Report Title:

Health Care Insurance Fraud

Description:

Creates a health insurance fraud investigations unit in the insurance division; establishes immunity from civil liability for a person who reports insurance fraud, except in the case of malicious reporting or perjury; makes an appropriation.

THE SENATE

S.B. NO.

614

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to Health insurance.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Insurance fraud is on the rise both locally and nationally. Whether impacted directly, as victims of insurance fraud, or indirectly, through the payment of increased insurance premiums, everyone is adversely affected by insurance fraud. Reliable estimates indicate that on the average insurance fraud costs every household throughout the United States over $500 annually. In New Jersey, the cost for no-fault insurance fraud alone was estimated to be over $246 annually per household.

Insurance fraud has also increasingly impacted the health insurance industry. Annual health care costs are estimated at $1.2 trillion nationally, and health care fraud losses are estimated at three per cent to fourteen per cent of total health care costs, which means that approximately $36 billion to $144 billion in losses annually can be directly attributed to health care fraud.

Hawaii's health care costs exceed $2 billion annually. Based on a conservative estimate of three per cent of all Hawaii health care benefits paid out due to fraud, losses to the Hawaii health care industry exceed $60 million annually.

In order to combat health insurance fraud, insurance companies need to be equipped with the information and knowledge necessary to investigate and prosecute individuals who are committing fraud. In 1998, Act 155, Session Laws of Hawaii 1988, was passed by the legislature, amending Hawaii's insurance code in reference to motor vehicle insurance fraud and strengthening the law regarding insurance fraud reporting.

Insurance fraud is not exclusively a motor vehicle insurance problem, but one that occurs across all lines of insurance. Providing immunity from civil liability for persons sharing information related to health insurance fraud will enable health insurers to provide information regarding potential insurance fraud to other insurers, government agencies, and law enforcement in order to help identify and prevent fraud against the health care industry.

This Act is based on S.B. No. 2093, H.D. 1, Regular Session of 2002, which was vetoed. This Act remedies the issues raised by the veto concerning:

(1) Providing the insurance commissioner with the means to investigate fraud relating to health insurance; and

(2) Providing immunity to persons who report fraud to the health plan.

The purpose of this Act is to provide immunity from civil liability for persons reporting health insurance fraud.

SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 2, part III, to be appropriately designated and to read as follows:

"§431:2- Health insurance fraud investigations unit. (a) There is established in the insurance division a health insurance fraud investigations unit. The unit shall investigate complaints of health insurance fraud by health insurers under chapter 431:10A, mutual benefit societies under chapter 432:1, and health maintenance organizations under chapter 432D.

(b) The unit shall employ attorneys, investigators, investigator assistants, and other support staff as necessary to promote the effective and efficient conduct of the unit's activities. Notwithstanding any other law to the contrary, the attorneys may represent the State in any judicial or administrative proceeding to enforce all applicable state laws relating to health insurance fraud, including but not limited to criminal prosecutions and actions for declaratory and injunctive relief. Investigators may serve process and apply for and execute search warrants pursuant to chapter 803 and the rules of court but shall not otherwise have the powers of a police officer or deputy sheriff. The commissioner may hire such employees not subject to chapters 76 and 89.

(c) The purpose of the health insurance fraud investigations unit shall be to conduct a statewide program for the prevention, investigation, and prosecution of health insurance fraud cases and violations of all applicable state laws relating to health insurance fraud. The health insurance fraud investigations unit may also review and take appropriate action on complaints relating to health insurance fraud."

SECTION 3. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to article 10A, part I, to be appropriately designated and to read as follows:

"§431:10A- Limitation of liability. (a) A person shall not be subject to civil liability for providing information, including filing a report, furnishing oral or written evidence, or giving testimony concerning suspected, anticipated, or completed insurance fraud, to the affected insurer, the insurance commissioner, the National Association of Insurance Commissioners, any federal, state, or county law enforcement or regulatory agency, or another insurer, if the information is provided only for the purpose of preventing, investigating, or prosecuting insurance fraud, except where the person has acted with malice or committed perjury. Nothing herein shall be construed to impose upon the insurance commissioner a duty to investigate or prosecute fraud under this chapter.

(b) As used in this section:

"Insurance fraud" shall have the same meaning as in section 431:10C-307.7.

"Malice" means having actual knowledge regarding the falsity of any information being provided under this section."

SECTION 4. Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to article 1, part I, to be appropriately designated and to read as follows:

"§432:1- Limitation of liability. (a) A person shall not be subject to civil liability for providing information, including filing a report, furnishing oral or written evidence, or giving testimony concerning suspected, anticipated, or completed insurance fraud, to the affected insurer, the insurance commissioner, the National Association of Insurance Commissioners, any federal, state, or county law enforcement or regulatory agency, or another insurer, if the information is provided only for the purpose of preventing, investigating, or prosecuting insurance fraud, except where the person has acted with malice or committed perjury. Nothing herein shall be construed to impose upon the insurance commissioner a duty to investigate or prosecute fraud under this chapter.

(b) As used in this section:

"Insurance fraud" shall have the same meaning as in section 431:10C-307.7.

"Malice" means having actual knowledge regarding the falsity of any information being provided under this section."

SECTION 5. Chapter 432D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§432D- Limitation of liability. (a) A person shall not be subject to civil liability for providing information, including filing a report, furnishing oral or written evidence, or giving testimony concerning suspected, anticipated, or completed insurance fraud, to the affected insurer, the insurance commissioner, the National Association of Insurance Commissioners, any federal, state, or county law enforcement or regulatory agency, or another insurer, if the information is provided only for the purpose of preventing, investigating, or prosecuting insurance fraud, except where the person has acted with malice or committed perjury. Nothing herein shall be construed to impose upon the insurance commissioner a duty to investigate or prosecute fraud under this chapter.

(b) As used in this section:

"Insurance fraud" shall have the same meaning as in section 431:10C-307.7.

"Malice" means having actual knowledge regarding the falsity of any information being provided under this section."

SECTION 6. There is appropriated out of the compliance resolution fund the sum of $ , or so much thereof as may be necessary for fiscal year 2003-2004, for the establishment and operation of a health insurance fraud investigations unit.

SECTION 7. The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 8. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval.

INTRODUCED BY:

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