INSURANCE FRAUD PREVENTION AMENDMENTS.

View NCGA Bill Details2019-2020 Session
Senate Bill 322 (Public) Filed Wednesday, March 20, 2019
AN ACT TO MODIFY CRIMINAL PENALTIES ASSOCIATED WITH CERTAIN NORTH CAROLINA INSURANCE FRAUD STATUTES AND TO INCORPORATE PORTIONS OF THE NAIC FRAUD PREVENTION MODEL ACT LANGUAGE INTO NORTH CAROLINA'S INSURANCE LAWS, AS RECOMMENDED BY THE DEPARTMENT OF INSURANCE.
Intro. by Burgin, Brown, Tillman.

Status: Ref To Com On Rules and Operations of the Senate (Senate action) (Mar 21 2019)

Bill History:

S 322

Bill Summaries:

  • Summary date: Mar 20 2019 - More information

    Part I

    Amends GS 58-1-5, defining fraudulent insurance act to mean an act or omission affecting the business of insurance committed by a person with the intent to injure, defraud, or deceive another person in violation of GS Chapter 58 (Insurance).

    Amends GS 58-2-50, concerning examinations, hearing, and investigations under GS Chapter 58. Authorizes the Commissioner of Insurance (Commissioner) to investigate and prosecute suspected fraudulent insurance acts and persons engaged in the business of insurance. Grants the Commissioner eight specified authorities, including the authority to inspect, copy, and collect records and evidence; serve subpoenas; execute search warrants and arrest warrants for criminal violations of the Chapter; arrest, upon probably cause, without warrant a person found in the act of violating or attempting to violate a Chapter provision; make criminal referrals to prosecuting authorities; and conduct investigations outside of the State. Deletes the previous provision authorizing the Commissioner to arrest with warrant or cause a person or persons to be arrested when the Commissioner or any investigator appointed to conduct the investigation believes evidence exists to charge with a criminal violation of the Chapter. Prohibits any person from knowingly or intentionally interfering with the enforcement of the Chapter's provisions or investigations of suspected or actual violations of the Chapter.

    Makes conforming changes to GS 58-2-160 to refer to fraudulent insurance acts.

    Enacts GS 58-2-166 to require claims for payment or other benefits or applications for issuance of an insurance policy to contain a warning statement regarding fraudulent insurance acts, as provided. Adds that the lack of the required statement is not a defense to any prosecution for a fraudulent insurance act. Requires policies issued by nonadmitted insurers to contain a disclosure statement of the insurer's status to do business in the State where the policy is delivered, issued for delivery, or the state where covereage is in force; provides for satisfaction of this disclosure by satisfying the requirements of GS 58-21-45 or GS 58-22-20. Excludes from the statute's requirements reinsurance claims forms and resinsurance applications. Enacts GS 58-2-167 to require insurers to have in place antifraud initiatives reasonably calculated to detect, prosecute, and prevent fraudulent insurance acts. Sets parameters for the initiatives and their modification, including requiring an antifraud plan meeting specified criteria submitted to the Commissioner. Specifies that antifraud plans submitted to the Commissioner are proprietary, privileged, confidential, and not public records under specified statutes, and are not subject to discovery or subpoena in a civil or criminal action. Effective January 1, 2020.

    Enacts GS 58-2-168, specifying that information and evidence provided under GS 58-2-160 and GS 58-2-163 or obtained by the Commissioner in an investigation of suspected or actual fraudulent insurance acts are privileged, confidential, not public records, and not subject to discovery or subpoena in a civil or criminal action. Authorizes the Commissioner to share/receive documents, materials, or other information with/from specified entities, so long as confidentiality and privilege is maintained, as specified. Clarifies that the Commissioner is not prohibited from providing information to or receiving information from any law enforcement authority or from complying with subpoenas or other lawful process in criminal actions, or as otherwise provided in Article 2 of GS Chapter 58. Deems there to be no waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information disclosed to the Commissioner or as a result of sharing authorized by the statute.

    Enacts GS 58-2-169, specifying that Article 2 does not preempt, prevent, or limit other law enforcement or regulatory authority, as specified.

    Retitles GS 58-58-267 Fraudulent viatical settlement act warning required (was Fraud warning required).

    Makes clarifying change to GS 58-58-285 (regarding the effects of Part 5, Viatical Settlements, of Article 58 on other law enforcement or regulatory authority).

    Part II

    Amends GS 58-2-161 (False statement to procure or deny benefit of insurance policy or certificate), narrowing the offenses set out in subdivision (b)(2). Now provides for the offense of assisting or abetting (previously additionally included soliciting or conspiring with) another person in preparing or making a false or misleading statement to procure or deny a benefit of an insurance policy or certificate with the intent to defraud or deceive the insurer or insurance claimant. Provides new criminal penalties for subsection (b) offenses, which include making or assisting or abetting another to make a false or misleading statement to procure or deny a benefit of an insurance policy or certificate with the intent to defraud or deceive the insurer or insurance claimant. Now provides for the person to be guilty of a Class 1 misdemeanor if the value of the claim for payment or other benefit sought is less than $1,000, a Class H felony if the value of the claim for payment or other benefit sought is more than $1,000, a Class E felony if the value of the claim for the payment sought is $50,000 or more, and a Class C felony if the value of the claim for payment or the benefit sought is $100,000 or more (previously, all violations were a Class H felony). Additionally, authorizes a fine of no more than $10,000 for each violation of the statute. Lastly, permits each claim to be considered a separate count (previously mandated). Makes organizational changes.

    Amends GS 58-2-164, increasing the penalty for rate evasion fraud from a Class 3 misdemeanor to a Class 1 misdemeanor. Additionally, modifies the offense language to include assisting or abetting another person as previously specified in existing language (previously included soliciting or conspiring with another person). Adds a new provision making it a Class H felony if a violation of subsection (b) is committed with respect to an application for insurance or amendment to a policy of auto insurance for more than one passenger vehicle. Makes organizational changes.

    Adds to GS 58-3-150, making it unlawful for any person, with the intent to injure, defraud, or deceive, who prepares, issues, or requests a certificate of insurance that meets the criteria of subdivisions (f)(2) or (f)(3) (contains any false or misleading information, or purports to alter, amend, or extend the coverage provided by the policy of insurance to which the certificate of insurance makes reference); punishable as a Class 1 misdemeanor if the value of the certificate of insurance is less than $5,000, or a Class I felony if the value of the certificate of insurance is $5,000 or more.

    Provides Part II is effective December 1, 2019.


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