H 4372 Session 110 (1993-1994)
H 4372 General Bill, By Richardson, Harvin, J.G. Mattos and J.J. Snow
A Bill to establish as part of the State Law Enforcement Division a
subdivision known as the Insurance Fraud Reporting Bureau, provide for the
duties of the Bureau, require that the Bureau be notified of insurance fraud
or related or similar activity, provide exemptions from civil and criminal
liability for reporting insurance fraud and for conducting investigations
under this Act, establish felony and misdemeanor offenses of committing
insurance fraud and of knowingly abetting, soliciting, or conspiring with a
person to commit insurance fraud, provide that the fines collected for these
offenses be used to fund the management and operations of the Insurance Fraud
Reporting Bureau, and require that restitution be made to victims of insurance
fraud; to amend Section 38-55-170, as amended, Code of Laws of South Carolina,
1976, relating to presenting false insurance claims for payment, so as to
change the penalties for the offense under this Section, require that the
fines under this Section be used to fund the management and operations of the
Insurance Fraud Reporting Bureau, and require that restitution be made to the
victims of the offense under this Section; to provide that nothing in this Act
shall be construed as abridging the ability, privilege, or right under the law
of any insurer, health maintenance organization, or other person, including
the State, from conducting its own investigation concerning insurance fraud or
the presentment of a false insurance claim or related criminal activity;
require the Director of the Insurance Fraud Reporting Bureau to disseminate
provisions of this Act by publishing brochures or similar materials and to
maintain a toll-free number to receive reports of insurance fraud and related
criminal activity; to require the Insurance Fraud Reporting Bureau to make
certain periodic reports; to amend Section 14-7-1610, as amended, relating to
the State Grand Jury System, legislative intent, and the provision that
Article 15 of Chapter 7, Title 14 (The State Grand Jury) does not limit the
authority of the county grand jury, the so
12/08/93 House Prefiled
12/08/93 House Referred to Committee on Labor, Commerce and Industry
01/11/94 House Introduced and read first time HJ-33
01/11/94 House Referred to Committee on Labor, Commerce and
Industry HJ-34
A BILL
TO ESTABLISH AS PART OF THE STATE LAW ENFORCEMENT
DIVISION A SUBDIVISION KNOWN AS THE INSURANCE
FRAUD REPORTING BUREAU, PROVIDE FOR THE DUTIES OF
THE BUREAU, REQUIRE THAT THE BUREAU BE NOTIFIED OF
INSURANCE FRAUD OR RELATED OR SIMILAR ACTIVITY,
PROVIDE EXEMPTIONS FROM CIVIL AND CRIMINAL
LIABILITY FOR REPORTING INSURANCE FRAUD AND FOR
CONDUCTING INVESTIGATIONS UNDER THIS ACT,
ESTABLISH FELONY AND MISDEMEANOR OFFENSES OF
COMMITTING INSURANCE FRAUD AND OF KNOWINGLY
ABETTING, SOLICITING, OR CONSPIRING WITH A PERSON TO
COMMIT INSURANCE FRAUD, PROVIDE THAT THE FINES
COLLECTED FOR THESE OFFENSES BE USED TO FUND THE
MANAGEMENT AND OPERATIONS OF THE INSURANCE
FRAUD REPORTING BUREAU, AND REQUIRE THAT
RESTITUTION BE MADE TO VICTIMS OF INSURANCE FRAUD;
TO AMEND SECTION 38-55-170, AS AMENDED, CODE OF LAWS
OF SOUTH CAROLINA, 1976, RELATING TO PRESENTING
FALSE INSURANCE CLAIMS FOR PAYMENT, SO AS TO
CHANGE THE PENALTIES FOR THE OFFENSE UNDER THIS
SECTION, REQUIRE THAT THE FINES UNDER THIS SECTION BE
USED TO FUND THE MANAGEMENT AND OPERATIONS OF
THE INSURANCE FRAUD REPORTING BUREAU, AND REQUIRE
