Bill Text: MI HB4202 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Insurance: no-fault; Michigan automobile insurance fraud authority; create. Amends title & secs. 134, 3301, 3330 & 4501 of 1956 PA 218 (MCL 500.134 et seq.) & adds ch. 63.

Spectrum: Partisan Bill (Republican 7-0)

Status: (Introduced - Dead) 2019-02-19 - Bill Electronically Reproduced 02/19/2019 [HB4202 Detail]

Download: Michigan-2019-HB4202-Introduced.html

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HOUSE BILL No. 4202

 

 

February 19, 2019, Introduced by Reps. Schroeder, Marino, Mueller, Webber, Crawford, Iden and Yaroch and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending the title and sections 134, 3301, 3330, and 4501 (MCL

 

500.134, 500.3301, 500.3330, and 500.4501), the title as amended by

 

2002 PA 304, section 134 as amended by 1990 PA 256, section 3330 as

 

amended by 2012 PA 204, and section 4501 as amended by 2012 PA 39,

 

and by adding chapter 63.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

TITLE

 

     An act to revise, consolidate, and classify the laws relating

 

to the insurance and surety business; to regulate the incorporation

 

or formation of domestic insurance and surety companies and

 

associations and the admission of foreign and alien companies and

 

associations; to provide their rights, powers, and immunities and

 

to prescribe the conditions on which companies and associations

organized, existing, or authorized under this act may exercise

 

their powers; to provide the rights, powers, and immunities and to

 

prescribe the conditions on which other persons, firms,

 

corporations, associations, risk retention groups, and purchasing

 

groups engaged in an insurance or surety business may exercise

 

their powers; to provide for the imposition of a privilege fee on

 

domestic insurance companies and associations; and the state

 

accident fund; to provide for the imposition of a tax on the

 

business of foreign and alien companies and associations; to

 

provide for the imposition of a tax on risk retention groups and

 

purchasing groups; to provide for the imposition of a tax on the

 

business of surplus line agents; to provide for the imposition of

 

regulatory fees on certain insurers; to provide for assessment fees

 

on certain health maintenance organizations; to modify tort

 

liability arising out of certain accidents; to provide for limited

 

actions with respect to that modified tort liability and to

 

prescribe certain procedures for maintaining those actions; to

 

require security for losses arising out of certain accidents; to

 

provide for the continued availability and affordability of

 

automobile insurance and homeowners insurance in this state and to

 

facilitate the purchase of that insurance by all residents of this

 

state at fair and reasonable rates; to provide for certain

 

reporting with respect to insurance and with respect to certain

 

claims against uninsured or self-insured persons; to prescribe

 

duties for certain state departments and officers with respect to

 

that reporting; to provide for certain assessments; to establish

 

and continue certain state insurance funds; to modify and clarify

the status, rights, powers, duties, and operations of the nonprofit

 

malpractice insurance fund; to provide for the departmental

 

supervision and regulation of the insurance and surety business

 

within this state; to provide for regulation over of worker's

 

compensation self-insurers; to provide for the conservation,

 

rehabilitation, or liquidation of unsound or insolvent insurers; to

 

provide for the protection of policyholders, claimants, and

 

creditors of unsound or insolvent insurers; to provide for

 

associations of insurers to protect policyholders and claimants in

 

the event of insurer insolvencies; to prescribe educational

 

requirements for insurance agents and solicitors; to provide for

 

the regulation of multiple employer welfare arrangements; to create

 

an automobile theft prevention authority 1 or more authorities to

 

reduce insurance fraud and the number of automobile thefts in this

 

state ; and to prescribe the powers and duties of the automobile

 

theft prevention authority; authorities; to provide certain for the

 

powers and duties upon of certain officials, departments, and

 

authorities of this state; to provide for an appropriation; to

 

repeal acts and parts of acts; and to provide penalties for the

 

violation of this act.

 

     Sec. 134. (1) Every certificate of authority or license in

 

force immediately prior to before January 1, 1957 and existing

 

under any act repealed by this act is valid until its original

 

expiration date, unless earlier terminated in accordance with this

 

act.

 

     (2) Any plan of operation adopted by an association or

 

facility, and any premium or assessment levied against an insurer

member of that association or facility, is hereby validated

 

retroactively to the date of its original adoption or levy and

 

shall continue continues in force and effect according to the terms

 

of the plan of operation, premium, or assessment until otherwise

 

changed by the commissioner director or the board of directors of

 

the association or facility pursuant to this act.

