hb4488 sub

COMMITTEE SUBSTITUTE
FOR

H. B. 4488

(By Mr. Speaker, Mr. Kiss, and Delegates Martin,
Michael, Douglas, Trump and L. White)

(Originating in the Committee on Government Organization)
[February 29, 2000]

A BILL to amend and reenact section two, article twenty-two, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact section two, article twenty-three of said chapter; to amend and reenact section four, article twenty-four of said chapter; to amend and reenact section six, article twenty-five of said chapter; to amend and reenact section twenty-four, article twenty-five-a of said chapter; to amend and reenact sections one and two, article forty-one of said chapter; to further amend said article by adding thereto ten new sections, designated sections four, five, six, seven, eight, nine, ten, eleven, twelve, and thirteen; and to amend chapter sixty-one of said code by adding thereto a new article, designated article five-b, all relating to insurance fraud; subjecting farmers' mutual insurance companies, fraternal benefit societies, certain hospital, medical, dental and health services corporations, health care corporations, and health maintenance organizations to insurance fraud provisions; defining terms; establishing an insurance fraud unit within the division of insurance; authorizing the promulgation of rules and requiring the filing of annual reports; establishing powers and duties of the unit; outlining investigative powers and procedures; providing confidentiality and immunity of the unit operations; prohibiting insurance fraud; establishing criminal penalties and fines; authorizing prosecution for fraudulent acts; authorizing special prosecutors; specifying duties of insurers; authorizing funding by an assessment of insurers; establishing the West Virginia insurance fraud prevention act; defining legislative intent and terms; creating misdemeanor and felony offenses for the commission of fraudulent acts; and creating penalties, exceptions and immunities.

Be it enacted by the Legislature of West Virginia:

That section two, article twenty-two, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that section two, article twenty-three of said chapter be amended and reenacted; that section four, article twenty-four of said chapter be amended and reenacted; that section six, article twenty-five of said chapter be amended and reenacted; that section twenty- four, article twenty-five-a of said chapter be amended and reenacted; that sections one and two, article forty-one of said chapter be amended and reenacted; that said article forty-one be further amended by adding thereto ten new sections, designated sections four, five, six, seven, eight, nine, ten, eleven, twelve and thirteen; and that chapter sixty-one of said code be amended by adding thereto a new article, designated article five-b, all to read as follows:
CHAPTER 33. INSURANCE.
ARTICLE 22. FARMERS' MUTUAL FIRE INSURANCE COMPANIES.
§33-22-2. Applicability of other provisions.

Each company to the same extent such provisions are applicable to domestic mutual insurers shall be governed by and be subject to the following articles of this chapter: Article one (definitions); article two (insurance commissioner); article four (general provisions) except that section sixteen of said article shall not be applicable thereto; article seven (assets and liabilities); article ten (rehabilitation and liquidation) except that under the provisions of section thirty-two of said article assessments shall not be levied against any former member of a farmers' mutual fire insurance company who is no longer a member of the company at the time the order to show cause was issued; article eleven (unfair trade practices); article twelve (agents, brokers and solicitors) except that the agent's license fee shall be five dollars; article twenty-six (West Virginia insurance guaranty association act); article twenty-seven (insurance holding company systems); article thirty (mine subsidence insurance) except that under the provisions of section six of said article, a farmers' mutual insurance company shall have the option of offering mine subsidence coverage to all of its policyholders but shall not be required to do so; article thirty-three (annual audited financial report); article thirty-four (administrative supervision); article thirty-four-a (standards and commissioner's authority for companies deemed to be in hazardous financial condition); article thirty-five (criminal sanctions for failure to report impairment); article thirty-six (business transacted with producer-controlled property-casualty insurer); article thirty-seven (managing general agents); article thirty-nine (disclosure of material transactions); article forty (risk-based capital for insurers); and article forty-one ~~(privileges and~~ ~~immunity)~~ (insurance fraud); but only to the extent these provisions are not inconsistent with the provisions of this article.
ARTICLE 23. FRATERNAL BENEFIT SOCIETIES.
§33-23-2. Applicability of other provisions.

