As Introduced 1
122nd General Assembly 4
Regular Session H. B. No. 248 5
1997-1998 6
REPRESENTATIVES REID-O'BRIEN-GARCIA-MOTTLEY-FOX-VESPER- 8
NETZLEY-HAINES 9
10
A B I L L
To amend sections 3905.49 and 3999.31 and to enact 13
sections 3905.491, 3999.41, and 3999.42 of the 14
Revised Code to require insurers to adopt an 15
antifraud program that includes written 16
procedures for pursuing insurance fraud; to 17
require insurers to report persons suspected of 18
insurance fraud to the Department of Insurance; 19
to require insurers to provide the Department 20
with a list of those employees who will 21
investigate insurance fraud, while limiting the 22
immunity relating to the exchange of information 23
on fraud to these employees; and to require 24
persons convicted of a felony while licensed as 25
agents or solicitors to report the conviction to 27
the Department.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 29
Section 1. That sections 3905.49 and 3999.31 be amended 32
and sections 3905.491, 3999.41, and 3999.42 of the Revised Code 33
be enacted to read as follows:
Sec. 3905.49. (A) The superintendent of insurance may 42
suspend, revoke, refuse to continue or renew, or refuse to issue 43
any license as an agent or solicitor under this chapter, if the 44
superintendent finds any one or more of the following: 45
(1) The person has made a false statement with respect to 47
a material matter in the license application; 48
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(2) Any cause for which issuance of the license could have 50
been refused had it existed and been known to the superintendent 51
at the time of issuance; 52
(3) The person has violated or failed to comply with any 54
insurance law or any lawful rule or order of the superintendent 55
or the commissioner of insurance of another state; 56
(4) The person has obtained or attempted to obtain any 58
such license through mispresentation MISREPRESENTATION or fraud; 59
(5) The person has improperly withheld, misappropriated, 61
or converted to the person's own use any moneys belonging to 62
policyholders, insurers, beneficiaries, or others received in the 63
course of the person's insurance business; 64
(6) The person has knowingly misrepresented the terms of 66
any actual or proposed insurance policy or contract; 67
(7) The person has been convicted of a felony. If a 69
person has been convicted of a felony based on evidence of acts 70
or omissions related to the insurance business, the 71
superintendent shall revoke any license issued to such person for 72
a period of not less than two years. If the person did not hold 73
a license at the time of the conviction, no license shall be 74
issued to the person for a period of two years after the date of 75
the conviction. 76
(8) The person is guilty of an unfair or deceptive trade 78
act OR practice or fraud under any section of Title XXXIX of the 79
Revised Code; 80
(9) In the conduct of the person's affairs under a 82
license, the person has used fraudulent, coercive, or dishonest 83
practices, or is incompetent, untrustworthy, or financially 84
irresponsible; 85
(10) The person's license has been suspended or revoked in 87
any other state, province, district, or territory; 88
(11) The person has forged another's name to an 90
application for insurance; 91
(12) The person has cheated on an examination for an 93
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insurance license; 94
(13) THE PERSON HAS FAILED TO REPORT A FELONY CONVICTION 96
AS REQUIRED UNDER SECTION 3905.491 OF THE REVISED CODE. 98
(B) The license of a partnership or corporation may be 100
suspended, revoked, or refused if the superintendent finds, after 101
notice and hearing under Chapter 119. of the Revised Code, that 102
an individual licensee's violation was known or should have been 103
known by one or more of the partners, officers, directors, or 104
managers acting on behalf of the partnership or corporation and 105
such violation was not reported to the department of insurance or 106
corrective action taken in relation to the violation. 107
(C) Before denying, revoking, suspending, or refusing to 109
continue or renew any license or imposing any penalty under this 110
section, the superintendent shall provide notice and an 111
opportunity for hearing, under Chapter 119. of the Revised Code, 112
to the licensee or applicant and any insurer represented by the 113
licensee or applicant. 114
(D) The superintendent may modify any order under this 116
section and restore a license of or issue a license to a person 117
if the superintendent finds, after notice and opportunity for 118
hearing provided to affected parties, that the person can 119
demonstrate all of the following: 120
(1) The person has made restitution for all pecuniary 122
losses caused by his THE PERSON'S violation; 123
(2) The person's character and reputation have been 125
