As Passed by the Senate 1
122nd General Assembly 4
Regular Session Am. Sub. H. B. No. 248 5
1997-1998 6
REPRESENTATIVES REID-O'BRIEN-GARCIA-MOTTLEY-FOX-VESPER-NETZLEY- 8
HAINES-HOTTINGER-BATCHELDER-GRENDELL-MYERS-MOTTL-LEWIS-BUCHY- 9
BRADING-OLMAN-SALERNO-SENATORS RAY-DIX-WATTS-GILLMOR- 10
LATELL-DRAKE-GAETH-KEARNS 11
13
A B I L L
To amend sections 3901.03, 3901.44, 3905.49, and 15
3999.31 and to enact sections 3905.491, 3999.41, 16
and 3999.42 of the Revised Code to require 18
insurers to adopt an antifraud program that
includes written procedures for pursuing 19
insurance fraud; to require insurers to report 21
persons suspected of insurance fraud to the
Department of Insurance; to require persons 22
convicted of a felony while licensed as agents 23
or solicitors to report the conviction to the 25
Department; to designate the office of the Warden
in the Department of Insurance as a criminal 26
justice agency; and to make other changes related 27
to insurance fraud investigations. 29
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 31
Section 1. That sections 3901.03, 3901.44, 3905.49, and 33
3999.31 be amended and sections 3905.491, 3999.41, and 3999.42 of 35
the Revised Code be enacted to read as follows:
Sec. 3901.03. The superintendent of insurance shall 44
appoint a warden who shall investigate all reported violations of 45
law relating to insurance, and perform such other duties in the 46
administration of laws relating to insurance as the 47
superintendent may direct.
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THE OFFICE OF THE WARDEN IS HEREBY DESIGNATED A CRIMINAL 49
JUSTICE AGENCY IN INVESTIGATING REPORTED VIOLATIONS OF LAW 50
RELATING TO INSURANCE, AND AS SUCH IS AUTHORIZED BY THIS STATE TO 51
APPLY FOR ACCESS TO THE COMPUTERIZED DATABASES ADMINISTERED BY 52
THE NATIONAL CRIME INFORMATION CENTER OR THE LAW ENFORCEMENT
AUTOMATED DATA SYSTEM IN OHIO, AND TO OTHER COMPUTERIZED 53
DATABASES ADMINISTERED FOR THE PURPOSE OF MAKING CRIMINAL JUSTICE 54
INFORMATION ACCESSIBLE TO STATE CRIMINAL JUSTICE AGENCIES. 55
Sec. 3901.44. (A) AS USED IN THIS SECTION, "INSURANCE 64
FRAUD INVESTIGATION" MEANS ANY INVESTIGATION CONDUCTED BY THE 65
SUPERINTENDENT OF INSURANCE OR A DESIGNEE OF THE SUPERINTENDENT 66
THAT RELATES TO A FRAUDULENT INSURANCE ACT AS DEFINED IN SECTION 67
3999.31 OF THE REVISED CODE. 68
(B) All papers, documents, reports, and evidence in the 71
possession of the division of insurance fraud of the department 72
of insurance SUPERINTENDENT OR THE SUPERINTENDENT'S DESIGNEE that 73
pertain to an INSURANCE FRAUD investigation conducted or 74
authorized by the division are confidential law enforcement 75
investigatory records under section 149.43 of the Revised Code. 76
Notwithstanding such section, the division SUPERINTENDENT shall 77
not prohibit public inspection of such records that pertain to an 78
INSURANCE FRAUD investigation after the expiration of all federal 80
and state statutes of limitations applicable to the particular 81
offense to which the papers, documents, reports, and evidence 82
relate.
(B)(C) All papers, documents, reports, and evidence in the 85
possession of the division of insurance fraud SUPERINTENDENT that 87
do not pertain to such an INSURANCE FRAUD investigation are 88
public records under section 149.43 of the Revised Code, and are 90
not by such possession alone confidential law enforcement 91
investigatory records.
(C)(D) All papers, documents, reports, and evidence in the 93
possession of the division of insurance fraud SUPERINTENDENT OR 94
THE SUPERINTENDENT'S DESIGNEE that pertain to such an INSURANCE 96
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FRAUD investigation are not subject to subpoena in civil actions 98
by any court of this state until opened for public inspection by 99
the division SUPERINTENDENT in accordance with division (A)(B) of 100
this section or with section 149.43 of the Revised Code, unless 101
the superintendent of insurance or his THE SUPERINTENDENT'S 103
designee consents, or until after reasonable notice to the 105
division SUPERINTENDENT and opportunity for hearing, the court 107
determines the division SUPERINTENDENT would not be hindered 108
unnecessarily by such subpoena. 109
(D) Investigators who are employees of the division (E) 112
THE SUPERINTENDENT AND THE SUPERINTENDENT'S DESIGNEE are not 113
subject to subpoena in civil actions by any court of this state 114
to testify concerning any matter of which they have knowledge 115
pursuant to a pending insurance fraud investigation by the 116
division SUPERINTENDENT.