Every fraternal benefit society shall be governed and be subject to the same extent as other insurers transacting like kinds of insurance, to the following articles of this chapter: Article one (definitions); article two (insurance commissioner); article four (general provisions); section thirty, article six (fee for form and rate filing); article seven (assets and liabilities); article ten (rehabilitation and liquidation); article eleven (unfair trade practices); article twelve (agents, brokers, solicitors and excess lines); article thirteen (life insurance); article fifteen-a (long-term care insurance); article twenty-seven (insurance holding company systems); article thirty-three (annual audited financial report); article thirty-four (administrative supervision); article thirty-four-a (standards and commissioner's authority for companies deemed to be in hazardous financial condition); article thirty-five (criminal sanctions for failure to report impairment); article thirty-seven (managing general agents); ~~and~~ article thirty-nine (disclosure of material transactions); and article forty-one (insurance fraud).
ARTICLE 24. HOSPITAL SERVICE CORPORATIONS, MEDICAL SERVICE CORPORATIONS, DENTAL SERVICE CORPORATIONS AND HEALTH SERVICE CORPORATIONS.
§33-24-4. Exemptions; applicability of insurance laws.

Every corporation defined in section two of this article is hereby declared to be a scientific, nonprofit institution and exempt from the payment of all property and other taxes. Every corporation, to the same extent the provisions are applicable to insurers transacting similar kinds of insurance and not inconsistent with the provisions of this article, shall be governed by and be subject to the provisions as hereinbelow indicated, of the following articles of this chapter: Article two (insurance commissioner), except that, under section nine of said article, examinations shall be conducted at least once every four years; article four (general provisions), except that section sixteen of said article shall not be applicable thereto; section thirty-four, article six (fee for form and rate filing); article six-c (guaranteed loss ratio); article seven (assets and liabilities); article eleven (unfair trade practices); article twelve (agents, brokers and solicitors), except that the agent's license fee shall be twenty-five dollars; section two-a, article fifteen (definitions); section two-b, article fifteen (guaranteed issue); section two-d, article fifteen (exception to guaranteed renewability); section two-e, article fifteen (discontinuation of coverage); section two-f, article fifteen (certification of creditable coverage); section two-g, article fifteen (applicability); section four-e, article fifteen (benefits for mothers and newborns); section fourteen, article fifteen (individual accident and sickness insurance); section sixteen, article fifteen (coverage of children); section eighteen, article fifteen (equal treatment of state agency); section nineteen, article fifteen (coordination of benefits with medicaid); article fifteen-a (long-term care insurance); article fifteen-c (diabetes insurance); section three, article sixteen (required policy provisions); section three-a, article sixteen (mental health); section three-c, article sixteen (group accident and sickness insurance); section three-d, article sixteen medicare supplement insurance); section three-f, article sixteen (treatment of temporomandibular joint disorder and craniomandibular disorder); section three-j, article sixteen (benefits for mothers and newborns); section three-k, article sixteen (preexisting condition exclusions); section three-l, article sixteen (guaranteed renewability); section three-m, article sixteen (creditable coverage); section three-n, article sixteen (eligibility for enrollment); section eleven, article sixteen (coverage of children); section thirteen, article sixteen (equal treatment of state agency); section fourteen, article sixteen (coordination of benefits with medicaid); section sixteen, article sixteen (diabetes insurance); article sixteen-a (group health insurance conversion); article sixteen-c (small employer group policies); article sixteen-d (marketing and rate practices for small employers); article twenty-six-a (West Virginia life and health insurance guaranty association act), after the first day of October, one thousand nine hundred ninety-one; article twenty-seven (insurance holding company systems); article twenty-eight (individual accident and sickness insurance minimum standards); article thirty-three (annual audited financial report); article thirty-four (administrative supervision); article thirty-four-a (standards and commissioner's authority for companies deemed to be in hazardous financial condition); article thirty-five (criminal sanctions for failure to report impairment); article thirty-seven (managing general agents); and article forty-one ~~(privileges and immunity)~~ (insurance fraud); and no other provision of this chapter may apply to these corporations unless specifically made applicable by the provisions of this article. If, however, the corporation is converted into a corporation organized for a pecuniary profit or if it transacts business without having obtained a license as required by section five of this article, it shall thereupon forfeit its right to these exemptions.
ARTICLE 25. HEALTH CARE CORPORATIONS.
§33-25-6. Supervision and regulation by insurance commissioner; exemption from insurance laws.

