COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 381
(By Senator Minard)
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[Originating in the Committee on Banking and Insurance;
reported February 7, 2007.]
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A BILL to amend and reenact §33-4-8 of the Code of West Virginia,
1931, as amended; to amend and reenact §33-41-8 and §33-41-11
of said code; and to amend said code by adding thereto a new
section, designated §33-41-8b, all relating to insurance
fraud; clarifying that the insurance code contains specific
criminal penalties for felony offenses; authorizing certain
employees of the fraud unit of the Insurance Commissioner to
investigate fraud relating to the Public Employees Insurance
Agency and to present criminal complaints directly to a
magistrate; modifying the threshold for certain criminal
penalties; and extending the statute of limitations for
certain misdemeanors involving insurance fraud.
Be it enacted by the Legislature of West Virginia:
That §33-4-8 of the Code of West Virginia, 1931, as amended, be amended and reenacted; that §33-41-8 and §33-41-11 of said code
be amended and reenacted; and that said code be amended by adding
thereto a new section, designated §33-41-8b, all to read as
follows:
ARTICLE 4. GENERAL PROVISIONS.
§33-4-8. General penalty; statute of limitations.
(a) In addition to the refusal to renew, suspension or
revocation of a license, or penalty in lieu of the foregoing,
because of violation of any provision of this chapter, it is a
misdemeanor for any person to violate any provision of this
chapter,
and any unless the violation is by this chapter or other
law of this state declared to be a felony. Unless another penalty
is provided in this chapter or by the laws of this state, every
person convicted of a misdemeanor for the violation of any
provision of this chapter shall be punished by a fine of not more
than one thousand dollars or by
imprisonment confinement in jail
for not more than six months, or by both
such fine and
imprisonment
confinement.
(b) Notwithstanding any provision of this code to the
contrary, a prosecution for any misdemeanor offense that involves
fraudulent activity related to the business of insurance and which
arises out of sections thirteen, fourteen, twenty, twenty-a,
twenty-four, twenty-four-e, twenty-four-f, twenty-four-g and
thirty-seven of article three, chapter sixty-one of this code shall
be commenced within three years after the offense is committed.
ARTICLE 41. INSURANCE FRAUD PREVENTION ACT.
§33-41-8. Creation of insurance fraud unit; purpose; duties;
personnel qualifications.
(a) There is established the West Virginia Insurance Fraud
Unit within the office of the Insurance Commissioner of West
Virginia. The Commissioner may employ full-time supervisory, legal
and investigative personnel for the unit, who shall be qualified by
training and experience in the areas of detection, investigation or
prosecution of fraud within and against the insurance industry to
perform the duties of their positions. The Director of the fraud
unit is a full-time position and shall be appointed by the
Commissioner and serve at his or her will and pleasure. The
Commissioner shall provide office space, equipment, supplies,
clerical and other staff that is necessary for the unit to carry
out its duties and responsibilities under this article.
(b) The fraud unit may in its discretion:
(1) Initiate inquiries and conduct investigations when the
unit has cause to believe violations of any of the following
provisions of this code relating to the business of insurance have
been or are being committed: Chapter twenty-three; chapter
thirty-three; article three of chapter sixty-one;
and section five,
article four of chapter sixty-one;
and article sixteen of chapter
five.
(2) Review reports or complaints of alleged fraud related to the business of insurance activities from federal, state and local
law-enforcement and regulatory agencies, persons engaged in the
business of insurance and the general public to determine whether
the reports require further investigation; and
(3) Conduct independent examinations of alleged fraudulent
activity related to the business of insurance and undertake
independent studies to determine the extent of fraudulent insurance
acts.