THAT RESTITUTION BE MADE TO THE VICTIMS OF THE
OFFENSE UNDER THIS SECTION; TO PROVIDE THAT NOTHING
IN THIS ACT SHALL BE CONSTRUED AS ABRIDGING THE
ABILITY, PRIVILEGE, OR RIGHT UNDER THE LAW OF ANY
INSURER, HEALTH MAINTENANCE ORGANIZATION, OR
OTHER PERSON, INCLUDING THE STATE, FROM CONDUCTING
ITS OWN INVESTIGATION CONCERNING INSURANCE FRAUD
OR THE PRESENTMENT OF A FALSE INSURANCE CLAIM OR
RELATED CRIMINAL ACTIVITY; REQUIRE THE DIRECTOR OF
THE INSURANCE FRAUD REPORTING BUREAU TO
DISSEMINATE PROVISIONS OF THIS ACT BY PUBLISHING
BROCHURES OR SIMILAR MATERIALS AND TO MAINTAIN A
TOLL-FREE NUMBER TO RECEIVE REPORTS OF INSURANCE
FRAUD AND RELATED CRIMINAL ACTIVITY; TO REQUIRE
THE INSURANCE FRAUD REPORTING BUREAU TO MAKE
CERTAIN PERIODIC REPORTS; TO AMEND SECTION 14-7-1610,
AS AMENDED, RELATING TO THE STATE GRAND JURY
SYSTEM, LEGISLATIVE INTENT, AND THE PROVISION THAT
ARTICLE 15 OF CHAPTER 7, TITLE 14 (THE STATE GRAND
JURY) DOES NOT LIMIT THE AUTHORITY OF THE COUNTY
GRAND JURY, THE SOLICITOR, OR OTHER LAW
ENFORCEMENT PERSONNEL, SO AS TO ESTABLISH THE
LEGISLATIVE INTENT THAT THERE IS A NEED TO ENHANCE
THE STATE GRAND JURY SYSTEM TO IMPROVE THE ABILITY
OF THE STATE TO DETECT AND INVESTIGATE CRIMES
INVOLVING INSURANCE FRAUD, PRESENTMENT OF FALSE
INSURANCE CLAIMS, AND RELATED CRIMINAL INSURANCE
ACTIVITY, OR ANY COMMON LAW CRIME ARISING OUT OF
OR IN CONNECTION WITH THE INSURANCE LAWS OR AN
ATTEMPT, AIDING, ABETTING, SOLICITATION, OR
CONSPIRACY TO COMMIT A CRIME INVOLVING THE
INSURANCE LAWS; TO AMEND SECTION 14-7-1615, AS
AMENDED, RELATING TO DEFINITIONS UNDER THE
PROVISIONS OF LAW REGARDING THE STATE GRAND JURY
SYSTEM, SO AS TO DEFINE "INSURANCE CRIMES"
AND "INSURANCE LAW OFFENSES"; AND TO
AMEND SECTION 14-7-1630, AS AMENDED, RELATING TO THE
JURISDICTION OF JURIES UNDER THE STATE GRAND JURY
SYSTEM AND RELATED MATTERS, SO AS TO INCLUDE IN THE
SUBJECT MATTER JURISDICTION OF A STATE GRAND JURY
CRIMES INVOLVING INSURANCE FRAUD, PRESENTING A
FALSE INSURANCE CLAIM, AND OTHER SIMILAR AND
RELATED INSURANCE CRIME.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. As used in this act:
(1) "Authorized agency" means any duly constituted
criminal investigative department or agency of the United States or of
this State; the Department of Insurance; the Department of Revenue and
Taxation, Division of Motor Vehicles; the Workers' Compensation
Commission; the Office of the Attorney General of this State; or the
prosecuting attorney of any judicial circuit, county, municipality, or
political subdivision of this State or of the United States, and their
respective employees or personnel acting in their official capacity.
(2) "Insurer" shall have the meaning set forth in Section
38-1-20(25) of the 1976 Code and includes any authorized insurer,
self-insurer, reinsurer, broker, producer, or any agent thereof.
(3) "Person" means any natural person, company,
corporation, unincorporated association, partnership, professional
corporation, or other legal entity, and includes any applicant,
policyholder, claimant, medical provider, vocational rehabilitation
provider, attorney, agent, insurer, fund, or advisory organization.
(4) "Insurance fraud" means any fraudulent conduct, act,
or omission committed by any person in connection with an insurance
transaction which is designed to obtain and results in an undeserved
economic advantage or benefit if such conduct, act, or omission is done
knowingly or with an intent to injure, defraud, or deceive.