Corporations organized under this article are subject to supervision and regulation of the insurance commissioner. The corporations organized under this article, to the same extent these provisions are applicable to insurers transacting similar kinds of insurance and not inconsistent with the provisions of this article, shall be governed by and be subject to the provisions as hereinbelow indicated of the following articles of this chapter: Article four (general provisions), except that section sixteen of said article shall not be applicable thereto; article six-c (guaranteed loss ratio); article seven (assets and liabilities); article eight (investments); article ten (rehabilitation and liquidation); section two-a, article fifteen (definitions); section two-b, article fifteen (guaranteed issue); section two-d, article fifteen (exception to guaranteed renewability); section two-e, article fifteen (discontinuation of coverage); section two-f, article fifteen (certification of creditable coverage); section two-g, article fifteen (applicability); section four-e, article fifteen (benefits for mothers and newborns); section fourteen, article fifteen (individual accident and sickness insurance); section sixteen, article fifteen (coverage of children); section eighteen, article fifteen (equal treatment of state agency); section nineteen, article fifteen (coordination of benefits with medicaid); article fifteen-c (diabetes insurance); section three, article sixteen (required policy provisions); section three-a, article sixteen (mental health); section three-j, article sixteen (benefits for mothers and newborns); section three-k, article sixteen (preexisting condition exclusions); section three-l, article sixteen (guaranteed renewability); section three-m, article sixteen (creditable coverage); section three-n, article sixteen (eligibility for enrollment); section eleven, article sixteen (coverage of children); section thirteen, article sixteen (equal treatment of state agency); section fourteen, article sixteen (coordination of benefits with medicaid); section sixteen, article sixteen (diabetes insurance); article sixteen-a (group health insurance conversion); article sixteen-c (small employer group policies); article sixteen-d (marketing and rate practices for small employers); article twenty-six-a (West Virginia life and health insurance guaranty association act); article twenty-seven (insurance holding company systems); article thirty-three (annual audited financial report); article thirty-four-a (standards and commissioner's authority for companies deemed to be in hazardous financial condition); article thirty-five (criminal sanctions for failure to report impairment); article thirty-seven (managing general agents); and article forty-one ~~(privileges and immunity)~~ (insurance fraud); and no other provision of this chapter may apply to these corporations unless specifically made applicable by the provisions of this article.
ARTICLE 25A. HEALTH MAINTENANCE ORGANIZATION ACT.
§33-25A-24. Statutory construction and relationship to other laws.

(a) Except as otherwise provided in this article, provisions of the insurance laws and provisions of hospital or medical service corporation laws are not applicable to any health maintenance organization granted a certificate of authority under this article. The provisions of this article shall not apply to an insurer or hospital or medical service corporation licensed and regulated pursuant to the insurance laws or the hospital or medical service corporation laws of this state except with respect to its health maintenance corporation activities authorized and regulated pursuant to this article. The provisions of this article shall not apply to an entity properly licensed by a reciprocal state to provide health care services to employer groups, where residents of West Virginia are members of an employer group, and the employer group contract is entered into in the reciprocal state. For purposes of this subsection, a "reciprocal state" means a state which physically borders West Virginia and which has subscriber or enrollee hold harmless requirements substantially similar to those set out in section seven-a of this article.

(b) Factually accurate advertising or solicitation regarding the range of services provided, the premiums and copayments charged, the sites of services and hours of operation, and any other quantifiable, nonprofessional aspects of its operation by a health maintenance organization granted a certificate of authority, or its representative shall not be construed to violate any provision of law relating to solicitation or advertising by health professions: Provided, That nothing contained in this subsection shall be construed as authorizing any solicitation or advertising which identifies or refers to any individual provider or makes any qualitative judgment concerning any provider.

(c) Any health maintenance organization authorized under this article shall not be considered to be practicing medicine and is exempt from the provisions of chapter thirty of this code, relating to the practice of medicine.

(d) The provisions of sections fifteen and twenty, article four (general provisions); section seventeen, article six (noncomplying forms); article six-c (guaranteed loss ratio); article seven (assets and liabilities); article eight (investments); article nine (administration of deposits); article twelve (agents, brokers, solicitors and excess line); section fourteen, article fifteen (individual accident and sickness insurance); section sixteen, article fifteen (coverage of children); section eighteen, article fifteen (equal treatment of state agency); section nineteen, article fifteen (coordination of benefits with medicaid); article fifteen-b (uniform health care administration act); section three, article sixteen (required policy provisions); section three-f, article sixteen (treatment of temporomandibular disorder and craniomandibular disorder); section eleven, article sixteen (coverage of children); section thirteen, article sixteen (equal treatment of state agency); section fourteen, article sixteen (coordination of benefits with medicaid); article sixteen-a (group health insurance conversion); article sixteen-d (marketing and rate practices for small employers); article twenty-five-c (health maintenance organization patient bill of rights); article twenty-seven (insurance holding company systems); article thirty-four-a (standards and commissioner's authority for companies deemed to be in hazardous financial condition); article thirty-five (criminal sanctions for failure to report impairment); article thirty-seven (managing general agents); article thirty-nine (disclosure of material transactions); article forty-one ~~(privileges and immunity)~~ (insurance fraud); and article forty-two (women's access to health care) shall be applicable to any health maintenance organization granted a certificate of authority under this article. In circumstances where the code provisions made applicable to health maintenance organizations by this section refer to the "insurer", the "corporation" or words of similar import, the language shall be construed to include health maintenance organizations.

