0001| SENATE BILL 160
|
0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
|
0003| INTRODUCED BY
|
0004| RICHARD M. ROMERO
|
0005|
|
0006|
|
0007|
|
0008|
|
0009|
|
0010| AN ACT
|
0011| RELATING TO INSURANCE; ENACTING THE INSURANCE FRAUD ACT;
|
0012| PROVIDING FOR THE INVESTIGATION AND PROSECUTION OF INSURANCE
|
0013| FRAUD; REPEALING AND ENACTING SECTIONS OF THE NMSA 1978;
|
0014| MAKING AN APPROPRIATION.
|
0015|
|
0016| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
|
0017| Section 1. A new section of the New Mexico Insurance
|
0018| Code is enacted to read:
|
0019| "[|NEW MATERIAL|] SHORT TITLE.--This act may be cited as
|
0020| the "Insurance Fraud Act"."
|
0021| Section 2. A new section of the New Mexico Insurance
|
0022| Code is enacted to read:
|
0023| "[|NEW MATERIAL|] FINDINGS--PURPOSE.--
|
0024| A. The legislature finds that insurance fraud is
|
0025| pervasive and expensive, and has the potential for increasing
|
- 1 -
0001| premium rates, placing businesses at risk, reducing the
|
0002| ability of consumers to raise their standard of living and
|
0003| decreasing the economic vitality of the state. Therefore, the
|
0004| legislature believes that the state must aggressively confront
|
0005| the problem of insurance fraud.
|
0006| B. The purpose of the Insurance Fraud Act is to
|
0007| permit the full utilization of the expertise of the
|
0008| superintendent of insurance to investigate and detect
|
0009| insurance fraud more effectively, to halt insurance fraud and
|
0010| to work with state, local and federal law enforcement and
|
0011| regulatory agencies against the commission of insurance
|
0012| fraud."
|
0013| Section 3. A new section of the New Mexico Insurance
|
0014| Code is enacted to read:
|
0015| "[|NEW MATERIAL|] DEFINITIONS.--As used in the Insurance
|
0016| Fraud Act:
|
0017| A. "fund" means the insurance fraud fund;
|
0018| B. "insurance fraud" means any act or practice in
|
0019| connection with an insurance transaction that constitutes a
|
0020| crime under the Criminal Code or the Insurance Code;
|
0021| C. "insurance transaction" means any act or
|
0022| practice relating to insurance and includes complying with the
|
0023| Insurance Code or any rule adopted under its authority; and
|
0024| D. "superintendent" means the superintendent of
|
0025| insurance."
|
- 2 -
0001| Section 4. A new section of the New Mexico Insurance
|
0002| Code is enacted to read:
|
0003| "[|NEW MATERIAL|] SUPERINTENDENT'S DUTIES.--The
|
0004| superintendent shall:
|
0005| A. initiate inquiries and conduct investigations
|
0006| when the superintendent has reason to believe that insurance
|
0007| fraud may have been or is being committed;
|
0008| B. respond to notifications or complaints of
|
0009| suspected insurance fraud generated by state and local police
|
0010| or other law enforcement authorities and governmental units,
|
0011| including the federal government and any other person;
|
0012| C. review notices and reports of insurance fraud
|
0013| submitted by authorized insurers, their employees, agents or
|
0014| producers and select those incidents of alleged fraud that, in
|
0015| his judgment, require further investigation and conduct the
|
0016| investigations;
|
0017| D. conduct independent investigations and
|
0018| examinations of insurance transactions and alleged insurance
|
0019| fraud, conduct studies to determine the extent of insurance
|
0020| fraud, deceit or intentional misrepresentation of any kind in
|
0021| the insurance process and publish information and reports on
|
0022| its examinations and studies;
|
0023| E. report incidents of alleged insurance fraud
|
0024| supported by investigations and examinations to the
|
0025| appropriate district attorney and any other appropriate law
|
- 3 -
0001| enforcement, administrative, regulatory or licensing agency
|
0002| and assemble evidence, prepare charges and otherwise assist
|
0003| any prosecutorial authority having jurisdiction over insurance
|
0004| fraud enforcement;
|
0005| F. assist any official or agency of this state,
|
0006| any other state or the federal government that requests
|
0007| assistance in investigating insurance fraud;
|
0008| G. maintain records and information in order to
|
0009| produce an annual report of his activities undertaken in
|
0010| connection with carrying out the provisions of the Insurance
|
0011| Fraud Act; and
|
0012| H. conduct, in cooperation with the attorney
|
0013| general and the department of public safety, public outreach
|
0014| and awareness programs on the costs of insurance fraud to the
|
0015| public and how members of the public can assist themselves,
|
0016| the superintendent and law enforcement officials in preventing
|
0017| and prosecuting insurance fraud."
