2005 Legislation
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HOUSE BILL NO. 115 – Insurance fraud, investigative agcy


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Bill Status

H0115...........................................................by BUSINESS
INSURANCE FRAUD - Amends existing law relating to insurance fraud to revise
the definition for "authorized agencies"; to revise provisions applicable
to the disclosure of information by insurers; and to revise provisions
applicable to the investigation section of the Department of Insurance.
02/04    House intro - 1st rdg - to printing
02/07    Rpt prt - to Bus
02/16    Rpt out - rec d/p - to 2nd rdg
02/17    2nd rdg - to 3rd rdg
02/22    3rd rdg - PASSED - 68-2-0
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
      Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon,
      Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth,
      Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henbest,
      Henderson, Jaquet, Jones, Kemp, Lake, LeFavour, Loertscher, Martinez,
      Mathews, McGeachin, Miller, Mitchell, Moyle, Nielsen, Nonini,
      Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche,
      Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
      Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail,
      Wills, Mr. Speaker
      NAYS -- McKague, Wood
      Absent and excused -- None
    Floor Sponsor - Chadderdon
    Title apvd - to Senate
02/23    Senate intro - 1st rdg - to Com/HuRes
03/04    Rpt out - rec d/p - to 2nd rdg
03/07    2nd rdg - to 3rd rdg
03/11    3rd rdg - PASSED - 32-0-2, 1 vacancy
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
      Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
      Gannon, Geddes, Goedde, Jorgenson, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai, Marley, McGee, McKenzie, Pearce, Richardson,
      Schroeder, Stegner, Stennett, Werk, Williams
      NAYS -- None
      Absent and excused -- Hill, Sweet, (District 21 seat vacant)
    Floor Sponsor - Compton
    Title apvd - to House
03/14    To enrol
03/15    Rpt enrol - Sp signed
03/16    Pres signed
03/17    To Governor
03/21    Governor signed
         Session Law Chapter 74
         Effective: 07/01/05