 

     (3) An association or facility or the board of directors of

 

the association or facility is not a state agency and the money of

 

an association or facility is not state money.

 

     (4) A Except as otherwise provided in section 6302, a record

 

of an association or facility shall be exempted is exempt from

 

disclosure pursuant to under section 13 of the freedom of

 

information act, Act No. 442 of the Public Acts of 1976, being

 

section 15.243 of the Michigan Compiled Laws.1976 PA 442, MCL

 

15.243.

 

     (5) Any premium or assessment levied by an association or

 

facility, or any premium or assessment of a similar association or

 

facility formed under a law in force outside this state, is not a

 

burden or special burden for purposes of a calculation under

 

section 476a, and any premium or assessment paid to an association

 

or facility shall not be included in determining the aggregate

 

amount a foreign insurer pays to the commissioner department of

 

treasury under section 476a.

 

     (6) As used in this section, "association or facility" means

 

an association of insurers created under this act and any other

 

association or facility formed under this act as a nonprofit

 

organization of insurer members, including, but not limited to, the

following:

 

     (a) The Michigan worker's compensation placement facility

 

created under chapter 23.

 

     (b) The Michigan basic property insurance association created

 

under section chapter 29.

 

     (c) The catastrophic claims association created under chapter

 

31.

 

     (d) The Michigan automobile insurance placement facility

 

created under chapter 33.

 

     (e) The Michigan life and health insurance guaranty

 

association created under chapter 77.

 

     (f) The property and casualty guaranty association created

 

under chapter 79.

 

     (g) The assigned claims facility created under section 3171.

 

     Sec. 3301. (1) Every insurer authorized to write automobile

 

insurance in this state shall participate in an organization for

 

the purpose of doing all of the following:

 

     (a) Providing the guarantee that automobile insurance coverage

 

will be available to any person who is unable to procure that

 

insurance through ordinary methods.

 

     (b) Preserving to the public the benefits of price competition

 

by encouraging maximum use of the normal private insurance system.

 

     (c) Providing funding for the Michigan automobile insurance

 

fraud authority.

 

     (2) The organization created under this chapter shall be

 

called the "Michigan automobile insurance placement facility".

 

     Sec. 3330. (1) The board of governors has the power to direct

the operation of the facility, including, at a minimum, the power

 

to do all of the following:

 

     (a) To sue and be sued in the name of the facility. A judgment

 

against the facility shall not create any liabilities in the

 

individual participating members of the facility.

 

     (b) To delegate ministerial duties, to hire a manager, to hire

 

legal counsel, and to contract for goods and services from others.

 

     (c) To assess participating members on the basis of

 

participation ratios pursuant to section 3303 to cover anticipated

 

costs of operation and administration of the facility, to provide

 

for equitable servicing fees, and to share losses, profits, and

 

expenses pursuant to the plan of operation.

 

     (d) To impose limitations on cancellation or nonrenewal by

 

participating members of facility-placed business, in addition to

 

the limitations imposed by chapters 21 and 32.

 

     (e) To provide for a limited number of participating members

 

to receive equitable distribution of applicants; or to provide for

 

a limited number of participating members to service applicants in

 

a plan of sharing of losses in accordance with section 3320(1)(c)

 

and the plan of operation.

 

     (f) To provide for standards of performance of service for the

 

participating members designated under subdivision (e).

 

     (g) To adopt a plan of operation and any amendments to the

 

plan, consistent with this chapter, necessary to assure the fair,

 

reasonable, equitable, and nondiscriminatory manner of

 

administering the facility, including compliance with chapter 21,

 

and to provide for any other matters necessary or advisable to

implement this chapter, including matters necessary to comply with

 

the requirements of chapter 21.

 

     (h) To assess self-insurers and insurers consistent with

 

chapter 31 and the assigned claims plan approved under section

 

3171.

 

     (i) Until December 31, 2024, to collect from participating

 

members and self-insurers money paid at the discretion of the

 

members and self-insurers to cover anticipated costs of operation

 

and administration of the Michigan automobile insurance fraud

 

authority. A member or self-insurer that pays money for the costs

 

and administration of the Michigan automobile insurance fraud

 

authority shall not pay the money from premium revenue, but shall

 

pay the money from other earnings or investments. Notwithstanding

 

any other provision of this act to the contrary, an insurer, the

 

director or department, or any other person shall not include or

 

consider the payment of money as described in this subsection with

 

respect to establishing a rate.