|
0018| Section 5. A new section of the New Mexico Insurance
|
0019| Code is enacted to read:
|
0020| "[|NEW MATERIAL|] SUPERINTENDENT'S AUTHORITY.--The
|
0021| superintendent is authorized to select and contract with
|
0022| investigative personnel and prosecutors to discharge his
|
0023| duties pursuant to the provisions of the Insurance Fraud Act."
|
0024| Section 6. A new section of the New Mexico Insurance
|
0025| Code is enacted to read:
|
- 4 -
0001| "[|NEW MATERIAL|] NOTICE AND COOPERATION REQUIRED--
|
0002| TOLLING PERIOD.--
|
0003| A. Every insurer or licensed insurance
|
0004| professional that has a reasonable belief that an act of
|
0005| insurance fraud will be, is being or has been committed shall
|
0006| furnish and disclose knowledge and information about it to the
|
0007| superintendent and shall cooperate fully with any
|
0008| investigation conducted by the superintendent. Failure to
|
0009| comply with this subsection shall constitute grounds for the
|
0010| superintendent to impose an administrative penalty pursuant to
|
0011| Section 59A-1-18 NMSA 1978 in addition to any applicable
|
0012| suspension, revocation or denial of a license or certificate
|
0013| of authority.
|
0014| B. A person who has a reasonable belief that an
|
0015| act of insurance fraud will be, is being or has been
|
0016| committed, or any person who collects, reviews or analyzes
|
0017| information concerning insurance fraud, may furnish and
|
0018| disclose any information in his possession concerning the
|
0019| insurance fraud to the superintendent or to an authorized
|
0020| representative of an insurer that requests the information for
|
0021| the purpose of detecting, prosecuting or preventing insurance
|
0022| fraud.
|
0023| C. If an insurer has a reasonable belief or
|
0024| probable cause to believe that an insurance fraud has been
|
0025| committed and has properly notified the superintendent of its
|
- 5 -
0001| suspicion, that notification shall toll any applicable time
|
0002| period in any unfair claims proceeding based on the alleged
|
0003| fraud until thirty days after determination by the
|
0004| superintendent and notice to the insurer that the
|
0005| superintendent will not recommend action on the claim.
|
0006| D. The superintendent, in cooperation with
|
0007| insurers or others, may establish a voluntary fund to reward
|
0008| persons not connected with the insurance industry who provide
|
0009| information or furnish evidence leading to the arrest and
|
0010| conviction of persons responsible for insurance fraud."
|
0011| Section 7. A new section of the New Mexico Insurance
|
0012| Code is enacted to read:
|
0013| "[|NEW MATERIAL|] IMMUNITY FROM CIVIL LIABILITY--PRIVATE
|
0014| INSURANCE FRAUD REPORTS AND ENFORCEMENT ACTIONS.--
|
0015| A. The provisions of Section 59A-4-21 NMSA 1978
|
0016| regarding immunity from civil liability for enforcement
|
0017| actions performed in good faith by the superintendent, his
|
0018| authorized representatives and examiners shall apply to the
|
0019| Insurance Fraud Act.