(e) Any long-term care insurance policy delivered or issued for delivery in this state by a health maintenance organization shall comply with the provisions of article fifteen-a of this chapter.

(f) A health maintenance organization granted a certificate of authority under this article shall be exempt from paying municipal business and occupation taxes on gross income it receives from its enrollees, or from their employers or others on their behalf, for health care items or services provided directly or indirectly by the health maintenance organization. This exemption applies to all taxable years through the thirty-first day of December, one thousand nine hundred ninety-six. The commissioner and the tax department shall conduct a study of the appropriations of imposition of the municipal business and occupation tax or other tax on health maintenance organizations, and shall report to the regular session of the Legislature, one thousand nine hundred ninety-seven, on their findings, conclusions and recommendations, together with drafts of any legislation necessary to effectuate their recommendations.
ARTICLE 41. INSURANCE FRAUD.
§33-41-1. Legislative purpose and findings.

It is the finding of the Legislature that the business of insurance involves many transactions that have potential for fraud, abuse and other illegal activities. It is the further finding of the Legislature that insurance fraud is a crime pursuant to state and federal statutes. The Legislature further finds that state, local and federal law enforcement and regulatory agencies may prosecute fraud in accordance with these statutes, thereby ultimately reducing the cost of insurance fraud to insurers and consumers. It is the purpose of this article to encourage the detection, investigation and prosecution of persons engaging in insurance fraud by providing certain privileges and immunity. It is the purpose of this article to permit full utilization of the expertise of the commissioner by the establishment of an insurance fraud unit within the division of insurance and to provide it with the responsibility and authority for detecting, investigating and controlling fraudulent insurance acts more effectively, halting fraudulent insurance acts, and assisting and receiving assistance from state, local and federal law-enforcement and regulatory agencies in enforcing laws prohibiting fraudulent insurance acts and thereby ultimately reducing the costs of insurance fraud to insurers and consumers. §33-41-2. Definitions.

The following words when used in this article shall have the meanings set forth in this section, unless the context clearly indicates otherwise:

(a) "Authorized agency" means:

(1) The division of public safety of this state, the police department of any municipality, any county sheriff's department and any duly constituted criminal investigative department or agency of the United States or of this state;

(2) The prosecuting attorney of any county of this state or of the United States or any district thereof;

(3) The state insurance commissioner or the commissioner's employees, agents or representatives;

(4) The national association of insurance commissioners; or

(5) A person or agency involved in the prevention and detection of fraud or that person's or agency's agents, employees or representatives.

(b) "Benefits" means money payments, goods, services or any other thing of value.

(d) "Commissioner" means the insurance commissioner of the state of West Virginia.

(e) "Director" means the director of the insurance fraud unit established pursuant to this article.

(f) "Financial loss" includes, but is not limited to, loss of earnings, out-of-pocket and other expenses, repair and replacements costs and claims payments made by any insurer, provider or person.

(g) "Health care provider" means any person, firm or corporation providing health care services or goods.

(h) ~~(e)~~ "Insurance fraud" ~~includes, but is not limited to,~~ means instances where any ~~person who, with the intent to injure, defraud or deceive any~~ person, insurer, or agency intentionally:

(1) ~~(i)~~ Presents or causes to be presented to any insurer or insurance representative any written or oral statement as part of or in support of an application for insurance or a claim for payment or other benefit pursuant to an insurance policy ~~knowing that such statement contains any false, incomplete or mesleading information concerning any fact or thing material to the application, claim or benefit~~ which contains any false representation or concealment as to any material fact or thing, with knowledge that it is not true and correct and with the intent that the representation or concealment be relied upon by the insurer;