Sec. 3905.49. (A) The superintendent of insurance may 125
suspend, revoke, refuse to continue or renew, or refuse to issue 126
any license as an agent or solicitor under this chapter, if the 127
superintendent finds any one or more of the following: 128
(1) The person has made a false statement with respect to 130
a material matter in the license application; 131
(2) Any cause for which issuance of the license could have 133
been refused had it existed and been known to the superintendent 134
at the time of issuance; 135
(3) The person has violated or failed to comply with any 137
insurance law or any lawful rule or order of the superintendent 138
or the commissioner of insurance of another state; 139
(4) The person has obtained or attempted to obtain any 141
such license through mispresentation MISREPRESENTATION or fraud; 142
(5) The person has improperly withheld, misappropriated, 144
or converted to the person's own use any moneys belonging to 145
policyholders, insurers, beneficiaries, or others received in the 146
course of the person's insurance business; 147
(6) The person has knowingly misrepresented the terms of 149
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any actual or proposed insurance policy or contract; 150
(7) The person has been convicted of a felony. If a 152
person has been convicted of a felony based on evidence of acts 153
or omissions related to the insurance business, the 154
superintendent shall revoke any license issued to such person for 155
a period of not less than two years. If the person did not hold 156
a license at the time of the conviction, no license shall be 157
issued to the person for a period of two years after the date of 158
the conviction. 159
(8) The person is guilty of an unfair or deceptive trade 161
act OR practice or fraud under any section of Title XXXIX of the 162
Revised Code; 163
(9) In the conduct of the person's affairs under a 165
license, the person has used fraudulent, coercive, or dishonest 166
practices, or is incompetent, untrustworthy, or financially 167
irresponsible; 168
(10) The person's license has been suspended or revoked in 170
any other state, province, district, or territory; 171
(11) The person has forged another's name to an 173
application for insurance; 174
(12) The person has cheated on an examination for an 176
insurance license; 177
(13) THE PERSON HAS FAILED TO REPORT A FELONY CONVICTION 179
AS REQUIRED UNDER SECTION 3905.491 OF THE REVISED CODE. 181
(B) The license of a partnership or corporation may be 183
suspended, revoked, or refused if the superintendent finds, after 184
notice and hearing under Chapter 119. of the Revised Code, that 185
an individual licensee's violation was known or should have been 186
known by one or more of the partners, officers, directors, or 187
managers acting on behalf of the partnership or corporation and 188
such violation was not reported to the department of insurance or 189
corrective action taken in relation to the violation. 190
(C) Before denying, revoking, suspending, or refusing to 192
continue or renew any license or imposing any penalty under this 193
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section, the superintendent shall provide notice and an 194
opportunity for hearing, under Chapter 119. of the Revised Code, 195
to the licensee or applicant and any insurer represented by the 196
licensee or applicant. 197
(D) The superintendent may modify any order under this 199
section and restore a license of or issue a license to a person 200
if the superintendent finds, after notice and opportunity for 201
hearing provided to affected parties, that the person can 202
demonstrate all of the following: 203
(1) The person has made restitution for all pecuniary 205
losses caused by his THE PERSON'S violation; 206
(2) The person's character and reputation have been 208
rehabilitated so that the person possesses the personal 209
qualifications required for the initial issuance of a license; 210
(3) If the order was an order of revocation based on a 212
conviction for felony based on evidence of acts or omissions 213
related to the insurance business, that two years have elapsed 214
since the effective date of the order, or if the order was an 215
order denying a license because of such a conviction, that two 216
years have elapsed since the date of the conviction; 217
(4) If required by the superintendent, the person passes 219
the examination required for an initial issuance of the license. 220
(E) The superintendent shall consider the following 222
standards in denying a license, imposing suspensions, 223
revocations, or refusals of continuations or renewals of 224
licenses: 225
(1) Whether the person acted in good faith and without 227
knowledge of his THE violation and makes restitution for any 228
pecuniary losses suffered by other persons as a result of his THE 229
PERSON'S actions. In such cases, the maximum suspension shall be 230
ninety days. 231
(2) Whether, within the meanings defined in section 233
2901.22 of the Revised Code, the person acted purposely, 234
knowingly, recklessly, or negligently; 235
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(3) Whether the amount of money or the nature of the 237
property involved in the violation would, if it were the subject 238
of a criminal offense, make a theft offense a misdemeanor or a 239
felony; 240
(4) The degree of trust placed in the person by, and the 242
incompetency, inexperience, or susceptibility to undue influence 243