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   First Regular Session - 2005
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 115
                                   BY BUSINESS COMMITTEE
  1                                        AN ACT
  9    Be It Enacted by the Legislature of the State of Idaho:
 10        SECTION 1.  That Section 41-291, Idaho Code, be, and the  same  is  hereby
 11    amended to read as follows:
 12        41-291.  DEFINITIONS.  As  used  in  sections 41-290 through and including
 13    section 41-298, Idaho Code:
 14        (1)  Sections 41-290 through 41-298, Idaho Code, shall  be  known  as  the
 15    "Idaho Arson and Fraud Reporting-Immunity Act."
 16        (2)  "Authorized agencies" shall mean:
 17        (a)  The director, Idaho Any law enforcement agency of this state; police;
 18        (b)  The  Any  prosecuting attorney who may be responsible for prosecution
 19        in the county jurisdiction where the fire or fraud occurred;
 20        (c)  The attorney responsible for the prosecution in the county  jurisdic-
 21        tion  where  the fire or fraud occurred as designated by the attorney gen-
 22        eral;
 23        (d)  The department of insurance, which includes the state fire marshal.
 24        (3)  Solely for the purpose of section 41-292(1), Idaho Code,  "authorized
 25    agencies" shall also include:
 26        (a)  The  United  States attorney's office when authorized or charged with
 27        investigation or prosecution of the fire or fraud in question;
 28        (b)  The federal bureau of investigation  or  any  other  federal  agency,
 29        charged  with  investigation  or prosecution of the fire or fraud in ques-
 30        tion.
 31        (4)  "Relevant" means information having any tendency to  make  the  exis-
 32    tence of any fact that is of consequence to the investigation or determination
 33    of  the issue more probable or less probable than it would be without the evi-
 34    dence.
 35        (5)  Material will be "deemed important," if within the sole discretion of
 36    the "authorized  agency,"  such  material  is  requested  by  the  "authorized
 37    agency."
 38        (6)  "Action," as used in this statute chapter, shall include nonaction or
 39    the failure to take action.
 40        (7)  "Immunity"  means  that  no civil action may arise against any person
 41    for furnishing information pursuant to section 41-248, 41-258, 41-290, 41-292,
 42    41-296 or 41-297, Idaho Code, where actual malice on the part of the insurance
 43    company, department of insurance, state fire marshal, authorized agency, their
  1    employees or agents, is not present.
  2        (8)  "Financial loss" includes, but is not limited to, loss  of  earnings,
  3    out-of-pocket and other expenses, repair and replacement costs and claims pay-
  4    ments.
  5        (9)  "Person" means a natural person, company, corporation, unincorporated
  6    association, partnership, professional corporation and any other legal entity.
  7        (10) "Practitioner"  means a licensee of this state authorized to practice
  8    medicine and surgery, psychology, chiropractic, law or any other  licensee  of
  9    the state whose services are compensated, directly or indirectly, by insurance
 10    proceeds,  or a licensee similarly licensed in other states and nations or the
 11    practitioner of any nonmedical treatment rendered in accordance with a  recog-
 12    nized religious method of healing.
 13        (11) "Statement"  includes,  but  is not limited to, any notice statement,
 14    any statement submitted on applications for insurance, proof of  claim,  proof
 15    of  loss,  bill  of lading, receipt for payment, invoice, account, estimate of
 16    property damages, bills for services,  diagnosis,  prescription,  hospital  or
 17    doctor  records,  X-rays,  test  results  or other evidence of loss, injury or
 18    expense, whether oral, written or computer generated.
 19        (12) "Insurer" shall mean any insurance company contemplated by title  41,
 20    Idaho  Code,  any  business  operating  as a self-insured for any purpose, the
 21    state insurance fund, and any self-insured as contemplated by title 72,  Idaho
 22    Code.
 23        SECTION  2.  That  Section  41-292, Idaho Code, be, and the same is hereby
 24    amended to read as follows:
 25        41-292.  DISCLOSURE OF INFORMATION BY INSURERS. (1) The  director  of  the
 26    department  of  insurance, state fire marshal or any authorized agency may, in
 27    writing, require the insurance company at interest to release to the  request-
 28    ing agency any or all relevant information or evidence deemed important to the
 29    authorized  agency,  director or state fire marshal which the company may have
 30    in its possession, relating to the loss in question. Relevant information  may
 31    include, without limitation herein:
 32        (a)  Pertinent  insurance  policy  information  relevant  to  a loss under
 33        investigation and any application for such a policy;
 34        (b)  Policy premium payment records which are available;
 35        (c)  History of previous claims made by the insured;
 36        (d)  Material relating to the investigation of the loss, including  state-
 37        ments of any person, proof of loss, and any other evidence relevant to the
 38        investigation.
 39        (2)  (a)  When  an  insurance company has facts to support a belief that a
 40        loss in which it has an interest may be of other  than  accidental  cause,
 41        then,  for  the  purpose of notification and for having such loss investi-
 42        gated, the company shall, in writing, notify the director of  the  depart-
 43        ment  of  insurance,  or  the state fire marshal, and any other authorized
 44        agency and provide any  or  all  material  developed  from  the  company's
 45        inquiry into the loss.
 46        (b)  When  an insurance company provides the director of the department of
 47        insurance or the state fire marshal with notice of a  loss,  it  shall  be
 48        sufficient notice for the purpose of this act chapter.
 49        (c)  Nothing  in  section  41-292(1), Idaho Code, shall abrogate or impair
 50        the rights or powers created under section 41-292(2), Idaho Code.
 51        (3)  The director of the department of insurance, the state  fire  marshal
 52    or  the  an  authorized  agency  provided with information pursuant to section
 53    41-248, 41-258, 41-290 or 41-292(1) or (2), Idaho Code, and in furtherance  of
  1    its  own purposes, may release or provide such information to any of the other
  2    authorized agencies.
  3        (4)  Any insurance company providing information to an  authorized  agency
  4    or  agencies  pursuant  to  section  41-258, 41-290 or 41-292(1) or (2), Idaho
  5    Code, shall have the right to request relevant  information  relative  to  the