(2) ~~(iii)~~ Solicits, offers or receives any remuneration, including any kickback, rebate or bribe, directly or indirectly, with the intent of causing an expenditure of moneys from any person or insurer which would not otherwise be payable under an applicable insurance policy; ~~and~~
(3) ~~(ii)~~ Submits or causes to be submitted to any authorized agency any written or oral statement as part of or in support of any application, audit, claim, report, investigation, valuation, statement, appraisal, estimation of loss, publication, certificate, actuarial report or study, filing, financial statement, tax return, rate request, petition or any other such document knowing that such statement contains any false, incomplete or misleading information concerning any fact or thing material thereto;

(4) Removes, conceals, alters or destroys the assets or records of an insurer, reinsurer or other person engaged in the business of insurance with the intent to interfere with or to obstruct any investigation or examination conducted under this chapter;

(5) ~~(iv)~~ Assists, abets, solicits or conspires with another to commit insurance fraud; or

(6) Solicits, offers or receives any remuneration, including any payment, kickback, rebate or bribe, directly or indirectly, with the intent of causing an expenditure of moneys from any person or insurer knowing that the benefits or any part of the benefits for which the solicitation, offer or receipt of remuneration was made will not be available or provided.

(i) "Insured" means any person, as defined herein, who is entitled to insurance coverage, benefits or protection pursuant to a policy of insurance issued by any insurer, including, but not limited to, the policyholder, family members included as insureds or beneficiaries and any person entitled to coverage pursuant to the terms of the policy.

(j) "Insurer" means any person engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative, regulatory or taxing authority of the commissioner, including, but not limited to, any domestic or foreign stock company, mutual company, mutual protective association, farmers' mutual fire companies, fraternal benefit society, reciprocal or interinsurance exchange, nonprofit medical care corporation, nonprofit health care corporation, nonprofit hospital service association, nonprofit dental care corporation, health maintenance organization, captive insurance company, risk retention group or other insurer, regardless of the type of coverage written, benefits provided or guarantees made by each. A person engaging in any of these activities is an insurer regardless of whether the person is acting in violation of laws requiring a certificate of authority or regardless of whether the person denies being an insurer.

(k) "Insurance representative" means any person, firm or corporation acting on an insurer's behalf, including, but not limited to, any agent, adjuster, officer, director, employee or investigator.

(l) ~~(f)~~ "Person" means any individual, partnership, firm, association, corporation, company, insurer, organization, society, reciprocal, business trust or any other legal entity. "Person" also includes hospital service corporations, medical service corporations and dental service corporations as defined in article twenty-four of this chapter, health care corporations as defined in article twenty-five of this chapter, or a health maintenance organization organized pursuant to article twenty-five-a of this chapter.

(m) "Statement" means any written or oral representation made to any person, insurer or authorized agency. A statement includes, but is not limited to, any oral report or representation; any insurance application, policy, notice or statement; any proof of loss, bill of lading, receipt for payment, invoice, account, estimate of property damages, or other evidence of loss, injury or expense; any bill for services, diagnosis, prescription, hospital or doctor record, X ray, test result or other evidence of treatment, services or expense; and any application, report, actuarial study, rate request or other document submitted or required to be submitted to any authorized agency. A statement also includes any of the above recorded by electronic or other media.

(n) "Unit" means the insurance fraud unit established pursuant to the provisions of this article acting collectively or by its duly authorized representatives.

§33-41-4. Insurance fraud unit established; director to be appointed; office space and staff provisions; promulgation of rules; annual report.

(a) There is hereby established an insurance fraud unit within the division of insurance. The commissioner shall appoint a full-time director of the insurance fraud unit who shall report to the commissioner. The director shall serve at the pleasure of the commissioner and shall be qualified by training and experience to perform the duties of the position. The commissioner shall provide the clerical and other staff appropriate for the unit to fulfill its responsibilities under this article.

(b) The insurance commissioner shall provide office space, hearing rooms, equipment and supplies for the insurance fraud unit and its staff.

(c) The commissioner may propose legislative rules for legislative approval pursuant to article three, chapter twenty-nine-a of this code in order to effect the purposes of this article.

(d) On or before the first day of each regular session of the Legislature, the commissioner shall file with the governor, the clerk of the Senate and the clerk of the House of Delegates a report detailing the finalized actions taken by the insurance fraud unit in the preceding fiscal year.
§33-41-5. Powers and duties.