SECTION 2. There is established as part of the State Law Enforcement
Division a subdivision to be known as the Insurance Fraud Reporting
Bureau, which shall investigate thoroughly all claims or allegations of
insurance fraud as defined in item (4) of Section 1, all claims or
allegations of violations of Section 38-55-170 of the 1976 Code, and all
claims or allegations of related criminal insurance activity. Such crimes
as described in this section are subject to presentment to the grand jury
in accordance with the provisions of Article 15 of Chapter 7, Title 14 of
the 1976 Code.
SECTION 3. Any person, insurer, or authorized agency receiving
information or having reason to believe that another has committed
insurance fraud or presented a false insurance claim or has committed a
similar, related insurance offense, or having knowledge of suspected
insurance fraud or presentment of a false insurance claim or related
criminal insurance activity shall notify the Insurance Fraud Reporting
Bureau of such knowledge, belief, or information and shall provide the
bureau, upon request, any additional information, records, documents,
materials, papers, or other evidence within his or its possession relative
thereto.
SECTION 4. (A) No person, insurer, or authorized agent is subject to
any civil or criminal liability by virtue of acting under Section 3, except
in the event of bad faith.
(B) No employee of the State Law Enforcement Division or of the
Insurance Fraud Reporting Bureau, or the head of either the division or
the bureau, is subject to any civil or criminal liability by virtue of
investigating or reporting on insurance fraud, false insurance claims, or
other similar, related criminal insurance activity as provided in this act,
except in the event of bad faith.
(C) For the purposes of this section, "bad faith" means
not having any reasonable basis in fact whatsoever to suspect or believe
that insurance fraud or any other crime described in this act has or may
have occurred.
SECTION 5. (A) Any person who commits insurance fraud, and any
other person knowingly, with an intent to injure, defraud, or deceive,
who assists, abets, solicits, or conspires with such person to commit
insurance fraud, is guilty of a:
(1) felony if the amount of the fraud is five thousand dollars or
more. Upon conviction, the person or persons must be imprisoned for
ten years or fined twenty thousand dollars or ten percent of the
established fraud, whichever is greater;
(2) felony if the amount of the fraud is more than one thousand
dollars but less than five thousand dollars. Upon conviction, the person
must be fined in the discretion of the court or imprisoned for five years,
or both;
(3) misdemeanor triable in magistrate's court if the amount of the
fraud is one thousand dollars or less. Upon conviction, the person must
be fined or imprisoned not more than is permitted by law without
presentment or indictment by the grand jury.
(B) The fines imposed pursuant to subsection (A) shall, upon
collection, be used to fund the management and operations of the
Insurance Fraud Reporting Bureau.
(C) A person convicted for a violation of the law concerning
insurance fraud under subsection (A) of this section must be ordered to
make restitution to the victim or victims of such fraud for any financial
loss sustained as a result of that violation.
SECTION 6. Section 38-55-170 of the 1976 Code, as last amended by
Section 121 of Act 184 of 1993, is further amended to read:
"Section 38-55-170. (A) A person who knowingly
causes to be presented a false claim for payment to an insurer transacting
business in this State, to a health maintenance organization transacting
business in this State, or to any person, including the State of South
Carolina, providing benefits for health care in this State, whether these
benefits are administered directly or through a third person, or who
knowingly assists, solicits, or conspires with another to present a false
claim for payment as described above, is guilty of a:
(1) felony if the amount of the claim is five thousand dollars or
more. Upon conviction, the person must be imprisoned not more than
ten years or fined not more than five thousand dollars, or
both. or ten percent of the established false claim, whichever is
greater;
(2) felony if the amount of the claim is more than one thousand
dollars but less than five thousand dollars. Upon conviction, the person
must be fined in the discretion of the court or imprisoned not more
than five years, or both.;
(3) misdemeanor triable in magistrate's court if the amount of the
claim is one thousand dollars or less. Upon conviction, the person must
be fined or imprisoned not more than is permitted by law without
presentment or indictment by the grand jury.
(B) The fines imposed pursuant to subsection (A) shall, upon
collection, be used to fund the management and operations of the
Insurance Fraud Reporting Bureau.
(C) A person convicted for a violation of the law concerning a false
claim under subsection (A) of this section must be ordered to make
restitution to the victim or victims of such criminal act for any financial
loss sustained as a result of that violation."
SECTION 7. Nothing contained in any provision of this act shall be
construed in any way whatever as abridging the ability, privilege, or
right under the law of any insurer transacting business in this State, any
health maintenance organization transacting business in this State, or
any other person, including the State of South Carolina, which provides
benefits for health care in this State, whether these benefits are
administered directly or through a third person, from conducting its own
private investigation concerning insurance fraud or the presentment of
a false insurance claim or related criminal activity.