 

     (2) The board of governors shall institute or cause to be

 

instituted by the facility or on its behalf an automatic data

 

processing system for recording and compiling data relative to

 

individuals insured through the facility. An automatic data

 

processing system established under this subsection shall, to the

 

greatest extent possible, be made compatible with the automatic

 

data processing system maintained by the secretary of state, to

 

provide for the identification and review of individuals insured

 

through the facility.

 

     (3) Before March 1, 2020, the board of governors shall amend

the plan of operation to establish appropriate procedures necessary

 

to collect money and carry out the administrative duties and

 

functions of the Michigan automobile insurance fraud authority.

 

     Sec. 4501. As used in this chapter:

 

     (a) "Authorized agency" means the department of state police;

 

a city, village, or township police department; a county sheriff's

 

department; a United States criminal investigative department or

 

agency; the prosecuting authority of a city, village, township,

 

county, or state or of the United States; the office of financial

 

and insurance regulation; department; the Michigan automobile

 

insurance fraud authority; or the department of state.

 

     (b) "Financial loss" includes, but is not limited to, loss of

 

earnings, out-of-pocket and other expenses, repair and replacement

 

costs, investigative costs, and claims payments.

 

     (c) "Insurance policy" or "policy" means an insurance policy,

 

benefit contract of a self-funded plan, health maintenance

 

organization contract, nonprofit dental care corporation

 

certificate, or health care corporation certificate.

 

     (d) "Insurer" means a property-casualty insurer, life insurer,

 

third party administrator, self-funded plan, health insurer, health

 

maintenance organization, nonprofit dental care corporation, health

 

care corporation, reinsurer, or any other entity regulated by the

 

insurance laws of this state and providing any form of insurance.

 

     (e) "Michigan automobile insurance fraud authority" means the

 

Michigan automobile insurance fraud authority created under section

 

6302.

 

     (f) (e) "Organization" means an organization or internal

department of an insurer established to detect and prevent

 

insurance fraud.

 

     (g) (f) "Person" includes an individual, insurer, company,

 

association, organization, Lloyds, society, reciprocal or inter-

 

insurance exchange, partnership, syndicate, business trust,

 

corporation, and any other legal entity.

 

     (h) (g) "Practitioner" means a licensee of this state

 

authorized to practice medicine and surgery, psychology,

 

chiropractic, or law, any other licensee of the this state, or an

 

unlicensed health care provider 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.

 

     (i) (h) "Runner", "capper", or "steerer" means a person who

 

receives a pecuniary or other benefit from a practitioner, whether

 

directly or indirectly, for procuring or attempting to procure a

 

client, patient, or customer at the direction or request of, or in

 

cooperation with, a practitioner whose intent is to obtain benefits

 

under a contract of insurance or to assert a claim against an

 

insured or an insurer for providing services to the client,

 

patient, or customer. Runner, capper, or steerer does not include a

 

practitioner who procures clients, patients, or customers through

 

the use of public media.

 

     (j) (i) "Statement" includes, but is not limited to, any

 

notice statement, proof of loss, bill of lading, receipt for

 

payment, invoice, account, estimate of property damages, bill for

services, claim form, diagnosis, prescription, hospital or doctor

 

record, X-rays, test result, or other evidence of loss, injury, or

 

expense.

 

CHAPTER 63

 

MICHIGAN AUTOMOBILE INSURANCE FRAUD AUTHORITY

 

     Sec. 6301. As used in this chapter:

 

     (a) "Authority" means the Michigan automobile insurance fraud

 

authority created in section 6302.

 

     (b) "Automobile insurance fraud" means a fraudulent insurance

 

act as described in section 4503 that is committed in connection

 

with automobile insurance, including an application for automobile

 

insurance.

 

     (c) "Board" means the board of directors of the authority.

 

     (d) "Car years" means net direct private passenger and

 

commercial nonfleet vehicle years of insurance providing the

 

security required by section 3101(1) written in this state for the

 

second previous calendar year as reported to the statistical agent

 

of each insurer.

 

     (e) "Facility" means the Michigan automobile insurance

 

placement facility created under chapter 33.