|
0020| B. A person acting without malice, fraudulent
|
0021| intent or bad faith shall not be subject to liability by
|
0022| virtue of reporting or furnishing, orally or in writing,
|
0023| information concerning suspected, anticipated or completed
|
0024| insurance fraud acts when the report or information is
|
0025| provided to:
|
- 6 -
0001| (1) the department of insurance, the
|
0002| superintendent or law enforcement agencies, their officials,
|
0003| agents or employees; or
|
0004| (2) the national association of insurance
|
0005| commissioners, a federal or state governmental agency or
|
0006| office established to detect and prevent insurance fraud, any
|
0007| other organization established for the same purpose and their
|
0008| agents, employees or designees.
|
0009| C. A person identified in Subsection B of this
|
0010| section or any of the person's officers, employees or agents
|
0011| when performing authorized activities, including the
|
0012| publication or dissemination of any related bulletin or
|
0013| reports, without malice, fraudulent intent or bad faith shall
|
0014| not be subject to civil liability for libel, slander or any
|
0015| other relevant tort and no civil cause of action of any nature
|
0016| shall exist against such persons.
|
0017| D. This section shall not abrogate or modify in
|
0018| any way any privilege or immunity recognized by common law or
|
0019| statute.
|
0020| E. The court shall award attorney fees and costs
|
0021| to any person identified in Subsection B of this section or
|
0022| any of that person's officers, employees or agents who is a
|
0023| prevailing party in a civil cause of action against him for
|
0024| libel, slander or any other relevant tort arising out of
|
0025| conduct pursuant to the Insurance Fraud Act if the party
|
- 7 -
0001| bringing the action was not substantially justified in
|
0002| bringing such action. For the purposes of this subsection,
|
0003| "substantially justified" means having a reasonable basis in
|
0004| law or fact at the time a proceeding was initiated.
|
0005| F. The relief provided in this section is in
|
0006| addition to remedies otherwise available against the same
|
0007| conduct under the common law or other laws of this state."
|
0008| Section 8. A new section of the New Mexico Insurance
|
0009| Code is enacted to read:
|
0010| "[|NEW MATERIAL|] WARNING REQUIRED.--Within six months of
|
0011| the effective date of the Insurance Fraud Act all claim forms
|
0012| and applications for insurance shall contain a statement
|
0013| permanently affixed to the application or claim form which
|
0014| states substantially as follows:
|
0015| "ANY PERSON WHO KNOWINGLY PRESENTS A FALSE OR FRAUDULENT
|
0016| CLAIM FOR PAYMENT OF A LOSS OR BENEFIT OR KNOWINGLY PRESENTS
|
0017| FALSE INFORMATION IN AN APPLICATION FOR INSURANCE IS GUILTY OF
|
0018| A CRIME AND MAY BE SUBJECT TO CIVIL FINES AND CRIMINAL
|
0019| PENALTIES.".
|
0020| The failure to include that statement shall not constitute a
|
0021| defense against prosecution for commission of insurance
|
0022| fraud."
|
0023| Section 9. A new section of the New Mexico Insurance
|
0024| Code is enacted to read:
|
0025| "[|NEW MATERIAL|] REPORT OF CONVICTION.--If any person
|
- 8 -
0001| licensed by any agency of any state or the federal government
|
0002| or holding credentials from any professional organization is
|
0003| convicted of insurance fraud in this state, the superintendent
|
0004| shall notify the appropriate licensing or credentialing
|
0005| authority of the judgment for appropriate disciplinary
|
0006| action."
|
0007| Section 10. A new section of the New Mexico Insurance
|
0008| Code is enacted to read:
|
0009| "[|NEW MATERIAL|] INSURER ANTI-FRAUD INITIATIVES--SPECIAL
|
0010| INVESTIGATIVE UNITS.--
|
0011| A. Within six months of the effective date of the
|
0012| Insurance Fraud Act and by July 1 of each succeeding year,
|
0013| every insurer who in the previous calendar year reported ten
|
0014| million dollars ($10,000,000) or more in direct written
|
0015| premiums in New Mexico shall establish, prepare, implement and
|
0016| submit to the superintendent an anti-fraud plan that is
|
0017| reasonably calculated to detect, prosecute and prevent
|
0018| insurance fraud. Any subsequent amendments to the plan shall
|
0019| be submitted to the superintendent at the time they are
|
0020| adopted.