(c) The insurance fraud unit may:
(1) Employ and train personnel to achieve the purposes of this
article and to employ legal counsel, investigators, auditors and
clerical support personnel and other personnel as the Commissioner
determines necessary from time to time to accomplish the purposes
of this article;
(2) Inspect, copy or collect records and evidence;
(3) Serve subpoenas issued by grand juries and trial courts in
criminal matters;
(4) Share records and evidence with federal, state or local
law-enforcement or regulatory agencies, and enter into interagency
agreements. For purposes of carrying out investigations under this
article, the unit shall be deemed a criminal justice agency under
all federal and state laws and regulations and as such shall have
access to any information that is available to other criminal
justice agencies concerning violations of the insurance laws of
West Virginia or related criminal laws;
(5) Make criminal referrals to the county prosecutors;
(6) Conduct investigations outside this state. If the
information the insurance fraud unit seeks to obtain is located
outside this state, the person from whom the information is sought
may make the information available to the insurance fraud unit to
examine at the place where the information is located. The
insurance fraud unit may designate representatives, including
officials of the state in which the matter is located, to inspect
the information on behalf of the insurance fraud unit, and the
insurance fraud unit may respond to similar requests from officials
of other states;
(7) The insurance fraud unit may initiate investigations and
participate in the development of, and if necessary, the
prosecution of any health care provider, including a provider of
rehabilitation services, suspected of fraudulent activity related
to the business of insurance;
(8) Specific personnel, designated by the Commissioner, shall
be permitted to operate vehicles owned or leased for the state
displaying Class A registration plates;
(9) Notwithstanding any provision of this code to the
contrary, specific personnel designated by the Commissioner may
carry firearms in the course of their official duties after meeting
specialized qualifications established by the Governor's Committee
on Crime, Delinquency and Correction, which shall include the
successful completion of handgun training provided to
law-enforcement officers by the West Virginia State Police:
Provided, That nothing in this subsection shall be construed to include any person designated by the Commissioner as a
law-enforcement officer as that term is defined by the provisions
of section one, article twenty-nine, chapter thirty of this code;
and
(10) The insurance fraud unit shall not be subject to the
provisions of article nine-a, chapter six of this code and the
investigations conducted by the insurance fraud unit and the
materials placed in the files of the unit as a result of any such
investigation are exempt from public disclosure under the
provisions of chapter twenty-nine-b of this code.
(d) The insurance fraud unit shall perform other duties as may
be assigned to it by the Commissioner.
§33-41-8b. Fraud investigators may present complaint directly to
magistrate.
Notwithstanding any other provision of this code to the
contrary, any person authorized under this article to initiate and
conduct investigations may submit complaints directly to a
magistrate upon review and approval by the prosecuting attorney, if
the complaint is based upon violations of the provisions of chapter
twenty-three, chapter thirty-three, article three of chapter
sixty-one, and section five, article four of chapter sixty-one
relating to the business of insurance.
The complaint shall be in the form of a written statement of
the essential facts constituting the offense charged. The
complaint shall be presented to and sworn before a magistrate in the county where the offense is alleged to have occurred.
If it appears from the complaint, or from an affidavit or
affidavits filed with the complaint, that there is probable cause
to believe that an offense has been committed and that the
defendant committed it, a warrant for the arrest of the defendant
shall be issued to any officer authorized by law to arrest persons
charged with offenses against the state.
§33-41-11. Fraudulent claims to insurance companies.
(a) Any person who knowingly and willfully and with intent to
defraud submits a materially false statement in support of a claim
for insurance benefits or payment pursuant to a policy of insurance
or who conspires to do so is guilty of a crime and is subject to
the penalties set forth in the provisions of this section.
(b) Any person who commits a violation of the provisions of
subsection (a) of this section where the benefit sought
exceeds is
one thousand dollars
or more in value is guilty of a felony and,
upon conviction thereof, shall be
confined imprisoned in a
correctional facility for not less than one nor more than ten
years, fined not more than ten thousand dollars, or both or in the
discretion of the circuit court confined in
a county or regional
jail for not more than one year and
so fined.
(c) Any person who commits a violation of the provisions of
subsection (a) of this section where the benefit sought is
less
than one thousand dollars
or less in value, is guilty of a
misdemeanor and, upon conviction thereof, shall be confined in
a
county or regional jail for not more than one year, fined not more than two thousand five hundred dollars, or both.
(d) Any person convicted of a violation of this section is
subject to the restitution provisions of article eleven-a, chapter
sixty-one of this code.
(e) In addition to the foregoing provisions, the offenses
enumerated in sections twenty-four-e through twenty-four-h,
inclusive, article three, chapter sixty-one of this code are
applicable to matters concerning workers' compensation insurance.
(f) The circuit court may award to the unit or other
law-enforcement agency investigating a violation of this section or
other criminal offense related to the business of insurance its
cost of investigation.
(g) Notwithstanding any provision of this code to the
contrary, a prosecution for any misdemeanor violation of this
section shall be commenced within three years after the violation
was committed.
NOTE: The purpose of this bill is to clarify the felony
offenses provided in the insurance statutes. The bill authorizes
certain employees of the fraud unit of the Insurance Commission to
present criminal complaints directly to a magistrate and it extends
the statute of limitations for certain misdemeanors involving
insurance fraud to three years.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§33-41-8b is new; therefore, strike-throughs and underscoring
have been omitted.
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