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F I S C A L I M P A C T R E P O R T

SPONSOR Stewart

ORIGINAL DATE

LAST UPDATED

1/23/07

HB 82

SHORT TITLE Insurance Fraud as Racketeering

SB

ANALYST Wilson

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

Minimal

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Corrections Department (CD)

Office of the Attorney General (OAG)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

House Bill 82 expands the crime of racketeering to include false applications, claims or proofs of

loss under the New Mexico Insurance Code.

The bill adds the crime of insurance fraud (Section 59A-16-23 NMSA 1978) to Section 30-42-

3’s list of crimes that can be used as the predicate crime constituting racketeering. Under

Section 30-42-4 of the Racketeering Act, racketeering is a separate crime punishable as a second

or third degree felony depending the on the type of racketeering involved. Thus, individuals

convicted of insurance fraud may also be separately convicted of racketeering under the act.

However, it is unlikely that this will lead to a large number of new racketeering convictions or to

longer sentences for those now convicted of both insurance fraud and racketeering.

House Bill 82 – Page

2

FISCAL IMPLICATIONS

There will be a minimal administrative cost for statewide update, distribution and documentation

of statutory changes. Any additional fiscal impact on the judiciary would be proportional to the

enforcement of this law and commenced prosecutions. New laws, amendments to existing laws

and new hearings have the potential to increase caseloads in the courts, thus requiring additional

resources to handle the increase.

CD

states

the fiscal impact is minimal. The bill could result in a few more convictions, with a

resultant minimal increase in the prison population and in probation/parole caseloads. There is

no appropriation in the bill to cover the probably slight increase in prison population and in

probation/parole caseloads. There could also be a minimal increase in revenues for CD. To the

extent that these individuals convicted of racketeering are placed on probation or parole, they

would have to then pay the probation/parole supervision fees required by law.

SIGNIFICANT ISSUES

The PRC states currently, individuals or entities submitting numerous false claims to insurance

companies, e.g. fraudulent pain management centers, medical and chiropractic centers can only

be charged with the individual false claims submitted as well as conspiracy in the appropriate

case. Adding 59A-16-23 as a predicate to Racketeering gives the prosecutor more tools with

which to combat a very pervasive form of insurance fraud.

ADMINISTRATIVE IMPLICATIONS

The Insurance Fraud Bureau of the PRC has the resources and staff to investigate and prosecute

these cases as Racketeering.

DW/mt