or duress of, any other person involved; 244
(5) The effect of the violation upon the perception by 246
insureds and insurance customers of the ethics and integrity of 247
the insurance industry; 248
(6) The extent to which the person's conduct departed from 250
the customary and usual ethical standards of persons engaged in 251
the insurance business; 252
(7) Such other factors as the superintendent determines to 254
be appropriate under the circumstances. 255
Sec. 3905.491. ANY PERSON WHO IS CONVICTED OF A FELONY 257
WHILE LICENSED AS AN AGENT OR SOLICITOR UNDER THIS CHAPTER SHALL 258
REPORT THE CONVICTION TO THE SUPERINTENDENT OF INSURANCE WITHIN 259
THIRTY DAYS OF THE ENTRY DATE OF THE JUDGMENT OF CONVICTION. 260
WITHIN THAT THIRTY-DAY PERIOD, THE PERSON SHALL ALSO PROVIDE THE 261
SUPERINTENDENT WITH A COPY OF THE JUDGMENT, THE PROBATION OR 262
COMMITMENT ORDER, AND ANY OTHER RELEVANT DOCUMENTS. 263
Sec. 3999.31. (A) As used in this section: 273
(1) "Fraudulent insurance act" means an act committed by a 275
person who, knowingly and with intent to defraud, presents, 276
causes to be presented, or prepares with knowledge or belief that 277
it will be presented to or by an insurer, purported insurer, 278
broker, or any agent thereof, any written statement as part of, 279
or in support of, an application for the issuance of, or the 280
rating of a policy or contract for property insurance, casualty 281
insurance, life insurance, sickness and accident insurance, or an 282
annuity, or a claim for payment or other benefit pursuant to such 283
a policy or contract, that the person knows to contain materially 284
false information concerning any fact material thereto, or 285
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conceals, for the purpose of misleading, information concerning 286
any fact material thereto. "Fraudulent insurance act" also 287
includes any such written statement, claim, or concealment in 288
relation to such an insurance policy or contract that constitutes 289
a criminal offense under Title XXIX or XXXIX of the Revised Code. 290
(2) "Person" includes, but is not limited to, the 292
superintendent of insurance, the national association of 293
insurance commissioners, any insurer, any organization 294
established to detect or prevent fraudulent insurance acts, and 295
any officer, director, trustee, representative, agent, broker, or 296
employee of the superintendent, association, insurer, 297
organization, or person. 298
(B) In the absence of fraud or bad faith, no person is 300
subject to liability for damages or any other civil liability for 301
libel, slander, or other relevant tort cause of action by virtue 302
of filing reports, without malice, or furnishing other 303
information, without malice, required under Title XXXIX of the 304
Revised Code or required by the superintendent under authority 305
granted by that title, and no liability for damages or any other 306
civil cause of action of any nature arises against a person for 307
providing or receiving information relating to suspected 308
fraudulent INSURANCE acts that is furnished to or received from 309
any of the following: 310
(1) Any law enforcement official, or any agent or employee 312
of such official; 313
(2) Other persons subject to the provisions of Title xxxix 316
XXXIX of the Revised Code;
(3) The division of insurance fraud of the department of 318
insurance SUPERINTENDENT AND ANY DESIGNEE OF THE SUPERINTENDENT, 319
any insurance frauds bureau, the national association of 321
insurance commissioners, or any organization established to
detect and prevent fraudulent insurance acts; or 322
(4) Any other person involved in the detection or 324
prevention of fraudulent insurance acts. 325
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(C) The superintendent of insurance and any agent, 327
employee, or designee of the superintendent or any personnel of 328
the division of insurance fraud of the department of insurance, 329
or any insurance frauds bureau, in the absence of malice, fraud, 330
or bad faith, is not subject to civil liability for libel, 331
slander, or other relevant tort and no civil cause of action of 332
any nature arises against such a person by virtue of the 333
publication of any report or bulletin related to the official 334
activities of the superintendent or of the division of insurance 335
fraud of the department of insurance, or of any insurance frauds 336
bureau in relation to fraudulent insurance acts. 337
(D) Nothing in this section is intended to abrogate or 339
modify in any way any common law or statutory privilege or 340
immunity enjoyed by any person. 341
(E) Nothing in this section shall be construed to negate, 343
supersede, or otherwise affect section 3911.06, 3911.07, 3915.05, 344
or 3923.04 of the Revised Code. 345
(F) This section may be cited as the conference of 347
insurance legislators/national association of insurance 348
commissioners model immunity act. 349
Sec. 3999.41. (A) EXCEPT AS PROVIDED IN DIVISION (D) OF 351
THIS SECTION, EVERY INSURER, AS DEFINED IN DIVISION (A) OF 353
SECTION 3999.36 OF THE REVISED CODE, SHALL ADOPT AN ANTIFRAUD 354
PROGRAM AND SHALL SPECIFY IN A WRITTEN PLAN THE PROCEDURES IT 355
WILL FOLLOW WHEN INSTANCES OF INSURANCE FRAUD OR SUSPECTED 356
INSURANCE FRAUD ARE BROUGHT TO ITS ATTENTION. THE INSURER SHALL 357
IDENTIFY IN THE WRITTEN PLAN THE PERSON OR PERSONS RESPONSIBLE 358
FOR THE INSURER'S ANTIFRAUD PROGRAM.