|
0021| B. Each insurer's anti-fraud plan shall outline,
|
0022| at a minimum, specific procedures, appropriate to the type of
|
0023| insurance the insurer writes, to:
|
0024| (1) prevent, detect and investigate all forms
|
0025| of insurance fraud;
|
- 9 -
0001| (2) educate appropriate employees on fraud
|
0002| detection and the insurer's anti-fraud plan;
|
0003| (3) provide for the hiring or contracting of
|
0004| fraud investigators;
|
0005| (4) report insurance fraud to appropriate law
|
0006| enforcement and regulatory authorities; and
|
0007| (5) pursue restitution, where appropriate,
|
0008| for financial loss caused by insurance fraud.
|
0009| C. The superintendent may review each insurer's
|
0010| anti-fraud plan to determine if it adequately complies with
|
0011| the requirements of this section. The superintendent may
|
0012| examine the insurer to assure its compliance with anti-fraud
|
0013| plans submitted to the superintendent. The superintendent may
|
0014| require reasonable modifications to the insurer's anti-fraud
|
0015| plan or may require other reasonable remedial action if the
|
0016| review or examination reveals substantial noncompliance with
|
0017| the plan.
|
0018| D. The superintendent may require each insurer to
|
0019| file a summary of the insurer's anti-fraud activities and
|
0020| results. Anti-fraud plans and summaries submitted to the
|
0021| superintendent shall be privileged and confidential, shall not
|
0022| be a public record and shall not be subject to discovery or
|
0023| subpoena in any civil or criminal action; provided, however,
|
0024| that the superintendent may make summaries of aggregate data
|
0025| available to the public.
|
- 10 -
0001| E. This section confers no private right of
|
0002| action."
|
0003| Section 11. A new section of the New Mexico Insurance
|
0004| Code is enacted to read:
|
0005| "[|NEW MATERIAL|] INVESTIGATORS' POWERS.--The
|
0006| superintendent's investigators shall be peace officers
|
0007| pursuant to the provisions of Chapter 29, Article 1 NMSA 1978,
|
0008| except that they shall not be authorized to carry firearms."
|
0009| Section 12. A new section of the New Mexico Insurance
|
0010| Code is enacted to read:
|
0011| "[|NEW MATERIAL|] ATTORNEY GENERAL'S DUTIES.--When so
|
0012| requested by the superintendent, the attorney general shall
|
0013| commission as a special assistant attorney general an attorney
|
0014| selected by and contracted with by the superintendent and
|
0015| approved by the attorney general to assist the superintendent
|
0016| in carrying out his duties, including providing legal advice
|
0017| and prosecuting offenders. The actual costs associated with
|
0018| the assignment of assistant attorneys general to the
|
0019| superintendent shall be paid out of the fund."
|
0020| Section 13. A new section of the New Mexico Insurance
|
0021| Code is enacted to read:
|
0022| "[|NEW MATERIAL|] INSURANCE FRAUD POLICY ADVISORY GROUP.-
|
0023| -The superintendent may create an insurance fraud policy
|
0024| advisory group consisting of representatives of authorized
|
0025| insurers, consumers of insurance products not otherwise
|
- 11 -
0001| connected with the insurance industry and other appropriate
|
0002| persons. The superintendent shall appoint the members of the
|
0003| advisory group and shall provide by rule for the creation,
|
0004| governance, duties and termination of the advisory group. Any
|
0005| advisory group so created shall advise the superintendent with
|
0006| respect to the implementation of and other matters related to
|
0007| the Insurance Fraud Act when so requested by the
|
0008| superintendent."
|
0009| Section 14. A new section of the New Mexico Insurance
|
0010| Code is enacted to read:
|
0011| "[|NEW MATERIAL|] INSURANCE FRAUD FUND CREATED--
|
0012| APPROPRIATION.--
|
0013| A. There is hereby created an "insurance fraud
|
0014| fund" in the state treasury. All fees collected under the
|
0015| provisions of the Insurance Fraud Act shall be deposited in
|
0016| the fund and are subject to appropriation for use in paying
|
0017| the expenses incurred by the superintendent in carrying out
|
0018| the provisions of the Insurance Fraud Act. Interest on the
|
0019| fund shall be credited to the fund. The fund is a continuing,
|
0020| nonreverting fund.
