement officers. The bill 14 1 requires the unit to employ at least one full=time prosecuting 14 2 attorney to prosecute all criminal actions which may be brought 14 3 under this Code chapter in which the unit may be interested, 14 4 when, in the prosecuting attorney's judgment, the interest of 14 5 the unit requires such action. 14 6 The bill provides an election of prosecution. If a person 14 7 commits an offense under this Code chapter, the prosecuting 14 8 attorney may elect to proceed under this Code chapter or any 14 9 other law of this state. The prosecuting attorney may be the 14 10 unit prosecuting attorney or a county attorney. 14 11 The bill sets forth criminal penalties for engaging in 14 12 workers' compensation fraud, including fraud committed by 14 13 employers, workers, insurers, health service providers, 14 14 employees of insurers, and attorneys. Specifically, the bill 14 15 penalizes as a class "D" felony the following forms of workers' 14 16 compensation fraud: benefit fraud, insurance coverage fraud, 14 17 employer fraud, health service provider fraud, insurance 14 18 carrier fraud, and attorney fraud. The elements for each crime 14 19 are enumerated in the bill. A class "D" felony is punishable 14 20 by confinement for no more than five years and a fine of at 14 21 least $750 but not more than $7,500. The bill provides that 14 22 in addition to any other applicable penalties, a court shall 14 23 order a person to pay restitution to persons aggrieved by the 14 24 violation, if a person commits an offense under this Code 14 25 chapter. The bill requires 50 percent of the criminal penalty 14 26 collected under this Code chapter to be deposited in a fund 14 27 created in the bill. Moneys in the fund are appropriated to 14 28 the insurance division of the department of commerce to the 14 29 unit for the benefit of the workers' compensation fraud unit. 14 30 The new workers' compensation fraud Code chapter 14 31 incorporates by reference the following provisions from the 14 32 insurance fraud Code chapter 507E: 507E.4 (examination of 14 33 information outside the state), 507E.5 (confidentiality), and 14 34 507E.7 (immunity from liability). 14 35 The new Code chapter also defines insurer. "Insurer" means 15 1 a person entering into arrangements or contracts of insurance 15 2 or reinsurance agreeing to perform any of the following acts: 15 3 pay or indemnify another as to loss from certain contingencies 15 4 called risks, including through reinsurance; pay or grant 15 5 a specified amount or determinable benefit to another in 15 6 connection with ascertainable risk contingencies; pay an 15 7 annuity to another; or act as surety. Insurer includes but is 15 8 not limited to an insurance company, a self=insured business, 15 9 or a group or self=insured plan as described in Code section 15 10 87.4. 15 11 The new Code chapter limits commencement of actions 15 12 for violations of the Code chapter to within five years of 15 13 commission of workers' compensation fraud. 15 14 The bill provides that if a person is currently receiving 15 15 or has a pending application for workers' compensation 15 16 benefits under Code chapter 85, 85A, or 85B and the workers' 15 17 compensation fraud unit makes a determination to file charges 15 18 in district court alleging a violation of the new Code chapter 15 19 by a person receiving benefits under Code chapter 85, 85A, or 15 20 85B, the workers' compensation fraud unit shall notify the 15 21 workers' compensation commissioner, who shall suspend benefits 15 22 or suspend any pending application. The bill provides that 15 23 a person convicted of workers' compensation fraud shall be 15 24 prohibited from receiving benefits under Code chapters 85, 15 25 85A, and 85B for the particular claim or injury giving rise to 15 26 the criminal action. The bill provides that if the person is 15 27 acquitted or the charges are dismissed, a person's benefits 15 28 or application will be resumed. The bill provides that a 15 29 person has an option to receive a lump sum for back payment of 15 30 benefits upon resumption of benefits. 15 31 The new Code chapter grants the commissioner of insurance 15 32 rulemaking authority. 15 33 The bill amends Code chapter 507E to provide a definition of 15 34 insurer. Insurer, for the purposes of that Code chapter, means 15 35 the same as defined in new Code chapter 507F. 16 1 The bill also amends Code section 507E.6 (duties of insurer) 16 2 to provide for a process when an insurer alerts the insurance 16 3 fraud bureau of workers' compensation fraud. The bill provides 16 4 that if the notification pertains to workers' compensation 16 5 insurance fraud, the insurance fraud bureau shall deliver the 16 6 notice to the workers' compensation fraud unit. 16 7 The bill amends Code chapter 85 to provide that the employer 16 8 retains the right to choose the employee's physician throughout 16 9 the course of treatment, including the choice of specialists. 16 10 The employer is not obliged to authorize a referral for care 16 11 with a specific provider of services. 16 12 The bill amends Code chapter 85 to reference suspension of 16 13 benefits under new Code chapter 507F. 16 14 The bill amends Code chapter 86 to reference the criminal 16 15 penalty for fraudulent attorney fees under new Code chapter 16 16 507F. 16 17 The bill also amends Code chapter 85 to provide that 16 18 medical services provided under Code chapter 85, 85A, or 85B 16 19 shall not be billed at a rate higher than the health service 16 20 provider's standard retail rate for that medical service. The 16 21 bill provides that a health service provider who bills and 16 22 receives payment in excess of the health service provider's 16 23 standard retail rate for medical services to treat a workers' 16 24 compensation=covered injury shall reimburse the company which 16 25 paid for the medical services for the excess payments. 16 26 The bill takes effect upon enactment and applies to acts 16 27 of fraud or prohibited health service providers' practices 16 28 committed on or after enactment. LSB 5360SV (2) 87 asf/rj