(a) The insurance fraud unit created pursuant to this article shall have the following powers and duties:

(1) To 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 herein;

(2) To initiate independent inquiries and conduct independent investigations when the director has cause to believe that an act of insurance fraud has been, or is currently being committed;

(3) To review reports or complaints of alleged insurance fraud from federal, state and local police, other law-enforcement authorities, governmental agencies or units, insurers and the general public; determine whether the reports require further investigation; and conduct the investigations;

(4) To administer oaths or affirmations;

(5) To issue subpoenas for witnesses and documents relevant to an investigation, including information concerning the existence, description, nature, custody, condition and location of any book, record, document or other tangible thing and the identity and location of persons having knowledge of relevant facts or any matter reasonably calculated to lead to the discovery of admissible evidence;

(6) To refer to the appropriate prosecuting authority all violations of applicable state and federal laws which govern or relate to insurance fraud;

(7) Subject to the provisions of section nine of this article, To petition any judge or court in this state for the appointment of a special prosecutor on a case-by-case basis as the need arises;

(8) To cooperate with federal or state government officials and insurers to investigate, detect, deter and prosecute insurance fraud and abuse in this state; and

(9) To communicate and exchange data and information with federal or state agencies, divisions, departments or officers and with health care providers, insurers or other interested parties regarding insurance fraud issues.

(b) The insurance fraud unit is further empowered to perform other duties as may be necessary to effect the purposes of the unit or as may be prescribed by the insurance commissioner.
§33-41-6. Investigations; procedures; subpoena powers.

(a) When the unit has reasonable cause to believe that a person has engaged in an act or activity which is subject to prosecution under this article, the unit shall make an investigation to determine if the act has been committed and report the findings of the investigation to the director.

(b) If the unit seeks evidence, documentation or related materials located within this state pertinent to an investigation or examination, the unit may by request or subpoena gain access to the material. The material shall be made available to the unit or shall be made available for inspection, examination and copying by a designated representative of the unit.

(c) If documents necessary to an investigation of the unit shall appear to be located outside the state, the documents shall be made available by the person or entity within the jurisdiction of the state having control over the documents either at a convenient location within the state or, if no such person or entity within this state exists at the place outside the state where the documents are maintained.

(d) Upon failure of a person to comply with a subpoena or subpoena duces tecum or failure of a person to give testimony without lawful excuse and upon reasonable notice to all persons affected thereby, the unit may apply to the circuit court of the county in which compliance is sought for appropriate orders to compel obedience with the provisions of this section.
§33-41-7. Confidentiality, immunity from subpoena, and immunity of commissioner and staff.

(a) The unit may not make public the name or identity of a person whose acts or conduct is investigated pursuant to this section or the facts disclosed in the investigation except as the same may be used in any legal action or enforcement proceeding brought pursuant to this article or any other provision of this code.

(b) All papers, records, documents, reports, materials or other evidence relevant to an insurance fraud investigation or examination shall remain confidential and may not be subject to public inspection so long as the director determines it is reasonably necessary to protect the privacy of the person or matter investigated or examined, to protect the person furnishing the material, or to be in the public interest.

(c) The papers, records, documents, reports, materials or other evidence relevant to an insurance fraud investigation or examination may not be subject to subpoena until opened for public inspection by the director.

(d) The commissioner, the director, and any employee, agent, representative or staff member are not subject to civil liability of any nature arising out of any official activities of their respective offices: Provided, That nothing herein abrogates or modifies in any manner any constitutional immunity or common law or statutory privilege or immunity heretofore enjoyed by any person identified in this subsection.
§33-41-8. Penalties.

Any person who commits an act of insurance fraud is guilty of a felony or misdemeanor, as determined by the provisions of sections three, four, and five, article five-b, chapter sixty-one of this code and, upon conviction thereof, shall be fined, imprisoned or both, as more particularly provided in those sections. In addition to any fine or imprisonment, any person found to be in violation of the provisions of this section is required to make full restitution to the person injured or damaged by the fraudulent act in a manner to be determined by the court.
§33-41-9. Prosecution for fraudulent acts; special prosecutors; director's report to the commissioner.

(a) If, upon review of any report submitted by the unit, the director determines that adequate evidence exists to believe that an act of insurance fraud has been committed, the director shall present any evidence of alleged insurance fraud to the prosecutor in the jurisdiction where the alleged acts of insurance fraud took place and request appropriate criminal prosecution.

(b) Upon receipt of the report and request from the director, the prosecutor may, where deemed appropriate, criminally prosecute any person for insurance fraud or other appropriate criminal offenses.

(c) Upon application of the prosecutor or the director, the court of appropriate jurisdiction may appoint a special prosecutor to criminally prosecute any person for insurance fraud or other appropriate criminal offenses.