rehabilitated so that the person possesses the personal 126
qualifications required for the initial issuance of a license; 127
(3) If the order was an order of revocation based on a 129
conviction for felony based on evidence of acts or omissions 130
related to the insurance business, that two years have elapsed 131
since the effective date of the order, or if the order was an 132
order denying a license because of such a conviction, that two 133
years have elapsed since the date of the conviction; 134
(4) If required by the superintendent, the person passes 136
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the examination required for an initial issuance of the license. 137
(E) The superintendent shall consider the following 139
standards in denying a license, imposing suspensions, 140
revocations, or refusals of continuations or renewals of 141
licenses: 142
(1) Whether the person acted in good faith and without 144
knowledge of his THE violation and makes restitution for any 145
pecuniary losses suffered by other persons as a result of his THE 146
PERSON'S actions. In such cases, the maximum suspension shall be 147
ninety days. 148
(2) Whether, within the meanings defined in section 150
2901.22 of the Revised Code, the person acted purposely, 151
knowingly, recklessly, or negligently; 152
(3) Whether the amount of money or the nature of the 154
property involved in the violation would, if it were the subject 155
of a criminal offense, make a theft offense a misdemeanor or a 156
felony; 157
(4) The degree of trust placed in the person by, and the 159
incompetency, inexperience, or susceptibility to undue influence 160
or duress of, any other person involved; 161
(5) The effect of the violation upon the perception by 163
insureds and insurance customers of the ethics and integrity of 164
the insurance industry; 165
(6) The extent to which the person's conduct departed from 167
the customary and usual ethical standards of persons engaged in 168
the insurance business; 169
(7) Such other factors as the superintendent determines to 171
be appropriate under the circumstances. 172
Sec. 3905.491. ANY PERSON WHO IS CONVICTED OF A FELONY 174
WHILE LICENSED AS AN AGENT OR SOLICITOR UNDER THIS CHAPTER SHALL 175
REPORT THE CONVICTION TO THE SUPERINTENDENT OF INSURANCE WITHIN 176
THIRTY DAYS OF THE ENTRY DATE OF THE JUDGMENT OF CONVICTION. 177
WITHIN THAT THIRTY-DAY PERIOD, THE PERSON SHALL ALSO PROVIDE THE 178
SUPERINTENDENT WITH A COPY OF THE JUDGMENT, THE PROBATION OR 179
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COMMITMENT ORDER, AND ANY OTHER RELEVANT DOCUMENTS. 180
Sec. 3999.31. (A) As used in this section: 190
(1) "Fraudulent insurance act" means an act committed by a 192
person who, knowingly and with intent to defraud, presents, 193
causes to be presented, or prepares with knowledge or belief that 194
it will be presented to or by an insurer, purported insurer, 195
broker, or any agent thereof, any written statement as part of, 196
or in support of, an application for the issuance of, or the 197
rating of a policy or contract for property insurance, casualty 198
insurance, life insurance, sickness and accident insurance, or an 199
annuity, or a claim for payment or other benefit pursuant to such 200
a policy or contract, that the person knows to contain materially 201
false information concerning any fact material thereto, or 202
conceals, for the purpose of misleading, information concerning 203
any fact material thereto. "Fraudulent insurance act" also 204
includes any such written statement, claim, or concealment in 205
relation to such an insurance policy or contract that constitutes 206
a criminal offense under Title XXIX or XXXIX of the Revised Code. 207
(2) "Person" includes, but is not limited to, the 209
superintendent of insurance, the national association of 210
insurance commissioners, any insurer, any organization 211
established to detect or prevent fraudulent insurance acts, and 212
any officer, director, trustee, representative, agent, broker, or 213
employee of the superintendent, association, insurer, 214
organization, or person. 215
(B) In EXCEPT AS PROVIDED IN DIVISION (F) OF THIS SECTION, 217
IN the absence of fraud or bad faith, no person is subject to 219
liability for damages or any other civil liability for libel, 220
slander, or other relevant tort cause of action by virtue of 221
filing reports, without malice, or furnishing other information, 222
without malice, required under Title XXXIX of the Revised Code or 223
required by the superintendent under authority granted by that 224
title, and no liability for damages or any other civil cause of 225
action of any nature arises against a person for providing or 226
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receiving information relating to suspected fraudulent INSURANCE 227
acts that is furnished to or received from any of the following: 228