  6    loss  in  question  and  to  receive,  within a reasonable time, not to exceed
  7    thirty (30) days, the information requested, if the information is not  other-
  8    wise privileged by law.
  9        (5)  In  the  absence  of  fraud  or malice, no person shall be subject to
 10    civil liability for libel, slander or any other relevant tort cause of  action
 11    by  virtue  of filing reports or furnishing other information required by this
 12    statute chapter or required by the director of  the  department  of  insurance
 13    under  the  authority  granted  in this statute chapter, and no civil cause of
 14    action of any nature shall arise against such person:
 15        (a)  For any information relating to suspected fraudulent  insurance  acts
 16        furnished  to  or received from law enforcement officials authorized agen-
 17        cies, their agents and employees; or
 18        (b)  For any information relating to suspected fraudulent  insurance  acts
 19        furnished  to  or received from other persons subject to the provisions of
 20        this chapter; or
 21        (c)  For any such information furnished in reports to  the  department  of
 22        insurance, frauds bureau, national association of insurance commissioners,
 23        national  insurance crime bureau or any organization established to detect
 24        and prevent fraudulent insurance acts, their agents, employees  or  desig-
 25        nees,  nor shall the director  or any employee of the department of insur-
 26        ance, frauds bureau, acting without malice in the  absence  of  fraud,  be
 27        subject  to  civil  liability  for libel, slander of or any other relevant
 28        tort and no civil cause of action of any nature shall arise  against  such
 29        person  by  virtue of the publication of any report or bulletin related to
 30        the official activities of the department  of  insurance.  frauds  bureau.
 31        Nothing herein is intended to abrogate or modify in any way any common law
 32        or statutory privilege or immunity heretofore enjoyed by any person.
 33        (6)  For  purposes  of subsection (5) of this section, there shall exist a
 34    rebuttable presumption that the person has acted without fraud or malice.
 35        SECTION 3.  That Section 41-295, Idaho Code, be, and the  same  is  hereby
 36    amended to read as follows:
 37        41-295.  DUTIES OF THE INVESTIGATION SECTION. The investigation section of
 38    the department of insurance shall have the following duties:
 39        (1)  To  conduct  civil  or criminal investigations within or outside this
 40    state as deemed necessary to determine whether any  person  has  violated  any
 41    provision of title 41, Idaho Code.
 42        (2)  For  purposes  of any investigation under this code, the director, or
 43    any officer designated by him, may administer oaths and affirmations, subpoena
 44    bank records, subpoena witnesses and compel their attendance,  take  evidence,
 45    and  require  the  production of any books, papers, correspondence, memoranda,
 46    agreements, or other documents the director deems relevant or material to  the
 47    investigation.
 48        (3)  The  investigation  section  shall  furnish  all  papers,  documents,
 49    reports,  complaints,  or  other  facts  of evidence to any police, sheriff or
 50    other law enforcement agency, when so requested, and will assist and cooperate
 51    with such law enforcement agencies.
 52        (4)  The investigation section shall refer criminal violations of the code
 53    to the attorney general, or county  prosecutor,  or  other  prosecutor  having
  1    jurisdiction  of any such violation.  The attorney general, or county prosecu-
  2    tor, or other prosecutor  shall promptly institute and prosecute  such  action
  3    or  proceedings against such person as the information may require or justify.
  4    Whoever is the prosecuting attorney of record shall have  exclusive  authority
  5    in all matters regarding such action or proceeding.
  6        (5)  The  investigation section shall have such other duties as the direc-
  7    tor of the department of insurance shall assign or as contained  elsewhere  in
  8    title 41, Idaho Code.
  9        (6)  The  investigation  section  shall be permitted to seek court ordered
 10    restitution as reimbursement, for the cost of investigation from  those  indi-
 11    viduals successfully prosecuted under section 41-293, Idaho Code. Any restitu-
 12    tion  payments  received  pursuant  to  this section shall be deposited in the
 13    insurance administrative account as provided in section 41-401, Idaho Code.
 14        (7)  There is hereby created an account in the agency asset  fund  in  the
 15    state  treasury,  to  be  designated as the fraud investigation and prevention
 16    account. The account shall be used by the director of the department of insur-
 17    ance for enforcement of this chapter,  investigation  of  cases  of  insurance
 18    fraud and related violations of laws of  this state.
 19        (8)  All claims against the account shall be examined, audited and allowed
 20    in  the  manner  now  or  hereafter  provided by law. All moneys placed in the
 21    account are hereby perpetually appropriated to the department of insurance for
 22    the purposes of the provisions of this section.
 23        (9)  Pending use for the purposes  of  the  provisions  of  this  section,
 24    moneys  in  the  account  shall be invested by the state treasurer in the same
 25    manner as provided under section 67-1210, Idaho Code, with  respect  to  other
 26    surplus  or  idle moneys in the state treasury. Interest earned on the invest-
 27    ments shall be returned to the account.

Statement of Purpose / Fiscal Impact

                     STATEMENT  OF  PURPOSE

                           RS 14424C1

This proposal amends insurance code provisions relating to
reporting and enforcement of insurance fraud.  The amendments
clarify that all Idaho law enforcement agencies and any prosecutor
that may have jurisdiction constitute authorized entities for
insurance fraud reporting purposes.  The changes also clarify how
any funds received by the Department's fraud investigation section
as restitution should be handled.   The amendments delete
references to an insurance fraud account that was part of the
original enactment, but has never been funded by the Legislature. 
The insurance fraud investigation unit is a section within the
Department of Insurance and is funded in the same manner as other
sections of the Department.  Therefore, there has not been a need
for a separate fraud investigation funding account. 

                         FISCAL  IMPACT


Name:     Shad Priest
Agency:   Insurance, Dept. of
Phone:    334-4214

Statement of Purpose/Fiscal Impact                   H 115