(d) The director shall annually report to the insurance commissioner as to all referred fraud cases and the results or status of the cases. The commissioner shall include the director's report in the annual report to the governor and the Legislature required pursuant to section three of this article.
§33-41-10. Duties of insurers.

(a) Any insurer which has a reasonable belief that an act of insurance fraud is being, or has been, committed with a payment, benefit or loss or with a potential payment, benefit or loss of one thousand dollars or greater shall send to the director, on a form prescribed by the commissioner, any and all information and additional information relating to the act as the director or unit may require.

(b) Insurers are required to give or deliver to insureds and applicants for insurance in this state or upon claims arising in this state in a form and manner as prescribed by the commissioner the following statement or a substantially similar statement:

"Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information material to an application for insurance is guilty of a crime and may be subject to fines and confinement in prison."
§33-41-11. Other law-enforcement authorities.

Nothing in this article preempts the authority or relieves the duty of any other law-enforcement agency to investigate, examine and prosecute suspected violations of law; prevents or prohibits a person from voluntarily disclosing any information concerning insurance fraud to any law-enforcement agency other than the unit; or limits any of the powers granted elsewhere by the laws of this state to the commissioner of insurance or the state police to investigate and examine possible violations of law and to take appropriate action.
§33-41-12. Remedies and penalties not exclusive.

The remedies and penalties provided in this article are in addition to those remedies and penalties provided elsewhere by law.
§33-41-13. Funding.

All insurers shall annually pay to the commissioner on or before the first day of July, two thousand, and every first day of July thereafter, a fraud unit assessment fee of five hundred dollars. This fee shall be paid to the treasurer of the state to the credit of a special revolving fund to be known as the "Commissioner's Fraud Unit Revolving Fund" which is hereby established. The commissioner may at his or her discretion, upon notice to the insurers subject to this section, increase this fraud unit assessment fee by one hundred fifty dollar increments on an annual basis or levy an additional fraud unit assessment fee of one hundred fifty dollars in any calendar year. In no event may the total fraud unit assessment fee levied exceed eight hundred dollars per insurer in any calendar year. Any funds expended or obligated by the commissioner from the "Commissioner's Fraud Unit Revolving Fund" may be expended or obligated solely for defrayment of the costs of performing the duties set forth in this article.

Any balance in the "Commissioner's Fraud Unit Revolving Fund" at the end of any fiscal year shall remain in the revolving account for use by the insurance fraud unit within the division of insurance for defrayment of the costs of performing the duties set forth in this article in the ensuing fiscal year.
CHAPTER 61. CRIMES AND THEIR PUNISHMENT.
ARTICLE 5B. WEST VIRGINIA INSURANCE FRAUD PREVENTION ACT.
§61-5B-1. Short title.

This article may be known and cited as the "West Virginia Insurance Fraud Prevention Act."
§61-5B-2. Legislative intent.

The Legislature of the state of West Virginia hereby recognizes that insurance fraud results in increased insurance costs which are ultimately borne by the consumers of this state. The intent of the "West Virginia Insurance Fraud Act" is to prohibit the giving of false or fraudulent information by any person in any capacity; to assist public officials, government agencies and insurers in the detection and investigation of fraudulent activities; reduce the occurrence of fraud through administrative enforcement and deterrence; require restitution of fraudulently obtained insurance benefits or payments; and establish penalties for violation of this article, all in an effort to deter the activities and reduce costs to the consumers of this state.
§61-5B-3. Definitions.

The following words when used in this article shall have the meanings set forth in this section, unless the context clearly indicates otherwise:

(a) "Authorized agency" means:

(2) The prosecuting attorney of any county of this state or of the United States or any district thereof;

(3) The state insurance commissioner or the commissioner's employees, agents or representatives;

(4) The national association of insurance commissioners; or

(5) A person or agency involved in the prevention and detection of fraud or that person's or agency's agents, employees or representatives.

(b) "Benefits" means money payments, goods, services or any other thing of value.

(d) "Commissioner" means the insurance commissioner of the state of West Virginia.

(e) "Director" means the director of the insurance fraud unit established pursuant to this article.

(f) "Financial loss" includes, but is not limited to, loss of earnings, out-of-pocket and other expenses, repair and replacements costs and claims payments made by any insurer, provider or person.

(g) "Health care provider" means any person, firm or corporation providing health care services or goods.