(1) Any law enforcement official, or any agent or employee 230
of such official; 231
(2) Other persons subject to the provisions of Title xxxix 234
XXXIX of the Revised Code;
(3) The division of insurance fraud of the department of 236
insurance, any insurance frauds bureau, the national association 237
of insurance commissioners, or any organization established to 238
detect and prevent fraudulent insurance acts; or 239
(4) Any other person involved in the detection or 241
prevention of fraudulent insurance acts. 242
(C) The superintendent of insurance and any agent, 244
employee, or designee of the superintendent or any personnel of 245
the division of insurance fraud of the department of insurance, 246
or any insurance frauds bureau, in the absence of malice, fraud, 247
or bad faith, is not subject to civil liability for libel, 248
slander, or other relevant tort and no civil cause of action of 249
any nature arises against such a person by virtue of the 250
publication of any report or bulletin related to the official 251
activities of the superintendent or of the division of insurance 252
fraud of the department of insurance, or of any insurance frauds 253
bureau in relation to fraudulent insurance acts. 254
(D) Nothing in this section is intended to abrogate or 256
modify in any way any common law or statutory privilege or 257
immunity enjoyed by any person. 258
(E) Nothing in this section shall be construed to negate, 260
supersede, or otherwise affect section 3911.06, 3911.07, 3915.05, 261
or 3923.04 of the Revised Code. 262
(F) EVERY INSURER SHALL FILE A WRITTEN NOTICE WITH THE 264
DEPARTMENT OF INSURANCE, IDENTIFYING EVERY OFFICER, DIRECTOR, 265
TRUSTEE, REPRESENTATIVE, AGENT, BROKER, OR OTHER EMPLOYEE OF THE 266
INSURER WHO HAS BEEN DESIGNATED BY THE INSURER TO INVESTIGATE 267
SUSPECTED FRAUDULENT INSURANCE ACTS. THE INSURER SHALL FILE 268
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AMENDMENTS TO THE NOTICE AS NECESSARY. DIVISION (B) OF THIS 269
SECTION DOES NOT APPLY TO ANY OFFICER, DIRECTOR, TRUSTEE, 270
REPRESENTATIVE, AGENT, BROKER, OR OTHER EMPLOYEE OF THE INSURER 271
WHO HAS NOT BEEN IDENTIFIED IN THE REQUIRED NOTICE TO THE 272
DEPARTMENT OF INSURANCE OR IN AN AMENDMENT TO THAT NOTICE. 273
(G) This section may be cited as the conference of 275
insurance legislators/national association of insurance 276
commissioners model immunity act. 277
Sec. 3999.41. (A) EVERY INSURER, AS DEFINED IN DIVISION 280
(A) OF SECTION 3999.36 OF THE REVISED CODE, SHALL ADOPT AN 281
ANTIFRAUD PROGRAM AND SHALL SPECIFY IN A WRITTEN PLAN THE 282
PROCEDURES IT WILL FOLLOW WHEN INSTANCES OF INSURANCE FRAUD OR 283
SUSPECTED INSURANCE FRAUD ARE BROUGHT TO ITS ATTENTION. THE 284
INSURER SHALL IDENTIFY IN THE WRITTEN PLAN THE PERSON OR PERSONS 285
RESPONSIBLE FOR THE INSURER'S ANTIFRAUD PROGRAM.
(B)(1) AN INSURER SHALL PRODUCE A WRITTEN PLAN AS REQUIRED 288
BY DIVISION (A) OF THIS SECTION WITHIN NINETY DAYS AFTER 289
OBTAINING ITS LICENSE TO TRANSACT BUSINESS WITHIN THIS STATE OR 290
WITHIN NINETY DAYS AFTER BEGINNING TO ENGAGE IN THE BUSINESS OF 291
INSURANCE WITHIN THIS STATE. THE INSURER SHALL FILE A COPY OF 292
ITS PLAN WITH THE DEPARTMENT OF INSURANCE.
(2) AN INSURER ENGAGED IN THE BUSINESS OF INSURANCE WITHIN 294
THIS STATE ON THE EFFECTIVE DATE OF THIS SECTION SHALL PRODUCE A 295
WRITTEN PLAN AS REQUIRED BY DIVISION (A) OF THIS SECTION WITHIN 297
NINETY DAYS AFTER THE EFFECTIVE DATE OF THIS SECTION. THE 298
INSURER SHALL FILE A COPY OF ITS PLAN WITH THE DEPARTMENT OF
INSURANCE. 299
(C) IF AN INSURER MODIFIES THE PROCEDURES IT FOLLOWS FOR 301
INSTANCES OF INSURANCE FRAUD OR SUSPECTED INSURANCE FRAUD, OR IF 302
THERE IS A CHANGE IN THE PERSON OR PERSONS RESPONSIBLE FOR THE 303
INSURER'S ANTIFRAUD PROGRAM, THE INSURER SHALL FILE AN AMENDED 304
PLAN WITH THE DEPARTMENT OF INSURANCE. 305
Sec. 3999.42. (A) IF AN INSURER, AS DEFINED IN DIVISION 308
(A) OF SECTION 3999.36 OF THE REVISED CODE, HAS A REASONABLE 309
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BELIEF THAT A PERSON IS PERPETRATING OR FACILITATING AN INSURANCE 310
FRAUD, AS ESTABLISHED BY SECTION 2913.47 OF THE REVISED CODE, OR 311
HAS DONE SO, THE INSURER SHALL NOTIFY THE DEPARTMENT OF 312
INSURANCE.
(B) THE NOTIFICATION REQUIRED BY DIVISION (A) OF THIS 315
SECTION SHALL BE MADE IN ACCORDANCE WITH RULES ADOPTED BY THE 316
DEPARTMENT OF INSURANCE.
(C) DIVISION (A) OF THIS SECTION DOES NOT REQUIRE 318
NOTIFICATION OF THE DEPARTMENT OF INSURANCE IF THE INSURANCE 319
FRAUD INVOLVES A CLAIM OF AN AMOUNT LESS THAN ONE THOUSAND 320
DOLLARS. 321
(D) THIS SECTION APPLIES TO INSURANCE FRAUD PERPETRATED OR 324
FACILITATED BY ANY PERSON, INCLUDING, BUT NOT LIMITED TO, ANY
APPLICANT, POLICYHOLDER, SUBSCRIBER, OR ENROLLEE, OR ANY OFFICER, 326
DIRECTOR, MANAGER, EMPLOYEE, REPRESENTATIVE, OR AGENT OF THE 327
INSURER.
Section 2. That existing sections 3905.49 and 3999.31 of 330
the Revised Code are hereby repealed.