AN ACT RELATING TO INSURANCE FRAUD
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 13 V.S.A. § 2031 is added to read:
§ 2031. INSURANCE FRAUD
(a) Definitions. As used in this section:
(1) “Conceal” means to take affirmative action intended to prevent others from discovering information. Mere failure to disclose information does not constitute concealment.
(2) “Insurance policy” has the same meaning as in 8 V.S.A. § 4722(3).
(3) “Insurer” has the same meaning as in 8 V.S.A. § 4901(2).
(4) “Person” means a natural person, company, corporation, unincorporated association, partnership, professional corporation, agency of government, or any other entity.
(b) Fraudulent insurance act. No person shall, with intent to defraud:
(1) present or cause to be presented a claim for payment or benefit, pursuant to any insurance policy, that contains false representations as to any material fact or which conceals a material fact; or
(2) present or cause to be presented any information which contains false representations as to any material fact or which conceals a material fact concerning the solicitation for sale of any insurance policy or purported insurance policy, an application for certificate of authority, or the financial condition of any insurer.
(c) Penalties. A person who violates subsection (b) of this section shall:
(1) if the benefit wrongfully obtained or the loss suffered by any person as a result of the violation has a value of less than $900.00, be imprisoned for not more than six months or fined not more than $5,000.00, or both; or
(2) if the benefit wrongfully obtained or the loss suffered by any person as a result of the violation has a value of more than $900.00, be imprisoned for not more than five years or fined not more than $10,000.00, or both; or
(3) for a second or subsequent offense, regardless of the value of the benefit wrongfully obtained, be imprisoned not more than five years or fined not more than $20,000.00, or both.
(d) Administrative action. Upon the conviction of a practitioner for a violation of subsection (b) of this section, the prosecutor shall inform the appropriate licensing authority. Any victim may notify the appropriate licensing authorities in this state and any other jurisdiction in which the practitioner is licensed of the conviction.
(e) This section shall not be construed to limit or restrict prosecution under any other applicable law.
(f) Immunity. No insurer or insurance professional acting in good faith and furnishing or disclosing information to the appropriate law enforcement official shall be subject to civil liability for libel, slander, or any other cause of action arising from the furnishing or disclosing of such information, except if the information is furnished solely to obtain an advantage in connection with a claim that will be, is being, or has been filed.
(g) This section shall not apply to workers' compensation fraud. Cases involving workers' compensation fraud shall be prosecuted under section 2024 of this title.
(h) The public policy of this state is that the standards of this section shall not apply or be introduced into evidence in any civil or administrative proceeding, whether to argue public policy, materiality, or for any other purpose.
Sec. 2. 8 V.S.A. chapter 130 is added to read:
Chapter 130. Insurance Fraud
§ 4750. Insurer Anti-Fraud Plans
(a) Every insurer with direct written premiums shall prepare, implement, and maintain an insurance anti-fraud plan. Each insurer’s anti-fraud plan shall outline specific procedures, appropriate to the type of insurance the insurer writes in this state, to:
(1) Prevent, detect, and investigate all forms of insurance fraud, including fraud involving the insurer’s employees or agents; fraud resulting from misrepresentations in the application, renewal, or rating of insurance policies; claims fraud; and security of the insurer’s data processing systems.
(2) Educate appropriate employees on fraud detection and the insurer’s anti-fraud plan.
(3) Provide for the hiring of or contracting for fraud investigators.
(4) Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud.
(5) Where appropriate, pursue restitution for financial loss caused by insurance fraud.
(6) Ensure that applicable state and federal privacy laws are complied with and that the confidential personal and financial information of consumers and insureds is protected.
(7) Comply with such other procedures as the commissioner may require by rule.
(b) The commissioner may require an insurer to file annually its anti-fraud plan with the department and an annual summary of the insurer’s anti-fraud activities and results.
(c) This section confers no private rights of action. This section does not affect private rights of action conferred under other laws or court decisions.
(d) Enforcement. Notwithstanding any other provision of this title, the following are the exclusive monetary penalties for violation of this section. Insurers that fail to prepare, implement, maintain, or submit to the department of banking, insurance, securities, and health care administration an insurance anti-fraud plan are subject to a penalty of $500.00 per day, not to exceed $10,000.00.
Sec. 3. 1 V.S.A. § 317(c)(36) is added to read:
(36) anti-fraud plans and summaries submitted by insurers to the department of banking, insurance, securities, and health care administration for the purposes of complying with 8 V.S.A. § 4750.
Sec. 4. EFFECTIVE DATE
This act shall take effect July 1, 2006, except for Sec. 2, which shall take effect January 1, 2007.
The Vermont General Assembly
115 State Street