|
0021| B. To implement the provisions of the Insurance
|
0022| Fraud Act, upon the effective date of the Insurance Fraud Act,
|
0023| the superintendent shall determine a rate of assessment and
|
0024| collect a fee from authorized insurers in an amount not less
|
0025| than two hundred dollars ($200) and not exceeding one-tenth of
|
- 12 -
0001| one percent of the correctly reported gross direct written
|
0002| premiums on policies written in New Mexico by the authorized
|
0003| insurers. The superintendent, after taking into account
|
0004| unexpended money produced by collection of the fee, shall
|
0005| adjust the rate of assessment each year to produce the amount
|
0006| of money that he estimates will be necessary to pay expenses
|
0007| incurred by the superintendent in carrying out the provisions
|
0008| of the Insurance Fraud Act.
|
0009| C. In calculating the gross direct written
|
0010| premiums for an insurer pursuant to the provisions of this
|
0011| section, all gross direct written premiums for workers'
|
0012| compensation insurance shall be excluded from the calculation.
|
0013| D. The fees required by this section are in
|
0014| addition to all other taxes and fees now imposed or that may
|
0015| be subsequently imposed."
|
0016| Section 15. A new section of the New Mexico Insurance
|
0017| Code is enacted to read:
|
0018| "[|NEW MATERIAL|] APPLICATION OF ACT TO OTHER ACTS.--
|
0019| A. No authority granted the superintendent under
|
0020| the Insurance Fraud Act shall be construed to abrogate or
|
0021| interfere with the authority of the safety and fraud division
|
0022| of the workers' compensation administration under the Workers'
|
0023| Compensation Act or of the medicaid fraud control unit under
|
0024| the Medicaid Fraud Act.
|
0025| B. Nothing in the Insurance Fraud Act shall:
|
- 13 -
0001| (1) preempt the authority of or relieve the
|
0002| duty of any other law enforcement agencies to investigate and
|
0003| prosecute alleged violations of law;
|
0004| (2) prevent or prohibit a person from
|
0005| voluntarily disclosing any information concerning insurance
|
0006| fraud to any law enforcement agency;
|
0007| (3) limit any of the powers granted elsewhere
|
0008| by law to the superintendent to investigate alleged violations
|
0009| of law and take appropriate action; or
|
0010| (4) interfere with the duties and authority
|
0011| of the workers' compensation administration."
|
0012| Section 16. A new section of the New Mexico Insurance
|
0013| Code is enacted to read:
|
0014| "[|NEW MATERIAL|] RULES.--The superintendent may
|
0015| promulgate rules deemed necessary or appropriate by the
|
0016| superintendent for the administration of the Insurance Fraud
|
0017| Act."
|
0018| Section 17. APPROPRIATION.--
|
0019| A. Five hundred thousand dollars ($500,000) is
|
0020| appropriated from the insurance fraud fund to the
|
0021| superintendent of insurance for expenditure in fiscal year
|
0022| 1999 for the purpose of carrying out the provisions of the
|
0023| Insurance Fraud Act. Any unexpended or unencumbered balance
|
0024| remaining at the end of fiscal year 1999 shall not revert to
|
0025| the general fund.
|
- 14 -
0001| B. The superintendent of insurance is authorized
|
0002| to employ three additional full-time employees to carry out
|
0003| the provisions of the Insurance Fraud Act.
|
0004| Section 18. REPEAL.--Sections 59A-16A-1 through
|
0005| 59A-16A-4 NMSA 1978 (being Laws 1991, Chapter 86, Sections 1
|
0006| through 4) are repealed.
|
0007| Section 19. EFFECTIVE DATE.--The effective date of the
|
0008| provisions of this act is July 1, 1998.
|
0009|
|