West Virginia Code
(a) This article may be cited as the "West Virginia Insurance Fraud Prevention Act."
(b) The Legislature finds that the business of insurance involves many transactions of numerous types that have potential for fraud and other illegal activities. This article is intended to permit use of the expertise of the commissioner to investigate and help prosecute insurance fraud and other crimes related to the business of insurance more effectively, and to assist and receive assistance from state, local and federal law-enforcement and regulatory agencies in enforcing laws prohibiting crimes relating to the business of insurance.
As used in this article:
(1) "Benefits" mean money payments, goods, services or other thing of value paid in response to a claim filed with an insurer based upon a policy of insurance;
(2) "Business of insurance" means the writing of insurance, including the writing of workers' compensation insurance under the provisions of chapter twenty-three of this code, self-insurance by an employer or employer group for workers' compensation risk including the risk of catastrophic injuries under the provisions of chapter twenty-three of this code or the reinsuring of risks by an insurer, including acts necessary or incidental to writing insurance or reinsuring risks and the activities of persons who act as or are officers, directors, agents or employees of insurers, or who are other persons authorized to act on their behalf;
(3) "Claim" means an application or request for payment or benefits provided under the terms of a policy of insurance;
(4) "Commissioner" means the Insurance Commissioner of West Virginia or his or her designee;
(5) "Health care provider" means a person, partnership, corporation, facility or institution licensed by, or certified in, this state or another state, to provide health care or professional health care services, including, but not limited to, a physician, osteopathic physician, hospital, dentist, registered or licensed practical nurse, optometrist, pharmacist, podiatrist, chiropractor, physical therapist or psychologist;
(6) "Insurance" means a contract or arrangement in which a person undertakes to:
(A) Pay or indemnify another person as to loss from certain contingencies called "risks", including through reinsurance;
(B) Pay or grant a specified amount or determinable benefit to another person in connection with ascertainable risk contingencies;
(C) Pay an annuity to another person;
(D) Act as surety; or
(E) Self-insurance for workers' compensation risk including the risk of catastrophic injuries under the provisions of chapter twenty-three of this code.
(7) "Insurer" means a person entering into arrangements or contracts of insurance or reinsurance. Insurer includes, but is 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, including the writing of workers' compensation insurance or self insurance under the provisions of chapter twenty-three of this code, 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;
(8) "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, trustees, an unincorporated organization, or any similar business entity or any combination of the foregoing. "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;
(9) "Policy" means an individual or group policy, group certificate, contract or arrangement of insurance or reinsurance, coverage by a self-insured employer or employer group for its workers' compensation risk including its risk of catastrophic injuries or reinsurance, affecting the rights of a resident of this state or bearing a reasonable relation to this state, regardless of whether delivered or issued for delivery in this state;
(10) "Reinsurance" means a contract, binder of coverage (including placement slip) or arrangement under which an insurer procures insurance for itself in another insurer as to all or part of an insurance risk of the originating insurer;
(11) "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 written or oral representation recorded by electronic or other media; and
(12) "Unit" means the insurance fraud unit established pursuant to the provisions of this article acting collectively or by its duly authorized representatives.
(a) Claims forms and applications for insurance, regardless of the form of transmission, may contain the following warning or a substantially similar caveat:
"Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison."
(b) The lack of a warning as authorized by the provisions of subsection (a) of this section does not constitute a defense in any prosecution for a fraudulent or illegal act nor shall it constitute the basis for any type of civil cause of action.
(c) Policies issued by nonadmitted insurers pursuant to article twelve-c of this chapter shall contain a statement disclosing the status of the insurer to do business in the state where the policy is delivered or issued for delivery or the state where coverage is in force. The requirement of this subsection may be satisfied by a disclosure specifically required by section five, article twelve-c of this chapter; section nine, article thirty-two of this chapter; and section eighteen, article thirty-two of this chapter.
(a) The commissioner may investigate suspected criminal acts relating to the business of insurance as authorized by the provisions of this article.