(h) "Insurance fraud" means instances where any person, insurer, or agency intentionally:

(1) Presents or causes to be presented to any insurer or insurance representative any written or oral statement as part of or in support of an application for insurance or a claim for payment or other benefit pursuant to an insurance policy which contains any false representation or concealment as to any material fact or thing, with knowledge that it is not true and correct and with the intent that the representation or concealment be relied upon by the insurer;

(2) Solicits, offers or receives any remuneration, including any kickback, rebate or bribe, directly or indirectly, with the intent of causing an expenditure of moneys from any person or insurer which would not otherwise be payable under an applicable insurance policy;

(3) Submits or causes to be submitted to any authorized agency any written or oral statement as part of or in support of any application, audit, claim, report, investigation, valuation, statement, appraisal, estimation of loss, publication, certificate, actuarial report or study, filing, financial statement, tax return, rate request, petition or any other such document knowing that such statement contains any false, incomplete or misleading information concerning any fact or thing material thereto;

(5) Assists, abets, solicits or conspires with another to commit insurance fraud; or

(j) "Insurer" means any person engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative, regulatory or taxing authority of the commissioner, including, but not limited to, any domestic or foreign stock company, mutual company, mutual protective association, farmers' mutual fire companies, fraternal benefit society, reciprocal or interinsurance exchange, nonprofit medical care corporation, nonprofit health care corporation, nonprofit hospital service association, nonprofit dental care corporation, health maintenance organization, captive insurance company, risk retention group or other insurer, regardless of the type of coverage written, benefits provided or guarantees made by each. A person is an insurer regardless of whether the person is acting in violation of laws requiring a certificate of authority or regardless of whether the person denies being an insurer.

(k) "Insurance representative" means any person, firm or corporation acting on an insurer's behalf, including, but not limited to, any agent, adjuster, officer, director, employee or investigator.

(l) "Person" means any individual, partnership, firm, association, corporation, company, insurer, organization, society, reciprocal, business trust or any other legal entity. "Person" also includes hospital service corporations, medical service corporations and dental service corporations as defined in article twenty-four of this chapter, health care corporations as defined in article twenty-five of this chapter, or a health maintenance organization organized pursuant to article twenty-five-a of this chapter.

(n) "Unit" means the insurance fraud unit as defined in article forty-one, chapter 33 of this code.
§61-5B-4. Fraudulent acts prohibited; penalties.

(a) Any person who commits an act of insurance fraud as defined in subdivision (h)(1) or (h)(2) of section three of this article is guilty of a misdemeanor or felony, as determined by the provisions of section five of this article and, upon conviction thereof, shall be fined, imprisoned or both, as more particularly provided in section five.

(b) Any person who commits an act of insurance fraud as defined in subdivision (h)(5) of section three of this article is guilty of a misdemeanor or felony, as determined by the provisions of section five of this article and, upon conviction thereof, shall be fined, imprisoned or both, as more particularly provided in section five.

(c) Any person who commits an act of insurance fraud as defined in subdivision (h)(3) or (h) (4) of section three of this article is guilty of a felony and, upon conviction thereof, shall be fined not more than five thousand dollars, or confined in the penitentiary for a definite term of years of not less than one year nor more than five years, or both fined and imprisoned.
§61-5B-5. Penalties.

(a) Except as otherwise provided, if any person violates the provisions of this article or of article forty-one, chapter thirty-three of this code, and the act results in a payment, benefit or financial loss to any person with a value of one thousand dollars or more, the person is guilty of a felony and, upon conviction thereof, shall be fined not less than five hundred dollars nor more than five thousand dollars, or confined in the penitentiary for a definite term of years of not less than one year nor more than five years, or both fined and imprisoned. In addition to any fine or imprisonment, any person subject to the provisions of this section shall be required to make full restitution to the person injured or damaged by the fraudulent act in a manner to be determined by the court.

(b) Except as otherwise provided, if any person violates the provisions of this article or of article forty-one, chapter thirty-three of this code, and the act results in a payment, benefit or loss to any person with a value of less than one thousand dollars, such person is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than five hundred dollars, or confined in the county jail for a term not to exceed one year, or both fined and imprisoned. In addition to any fine or imprisonment, any person subject to the provisions of this section shall be required to make full restitution to the person injured or damaged by the fraudulent insurance act in a manner to be determined by the court.
§61-5B-6. Immunities and exceptions.

A person in the relation of husband, wife, parent, grandparent, child, grandchild, brother or sister, by consanguinity or affinity, of an accused charged with an act of insurance fraud, who after the commission of an offense aids or assists the accused to avoid or escape from prosecution or punishment, has not committed insurance fraud by reason of providing the aid or assistance, and is not subject to the penalties set forth in section four of this article.