(B)(1) AN INSURER SHALL DEVELOP A WRITTEN PLAN REQUIRED BY 361
DIVISION (A) OF THIS SECTION WITHIN NINETY DAYS AFTER OBTAINING 362
ITS LICENSE TO TRANSACT BUSINESS WITHIN THIS STATE OR WITHIN 363
NINETY DAYS AFTER BEGINNING TO ENGAGE IN THE BUSINESS OF 364
INSURANCE WITHIN THIS STATE AND SHALL THEREAFTER MAINTAIN SUCH A 365
WRITTEN PLAN.
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(2) AN INSURER ENGAGED IN THE BUSINESS OF INSURANCE WITHIN 367
THIS STATE ON THE EFFECTIVE DATE OF THIS SECTION SHALL DEVELOP A 368
WRITTEN PLAN REQUIRED BY DIVISION (A) OF THIS SECTION WITHIN 370
NINETY DAYS AFTER THE EFFECTIVE DATE OF THIS SECTION AND SHALL
THEREAFTER MAINTAIN SUCH A WRITTEN PLAN. 371
(C) IF AN INSURER MODIFIES THE PROCEDURES IT FOLLOWS FOR 373
INSTANCES OF INSURANCE FRAUD OR SUSPECTED INSURANCE FRAUD, OR IF 374
THERE IS A CHANGE IN THE PERSON OR PERSONS RESPONSIBLE FOR THE 375
INSURER'S ANTIFRAUD PROGRAM, THE INSURER SHALL MODIFY THE WRITTEN 376
PLAN IT MAINTAINS PURSUANT TO THIS SECTION. 377
(D) THE REQUIREMENTS OF THIS SECTION ARE NOT APPLICABLE TO 379
ANY INSURER IDENTIFIED IN DIVISION (A) OF THIS SECTION THAT IS 380
NOT ENGAGED IN WRITING DIRECT INSURANCE IN THIS STATE. 381
Sec. 3999.42. (A) IF AN INSURER, AS DEFINED IN DIVISION 384
(A) OF SECTION 3999.36 OF THE REVISED CODE, HAS A REASONABLE 385
BELIEF THAT A PERSON IS PERPETRATING OR FACILITATING AN INSURANCE 386
FRAUD, AS ESTABLISHED BY SECTION 2913.47 OF THE REVISED CODE, OR 387
HAS DONE SO, THE INSURER SHALL NOTIFY THE DEPARTMENT OF 388
INSURANCE.
(B) THE NOTIFICATION REQUIRED BY DIVISION (A) OF THIS 391
SECTION SHALL BE MADE IN ACCORDANCE WITH RULES ADOPTED BY THE 392
DEPARTMENT OF INSURANCE.
(C) DIVISION (A) OF THIS SECTION DOES NOT REQUIRE 394
NOTIFICATION OF THE DEPARTMENT OF INSURANCE IF THE INSURANCE 395
FRAUD INVOLVES A CLAIM OF AN AMOUNT LESS THAN ONE THOUSAND 396
DOLLARS. 397
(D) THIS SECTION APPLIES TO INSURANCE FRAUD PERPETRATED OR 400
FACILITATED BY ANY PERSON, INCLUDING, BUT NOT LIMITED TO, ANY
APPLICANT, POLICYHOLDER, SUBSCRIBER, OR ENROLLEE, OR ANY OFFICER, 402
DIRECTOR, MANAGER, EMPLOYEE, REPRESENTATIVE, OR AGENT OF THE 403
INSURER.
Section 2. That existing sections 3901.03, 3901.44, 405
3905.49, and 3999.31 of the Revised Code are hereby repealed. 406