 

     Sec. 6302. (1) The Michigan automobile insurance fraud

 

authority is created within the facility. The facility shall

 

provide staff for the authority and shall carry out the

 

administrative duties and functions as directed by the board.

 

     (2) The authority is not a state agency, and the money of the

 

authority is not state money. However, the authority shall comply

 

with the freedom of information act, 1976 PA 442, MCL 15.231 to

15.246, as if the authority were a public body. A record or portion

 

of a record, material, data, or other information received,

 

prepared, used, or retained by the authority in connection with the

 

investment of assets or of an insurer that relates to financial or

 

proprietary information and is considered by the person or insurer

 

providing the authority with the record, material, data, or

 

information as confidential and acknowledged by the authority as

 

confidential is not subject to disclosure by the authority. As used

 

in this subsection:

 

     (a) "Financial or proprietary information" means information

 

that has not been publicly disseminated or that is unavailable from

 

other sources, the release of which might cause the person

 

providing the information to the authority significant competitive

 

harm. Financial or proprietary information includes, but is not

 

limited to, financial performance data and projections, financial

 

statements, and product and market data.

 

     (b) "Public body" means that term as defined in section 2 of

 

the freedom of information act, 1976 PA 442, MCL 15.232.

 

     (3) The authority shall do all of the following:

 

     (a) Provide financial support to state or local law

 

enforcement agencies for programs designed to reduce the incidence

 

of automobile insurance fraud.

 

     (b) Provide financial support to state or local prosecutorial

 

agencies for programs designed to reduce the incidence of

 

automobile insurance fraud.

 

     (c) Provide financial support to an independent entity, formed

 

by the director, to investigate the claims practices of insurance

companies and to evaluate if those claims practices create

 

unnecessary disputes, treat patients or medical providers unfairly,

 

increase litigation, or cause unnecessary delays in the payment of

 

claims.

 

     (4) The authority may provide financial support to law

 

enforcement, prosecutorial, insurance, education, or training

 

associations for programs designed to reduce the incidence of

 

automobile insurance fraud.

 

     (5) The purposes, powers, and duties of the authority are

 

vested in and shall be exercised by a board of directors. The board

 

of directors consists of 25 members as follows:

 

     (a) Eight members who represent automobile insurers in this

 

state, including the following:

 

     (i) At least 2 members who represent insurer groups with

 

350,000 or more car years.

 

     (ii) At least 2 members who represent insurer groups with

 

fewer than 350,000 but 100,000 or more car years.

 

     (iii) At least 1 member who represents insurer groups with

 

fewer than 100,000 car years.

 

     (b) The director or his or her designee.

 

     (c) The attorney general or his or her designee.

 

     (d) The director of the department of state police or his or

 

her designee.

 

     (e) Two members who represent other law enforcement agencies

 

in this state.

 

     (f) One member who represents prosecuting attorneys in this

 

state.

     (g) Two members who represent the general public.

 

     (h) Three members who represent consumer rights and patient

 

advocacy groups.

 

     (i) One member of the medical community who cares primarily

 

for patients with acute medical needs.

 

     (j) Three members of the medical community who care primarily

 

for patients with subacute medical needs.

 

     (k) Two licensed attorneys knowledgeable about chapter 31.

 

     (6) The members of the board representing insurers shall be

 

elected by authorized insurers that provide automobile insurance in

 

this state from a list of nominees proposed by the board of

 

governors of the facility. In preparing the list of nominees for

 

the members, the board of governors of the facility shall solicit

 

nominations from authorized insurers that provide automobile

 

insurance in this state.

 

     (7) The governor shall appoint the members of the board

 

representing law enforcement agencies other than the department of

 

state police. In appointing the members, the governor shall solicit

 

input from various law enforcement associations in this state.

 

     (8) The governor shall appoint the member of the board

 

representing prosecuting attorneys. In appointing the member, the

 

governor shall solicit input from the Prosecuting Attorneys

 

Association of Michigan.

 

     (9) The governor shall appoint the members of the board

 

representing the general public. The governor shall appoint

 

individuals who are residents of this state and not employed by or

 

under contract with a state or local unit of government or an

insurer.

 

     (10) The governor shall appoint the 4 medical community

 

members of the board. In appointing these members, the governor

 

shall solicit input from the medical community in this state. The

 

governor shall appoint individuals who are residents of this state

 

and are not employed by or under contract with a state or local

 

unit of government or an insurer.