(b) If the prosecuting attorney of the county in which a criminal violation relating to the business of insurance occurs determines that his or her office is unable to take appropriate action, he or she may petition the appropriate circuit court for the appointment of a special prosecutor or special assistant prosecutor from the West Virginia prosecuting attorney Institute pursuant to the provisions of section six, article four, chapter seven of this code. Notwithstanding the provisions of that section, attorneys employed by the commissioner and assigned to the insurance fraud unit created by the provisions of section eight of this article may prosecute or assist in the prosecution of violations of the criminal laws of this state related to the business of insurance and may act as special prosecutors or special assistant prosecutors in those cases if assistance is sought by the prosecuting attorney or special prosecutor assigned by the institute to prosecute those matters.
(c) Funds allocated for insurance fraud prevention may be dispersed by the commissioner, at his or her discretion, for the purpose of insurance fraud enforcement as authorized by the provisions of this code.
(d) The Insurance Fraud Unit authorized by the provisions of section eight of this article may assist federal law-enforcement agencies, the West Virginia state police, the State Fire Marshal, municipal police departments and the sheriffs of the counties in West Virginia in investigating crimes related to the business of insurance.
(e) The commissioner may conduct public outreach, education, and awareness programs on the costs of insurance fraud to the public.
(a) A person engaged in the business of insurance having knowledge or a reasonable belief that fraud or another crime related to the business of insurance is being, will be or has been committed shall provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.
(b) The commissioner may prescribe a reporting form to facilitate reporting of possible fraud or other offenses related to the business of insurance for use by persons other than those persons referred to in subsection (a) of this section.
(a) There shall be no civil liability imposed on and no cause of action shall arise from a person's furnishing information concerning suspected or anticipated fraud relating to the business of insurance, if the information is provided to or received from:
(1) The commissioner or the commissioner's employees, agents or representatives;
(2) Federal, state, or local law-enforcement or regulatory officials or their employees, agents or representatives;
(3) A person involved in the prevention and detection of insurance fraud or that person's agents, employees or representatives; or
(4) The national association of Insurance Commissioners or its employees, agents or representatives.
(b) The provisions of subsection (a) of this section are not applicable to materially incorrect statements made maliciously or fraudulently by a person designated a mandated reporter pursuant to the provisions of subsection (a), section five of this article or made in reckless disregard to the truth or falsity of the statement by those not mandated to report. In an action brought against a person for filing a report or furnishing other information concerning an alleged insurance fraud, the party bringing the action shall plead with specificity any facts supporting the allegation that subsection (a) of this section does not apply because the person filing the report or furnishing the incorrect information did so maliciously in the case of a mandated reporter or in the case of a person not designated a mandated reporter, in reckless disregard for the truth or falsity of the statement.
(c) Nothing in this article shall be construed to limit, abrogate or modify existing statutes or case law applicable to the duties or liabilities of insurers regarding bad faith or unfair trade practices.
(d) This section does not abrogate or modify common law or statutory privileges or immunities.
(a) Documents, materials or other information in the possession or control of the office of the Insurance Commissioner that are provided pursuant to section six of this article or obtained by the commissioner in an investigation of alleged fraudulent acts related to the business of insurance shall be confidential by law and privileged, shall not be subject to the provisions of chapter twenty-nine-b of this code, shall not be open to public inspection, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner's official duties. The commissioner may use the documents, materials or other information if they are required for evidence in criminal proceedings or other action by the state or federal government and in such context may be discoverable as ordered by a court of competent jurisdiction exercising its discretion.
(b) Neither the commissioner nor any person who receives documents, materials or other information while acting under the authority of the commissioner may be permitted or required to testify in any private civil action concerning any confidential documents, materials or information subject to subsection (a) of this section except as ordered by a court of competent jurisdiction.
(c) In order to assist in the performance of the commissioner's duties, the commissioner:
(1) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subsection (a) of this section with other state, federal and international regulatory agencies, with the national association of Insurance Commissioners and its affiliates and subsidiaries, and with local, state, federal and international law-enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information;
(2) May receive documents, materials or information, including otherwise confidential and privileged documents, materials or information, from the national association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory and law-enforcement officers of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
(3) May enter into agreements governing sharing and use of information including the furtherance of any regulatory or legal action brought as part of the recipient's official duties.
