Bill Text: PA HB427 | 2011-2012 | Regular Session | Introduced

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Bill Title: Providing for antifraud plans; and making a related repeal.

Spectrum: Slight Partisan Bill (Republican 6-2)

Status: (Introduced - Dead) 2011-02-03 - Referred to INSURANCE [HB427 Detail]

Download: Pennsylvania-2011-HB427-Introduced.html

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PRINTER'S NO. 393
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 427 Session of2011
INTRODUCED BY GODSHALL, MICOZZIE, CALTAGIRONE, DeLUCA, HARHART, HENNESSEY, SWANGER AND J. TAYLOR, FEBRUARY 3, 2011
REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 3, 2011
AN ACT
Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
act relating to insurance; amending, revising, and
consolidating the law providing for the incorporation of
insurance companies, and the regulation, supervision, and
protection of home and foreign insurance companies, Lloyds
associations, reciprocal and inter-insurance exchanges, and
fire insurance rating bureaus, and the regulation and
supervision of insurance carried by such companies,
associations, and exchanges, including insurance carried by
the State Workmen's Insurance Fund; providing penalties; and
repealing existing laws," providing for antifraud plans; and
making a related repeal.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of May 17, 1921 (P.L.682, No.284), known
as The Insurance Company Law of 1921, is amended by adding an
article to read:
ARTICLE XXVI
ANTIFRAUD PLANS
Section 2601. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Comprehensive database system." A centralized organization
or entity designed to collect and disseminate insurance claims
information and data from and among its members or subscribers
for, but not limited to, the prevention and suppression of
fraud.
"Department." The Insurance Department of the Commonwealth.
"Insurance fraud." Malicious or intentional concealment,
distortion or fabrication of a material fact, knowing and
willful misrepresentation of a material fact or any activity
defined as an offense under 18 Pa.C.S. § 4117 (relating to
insurance fraud).
"Insurer." The term shall have the meaning set forth in
section 201-A of the act of May 17, 1921 (P.L.789, No.285),
known as The Insurance Department Act of 1921, and it shall also
include any insurer licensed to do business in this
Commonwealth.
Section 2602. Filing of plans.
Each insurer licensed to do business in this Commonwealth
shall institute an insurance antifraud plan. The antifraud plan
of insurers licensed on the effective date of this article shall
be filed with the department on or before December 31, 2011. All
insurers licensed after the effective date of this article shall
file within six months of licensure. All changes to the
antifraud plan shall be filed with the department within 30 days
after it has been modified.
Section 2603. Content of plan.
The antifraud plans of each insurer shall establish specific
procedures:
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(1) To prevent insurance fraud, including internal fraud
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 such 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 a comprehensive
database system.
(6) To ensure that costs incurred as a result of
insurance fraud are not included in any rate base affecting
the premiums charged by insurers.
Section 2604. Review by commissioner.
Antifraud plans shall be filed with the department. If, after
the review, the commissioner finds that the antifraud plan does
not comply with the provisions of this article, the antifraud
plan may be disapproved. Notice of disapproval shall include a
statement of the specific reasons for such disapproval. Any plan
disapproved by the commissioner must be refiled within 60 days
of the date of the notice of disapproval. The commissioner shall
audit insurers to ensure compliance with antifraud plans as a
part of the examinations performed in accordance with the act of
May 17, 1921 (P.L.789, No.285), known as The Insurance
Department Act of 1921.
Section 2605. Report on antifraud activities.
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All 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. Insurance fraud referrals made by
an insurer shall be issued in accordance with the insurer's
antifraud plan.
Section 2606. Penalties.
Insurers that fail to file timely antifraud plans as required
by this article shall be assessed a civil penalty of $500 per
day of noncompliance, which moneys shall be deposited into the
Insurance Fraud Prevention Trust Fund. Insurers that do not make
a good faith attempt to file an antifraud plan which complies
with this article shall also be subject to the penalty
provisions of section 320, except that no penalty may be imposed
for the first filing made by an insurer under this article.
Insurers that fail to follow the antifraud plan shall be subject
to a civil penalty not to exceed $10,000 for each violation at
the discretion of the commissioner after consideration of all
relevant factors, including the willfulness of any violation.
Section 2607. Confidentiality of plans and reports.
The antifraud plans and reports which insurers file with the
department and any reports or materials related to such reports
are not public records and shall not be subject to public
inspection.
Section 2608. Reporting of insurance fraud.
The following shall apply:
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(1) Every insurer licensed to do business in this
Commonwealth, and its employees, insurance producers, brokers
and public adjusters, or public adjuster solicitors, who has
a reasonable good faith cause to believe that insurance fraud
has occurred shall refer suspected insurance fraud to the
appropriate law enforcement authorities. All reports of
insurance fraud to law enforcement authorities shall be made
in the form and manner jointly approved by the department and
the Attorney General.
(2) Where insurance fraud involves insurance producers,
brokers, public adjusters or public adjuster solicitors, a
copy of the report shall also be sent to the department.
(3) A copy of each referral sent to a law enforcement
authority under this article shall be sent by the law
enforcement authority to the Insurance Fraud Prevention
Authority for review for use in accordance with the duties
and responsibilities of the authority.
Section 2609. 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 article.
Section 2610. Fraud referral training.
A comprehensive insurance fraud referral training program as
established by the Insurance Fraud Prevention Authority may be
made available to insurers.
Section 2. Article XII of the act of June 2, 1915 (P.L.736,
No.338), known as the Workers' Compensation Act, is repealed to
the extent that it is inconsistent with the provisions of
Article XXVI of the act.
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Section 3. This act shall take effect immediately.
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