 

     (11) The governor shall appoint the 3 consumer rights and

 

patient advocacy members of the board. In appointing these members,

 

the governor shall solicit input from consumer rights and patient

 

advocacy groups in this state. The governor shall appoint

 

individuals who are residents of this state and are not employed by

 

or under contract with a state or local unit of government or an

 

insurer.

 

     (12) The State Bar of Michigan shall elect the 2 attorney

 

members of the board.

 

     (13) Except as otherwise provided in this subsection, a member

 

of the board shall serve for a term of 4 years or until his or her

 

successor is elected, designated, or appointed, whichever occurs

 

later. Of the members first elected or appointed under this

 

section, 2 members representing insurers, 1 member representing law

 

enforcement agencies, and 1 member who represents the general

 

public shall serve for a term of 2 years, 3 members representing

 

insurers, the member representing prosecuting attorneys, 1 member

 

who represents the general public, 2 members who represent consumer

 

rights and patient advocacy groups, 2 members of the medical

 

community, and 1 of the attorneys elected by the State Bar of

Michigan shall serve for a term of 3 years, and 3 members

 

representing insurers, 1 member representing law enforcement

 

agencies, 1 member who represents consumer rights and patient

 

advocacy groups, 2 members of the medical community, and 1 of the

 

attorneys elected by the State Bar of Michigan shall serve for a

 

term of 4 years.

 

     (14) The board is dissolved on January 1, 2025.

 

     Sec. 6303. (1) A member of the board shall serve without

 

compensation, except that the board shall reimburse a member in a

 

reasonable amount for necessary travel and expenses.

 

     (2) A majority of the members of the board constitute a quorum

 

for the transaction of business at a meeting or the exercise of a

 

power or function of the authority, notwithstanding the existence

 

of 1 or more vacancies. Notwithstanding any other provision of law

 

to the contrary, action may be taken by the authority at a meeting

 

on a vote of the majority of its members present in person or

 

through the use of amplified telephonic equipment, if authorized by

 

the bylaws or plan of operation of the board. The authority shall

 

meet at the call of the chair or as may be provided in the bylaws

 

of the authority. Meetings of the authority may be held anywhere in

 

this state.

 

     (3) The board shall adopt a plan of operation by a majority

 

vote of the board. Vacancies on the board shall be filled in

 

accordance with the plan of operation.

 

     (4) The board shall conduct its business at meetings that are

 

held in this state, open to the public, and held in a place that is

 

available to the general public. However, the board may establish

reasonable rules to minimize disruption of a meeting of the board.

 

At least 10 days but not more than 60 days before a meeting, the

 

board shall provide public notice of the meeting at the board's

 

principal office and on a publicly accessible internet website. The

 

board shall include in the public notice of its meeting the address

 

where minutes of the board may be inspected by the public. The

 

board may meet in a closed session for any of the following

 

purposes:

 

     (a) To consider the hiring, dismissal, suspension,

 

disciplining, or evaluation of officers or employees of the

 

authority.

 

     (b) To consult with its attorney.

 

     (c) To comply with state or federal law, rules, or regulations

 

regarding privacy or confidentiality.

 

     (5) The board shall display information concerning the

 

authority's operations and activities, including, but not limited

 

to, the annual financial report required under section 6310, on a

 

publicly accessible internet website.

 

     (6) The board shall keep minutes of each board meeting. The

 

board shall make the minutes open to public inspection and

 

available at the address designated on the public notice of its

 

meetings. The board shall make copies of the minutes available to

 

the public at the reasonable estimated cost for printing and

 

copying. The board shall include all of the following in the

 

minutes:

 

     (a) The date, time, and place of the meeting.

 

     (b) The names of board members who are present and board

members who are absent.

 

     (c) Board decisions made during any portion of the meeting

 

that was open to the public.

 

     (d) All roll call votes taken at the meeting.

 

     Sec. 6304. On January 1, 2025, the authority is dissolved.

 

     Sec. 6305. The board has the powers necessary to carry out its

 

duties under this act, including, but not limited to, the power to

 

do the following:

 

     (a) Sue and be sued in the name of the authority.

 

     (b) Solicit and accept gifts, grants, loans, and other aid

 

from any person, the federal government, this state, a local unit

 

of government, or an agency of the federal government, this state,

 

or a local unit of government.

 

     (c) Make grants and investments.