SECTION 8. The director of the Insurance Fraud Reporting Bureau
shall disseminate provisions of this act by the publishing of
informational brochures or other similar materials which encourage the
public to report insurance fraud and related criminal activity and shall
maintain a toll-free number to receive such reports.
SECTION 9. The Insurance Fraud Reporting Bureau shall periodically
report to insurers transacting business in this State, health maintenance
organizations transacting business in this State, and other persons,
including the State of South Carolina, which provide benefits for health
care in this State, whether these benefits are administered directly or
through a third person, regarding (a) the status of matters reported to the
bureau, if not privileged information by law; (b) the outcome of all
investigations and prosecutions under this act, if not privileged
information by law; and (c) patterns and practices of fraudulent
insurance transactions identified in the course of performing its duties.
SECTION 10. (A) Section 14-7-1610 of the 1976 Code, as last
amended by Act 335 of 1992, is further amended to read:
"Section 14-7-1610. It is the intent of the General Assembly
to enhance the grand jury system and to improve the ability of the State
to detect and eliminate criminal activity. The General Assembly
recognizes the great importance of having the federal authorities
available for certain investigations. The General Assembly finds that
crimes involving narcotics, dangerous drugs, or controlled substances,
as well as crimes involving obscenity, often transpire or have
significance in more than one county of this State. When this occurs,
these crimes are most effectively detected and investigated by a grand
jury system which has the authority to cross county lines.
The General Assembly further finds that there is a need to enhance the
grand jury system to improve the ability of the State to detect and
eliminate public corruption. Crimes involving public corruption
transpire at times in a single county, but often transpire or have
significance in more than one county of this State. The General
Assembly believes that a state grand jury, possessing considerably
broader investigative authority than individual county grand juries,
should be available to investigate public corruption offenses in South
Carolina.
The General Assembly further finds that there is a need to enhance the
grand jury system to improve the ability of the State to detect and
investigate crimes involving the election laws, including, but not limited
to, those named offenses as specified in Title 7, or any common law
crimes involving the election laws where not superseded, or any crime
arising out of or in connection with the election laws, or any attempt,
aiding, abetting, solicitation, or conspiracy to commit a crime involving
the election laws.
The General Assembly further finds that there is a need to
enhance the grand jury system to improve the ability of the State to
detect and investigate crimes involving insurance fraud, presentment of
false insurance claims, and related criminal insurance activity, or any
common law crime arising out of or in connection with the insurance
laws, or an attempt, aiding, abetting, solicitation, or conspiracy to
commit a crime involving the insurance laws.
The General Assembly further finds that related criminal activity
often arises out of or in connection with crimes involving narcotics,
dangerous drugs or controlled substances, obscenity, or public
corruption, or insurance fraud and related insurance crimes, and
that the mechanism for detecting and investigating these related crimes
must be improved also.
Accordingly, the General Assembly concludes that a state grand jury
should be allowed to investigate certain crimes related to narcotics,
dangerous drugs, and obscenity and should also be allowed to
investigate crimes involving public corruption, and
election laws, and insurance fraud and related insurance crimes.
Nothing herein in this article limits the authority of
a county grand jury, solicitor, or other appropriate law enforcement
personnel to investigate, indict, or prosecute offenses within the
jurisdiction of the state grand jury."
(B) Section 14-7-1615 of the 1976 Code, as last amended by Act 335
of 1992, is amended by adding:
"(C) `Insurance crimes' or `insurance law offenses' are those
concerning insurance fraud, presenting a false insurance claim, and any
similar and related offense under the State's insurance laws where an
economic or monetary benefit or advantage is gained, secured, or
obtained by deceit or falsehood, including attempting, aiding, abetting,
soliciting, or conspiring to commit such an offense."
(C) Section 14-7-1630(A) of the 1976 Code, as last amended by Act
335 of 1992, is further amended by adding:
"(4) crimes involving insurance fraud, presenting a false
insurance claim, or any other similar and related insurance crime,
including any common law crimes involving insurance laws not
superseded, or an attempt, aiding, abetting, soliciting, or conspiracy to
commit such an insurance crime."
SECTION 11. This act takes effect upon approval by the Governor.
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