Current Status Introducing Body:House Bill Number:4372 Primary Sponsor:Richardson Committee Number:26 Type of Legislation:GB Subject:Insurance Fraud Reporting Bureau, SLED Residing Body:House Current Committee:Labor, Commerce and Industry Computer Document Number:PT/22294JM.94 Introduced Date:19940111 Last History Body:House Last History Date:19940111 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Richardson Snow Harvin Mattos Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
____ ______ ____________ ______________________________ ___ ____________
4372 House 19940111 Introduced, read first time, 26
referred to Committee
4372 House 19931208 Prefiled, referred to 26
Committee
View additional legislative information at the LPITS web site.
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.