 

     (d) Procure insurance against any loss in connection with its

 

property, assets, or activities.

 

     (e) Invest at its discretion any money held in reserve or

 

sinking funds or any money not required for immediate use or

 

disbursement and to select and use depositories for its money.

 

     (f) Contract for goods and services and engage personnel as

 

necessary.

 

     (g) Indemnify and procure insurance indemnifying any member of

 

the board for personal loss or accountability resulting from the

 

member's action or inaction as a member of the board.

 

     (h) Perform other acts not specifically enumerated in this

 

section that are necessary or proper to accomplish the purposes of

 

the authority and that are not inconsistent with this section or

the plan of operation.

 

     Sec. 6307. (1) An insurer or self-insurer engaged in writing

 

insurance coverages that provide the security required by section

 

3101(1) in this state may pay to the facility, for deposit into the

 

account of the authority, money to be used by the authority to

 

carry out its duties under this chapter.

 

     (2) The facility shall segregate all money received under

 

subsection (1), and all other money received by the authority for

 

the purpose, from other money of the facility, if applicable. The

 

facility shall only expend the money received under subsection (1)

 

as directed by the board.

 

     Sec. 6308. (1) An insurer authorized to transact automobile

 

insurance in this state, as a condition of its authority to

 

transact insurance in this state, shall report automobile insurance

 

fraud data and claims practices information to the authority using

 

the format and procedures adopted by the board.

 

     (2) The department of state police shall cooperate with the

 

authority and shall provide available motor vehicle fraud and theft

 

statistics to the authority on request.

 

     (3) The board shall develop performance metrics that are

 

consistent, controllable, measurable, and attainable. The board

 

shall use the metrics each year to evaluate new applications

 

submitted for funding consideration and to renew funding for

 

existing programs.

 

     Sec. 6310. (1) Beginning January 1 of the year after the

 

effective date of the amendatory act that added this section, the

 

authority shall prepare and publish an annual financial report, and

beginning July 1 of the year after the effective date of the

 

amendatory act that added this section, the authority shall prepare

 

and publish an annual report to the legislature on the authority's

 

efforts to prevent automobile insurance fraud, unfair claims

 

practices of insurance companies, and cost savings that have

 

resulted from those efforts.

 

     (2) The annual report to the legislature required by this

 

section must detail the automobile insurance fraud and unfair

 

claims practices of insurance companies occurring in this state for

 

the previous year, assess the impact of the fraud and unfair claims

 

practices of insurance companies on rates charged for automobile

 

insurance, summarize prevention programs, and outline allocations

 

made by the authority. The members of the board, insurers, and the

 

director shall cooperate in developing the report as requested by

 

the authority and shall make available to the authority records and

 

statistics concerning automobile insurance fraud and unfair claims

 

practices of insurance companies, including the number of instances

 

of suspected and confirmed insurance fraud, number of prosecutions

 

and convictions involving automobile insurance fraud, automobile

 

insurance fraud recidivism, unfair settlement practices and claims

 

practices, including the claims practices of the catastrophic

 

claims association under section 3104, reimbursement rate

 

practices, timeliness of claims practices, and the use of

 

independent medical examiners and special investigation units. The

 

authority shall evaluate the impact automobile insurance fraud has

 

on the citizens of this state and the costs incurred by the

 

citizens through insurance, police enforcement, prosecution, and

incarceration because of automobile insurance fraud. The authority

 

shall evaluate the impact unfair claims practices by insurers have

 

on the citizens of this state and shall determine the costs

 

incurred by the citizens through unnecessary litigation and bad-

 

faith practices that delay, withhold, or deny policyholder benefits

 

that are based on legitimate claims, including special

 

investigation units that report suspected fraud and abuse cases

 

that are not based on independent, appropriate, and good-faith

 

investigation. The authority shall also report on all of the

 

following:

 

     (a) Processing, submission, and billing practices, and shall

 

recommend appropriate standardization practices.

 

     (b) The costs of unnecessary litigation and bad-faith

 

practices that delay, withhold, or deny policyholder benefits, and

 

shall recommend any changes to existing laws to reduce these costs.

 

     (3) The authority shall submit the annual report to the

 

legislature required by this section to the senate and house of

 

representatives standing committees with primary jurisdiction over

 

insurance issues and the director.

 

     Enacting section 1. This amendatory act takes effect January

 

1, 2020.