(d) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subsection (c) of this section.
(e) Nothing in this section shall prohibit the commissioner from providing information to or receiving information from any local, state, federal or international law-enforcement authorities, including any prosecuting authority; or from complying with subpoenas or other lawful process in criminal actions; or as may otherwise be provided in this article.
(f) Nothing in this article may be construed to abrogate or limit the attorney-client or work product privileges existing at common law or established by statute or court rule.
(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: This chapter; chapter twenty-three of this code; article three, chapter sixty-one of this code; and section five, article four of said chapter. Notwithstanding any provision of this code to the contrary, the fraud unit may, with the agreement of the Director of the Public Employees Insurance Agency, conduct investigations related to possible fraud under article sixteen, chapter five of this code;
(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.
(a) The Commissioner shall require any applicant for employment with the fraud unit to be fingerprinted. The Commissioner is authorized to conduct a criminal records check through the Criminal Identification Bureau of the West Virginia State Police and a national criminal history check through the Federal Bureau of Investigation. The results of any criminal records or criminal history check shall be sent to the Commissioner. The West Virginia State Police may exchange this fingerprint data with the Federal Bureau of Investigation.
(b) The Director shall not disclose information obtained pursuant to subsection (a) of this section except for purposes directly related to the employment of the applicant.
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 after review and approval by the prosecuting attorney, if the complaint is related to the business of insurance and may be prosecuted as a criminal violation under this chapter; chapter twenty-three of this code; article three, chapter sixty-one of this code; or section five, article four of said chapter.
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.
This article does not:
(1) Preempt the authority or relieve the duty of other law-enforcement or regulatory agencies to investigate, examine and prosecute suspected violations of law;
(2) Prevent or prohibit a person from disclosing voluntarily information concerning insurance fraud to a law-enforcement or regulatory agency other than the insurance fraud unit; or
(3) Limit the powers granted elsewhere by the laws of this state to the commissioner or his or her agents to investigate and examine possible violations of law and to take appropriate action against violators of law.
The Insurance Commissioner shall, pursuant to the provisions of article three, chapter twenty-nine-a of this code, promulgate such legislative rules as are necessary or proper to carry out the purposes of this article.
(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 is $1,000 or more in value is guilty of a felony and, upon conviction thereof, shall be imprisoned in a correctional facility for not less than one nor more than ten years, fined not more than $10,000, or both, or in the discretion of the circuit court confined in jail for not more than one year and fined not more than $10,000, or both.
(c) Any person who commits a violation of the provisions of subsection (a) of this section where the benefit sought is less than $1,000 in value is guilty of a misdemeanor and, upon conviction thereof, shall be confined in jail for not more than one year, fined not more than $2,500, 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.
A person or entity engaged in the business of insurance or a person or entity making a claim against an insurer who violates any provision of this article may be subject to the following:
(1) Where applicable, suspension or revocation of license or certificate of authority or a civil penalty of up to $10,000 per violation, or where applicable, both. Suspension or revocation of license or certificate of authority or imposition of civil penalties may be pursuant to an order of the commissioner issued pursuant to the provisions of section thirteen, article two of this chapter. The commissioner's order may require a person found to be in violation of this article to make reasonable restitution to persons aggrieved by violations of this article. The commissioner may assess a person sanctioned pursuant to the provisions of this section the cost of investigation;
(2) Notwithstanding any other provision of law, a civil penalty imposed pursuant to the provisions of this section is mandatory and not subject to suspension;
(3) A person convicted of a felony violation law reasonably related to the business of insurance shall be disqualified from engaging in the business of insurance; and
(4) The commissioner may apply for a temporary or permanent injunction in any appropriate circuit court of this state seeking to enjoin and restrain a person from violating or continuing to violate the provisions of this article or rule promulgated under this article, notwithstanding the existence of other remedies at law. The circuit court shall have jurisdiction of the proceeding and have the power to make and enter an order or judgment awarding temporary or permanent injunctive relief restraining any person from violating or continuing to violate any provision of this article or rule promulgated under the article as in its judgment is proper.