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As Reported by the Senate Insurance, Commerce and Labor Committee
122nd General Assembly
Regular Session
1997-1998 | Am. Sub. H. B. No. 248 |
REPRESENTATIVES REID-O'BRIEN-GARCIA-MOTTLEY-FOX-VESPER-NETZLEY-
HAINES-HOTTINGER-BATCHELDER-GRENDELL-MYERS-MOTTL-LEWIS-BUCHY-
BRADING-OLMAN-SALERNO-
SENATORS RAY-DIX-WATTS-GILLMOR
A BILL
To amend sections 3901.44, 3905.49, and
3999.31 and to enact sections 3905.491, 3999.41, and
3999.42 of the Revised Code to
require insurers to adopt an antifraud program that includes
written procedures for pursuing insurance fraud;
to require
insurers to report persons suspected of insurance fraud to the
Department of Insurance; to require persons
convicted of a felony while licensed as agents
or solicitors to report the
conviction to the Department; and to make other changes related to insurance
fraud
investigations.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 3901.44, 3905.49, and
3999.31 be amended and sections 3905.491, 3999.41, and
3999.42 of the Revised Code be enacted to read as follows:
Sec. 3901.44. (A) AS USED IN THIS SECTION, "INSURANCE FRAUD INVESTIGATION"
MEANS ANY INVESTIGATION CONDUCTED BY THE SUPERINTENDENT OF
INSURANCE OR A DESIGNEE OF THE SUPERINTENDENT THAT RELATES TO A
FRAUDULENT INSURANCE ACT AS DEFINED IN SECTION 3999.31 OF THE
REVISED CODE.
(B) All papers, documents, reports, and
evidence in the possession of the division of insurance fraud of
the department of insurance SUPERINTENDENT OR THE SUPERINTENDENT'S
DESIGNEE that pertain to an INSURANCE FRAUD investigation
conducted or authorized by the division are confidential law
enforcement investigatory records under section 149.43 of the
Revised Code. Notwithstanding such section, the division
SUPERINTENDENT shall
not prohibit public inspection of such records that pertain to an INSURANCE
FRAUD
investigation after the expiration of all federal and state
statutes of limitations applicable to the particular offense to
which the papers, documents, reports, and evidence relate.
(B)(C) All papers, documents, reports, and evidence in
the
possession of the division of insurance fraud SUPERINTENDENT
that do not pertain
to such an INSURANCE FRAUD investigation are public records under
section 149.43
of the Revised Code, and are not by such possession alone
confidential law enforcement investigatory records.
(C)(D) All papers, documents, reports, and evidence in the
possession of the division of insurance fraud SUPERINTENDENT OR THE
SUPERINTENDENT'S DESIGNEE that pertain to
such an INSURANCE FRAUD investigation are not subject to subpoena in
civil
actions by any court of this state until opened for public
inspection by the division SUPERINTENDENT in accordance with
division (A)(B) of
this section or with section 149.43 of the Revised Code, unless
the superintendent of insurance or his THE
SUPERINTENDENT'S
designee consents, or
until after reasonable notice to the division SUPERINTENDENT and
opportunity for
hearing, the court determines the division SUPERINTENDENT would
not be hindered
unnecessarily by such subpoena.
(D) Investigators who are employees of the division
(E) THE SUPERINTENDENT AND THE SUPERINTENDENT'S DESIGNEE are
not subject to subpoena in civil actions by any court of this
state to testify concerning any matter of which they have
knowledge pursuant to a pending insurance fraud investigation by
the division SUPERINTENDENT.
Sec. 3905.49. (A) The superintendent of insurance may
suspend, revoke, refuse to continue or renew, or refuse to issue
any license as an agent or solicitor under this chapter, if the
superintendent finds any one or more of the following:
(1) The person has made a false statement with respect to
a material matter in the license application;
(2) Any cause for which issuance of the license could have
been refused had it existed and been known to the superintendent
at the time of issuance;
(3) The person has violated or failed to comply with any
insurance law or any lawful rule or order of the superintendent
or the commissioner of insurance of another state;
(4) The person has obtained or attempted to obtain any
such license through mispresentation MISREPRESENTATION or fraud;
(5) The person has improperly withheld, misappropriated,
or converted to the person's own use any moneys belonging to
policyholders, insurers, beneficiaries, or others received in the
course of the person's insurance business;
(6) The person has knowingly misrepresented the terms of
any actual or proposed insurance policy or contract;
(7) The person has been convicted of a felony. If a
person has been convicted of a felony based on evidence of acts
or omissions related to the insurance business, the
superintendent shall revoke any license issued to such person for
a period of not less than two years. If the person did not hold
a license at the time of the conviction, no license shall be
issued to the person for a period of two years after the date of
the conviction.
(8) The person is guilty of an unfair or deceptive trade
act OR practice or fraud under any section of Title XXXIX of the
Revised Code;
(9) In the conduct of the person's affairs under a
license, the person has used fraudulent, coercive, or dishonest
practices, or is incompetent, untrustworthy, or financially
irresponsible;
(10) The person's license has been suspended or revoked in
any other state, province, district, or territory;
(11) The person has forged another's name to an
application for insurance;
(12) The person has cheated on an examination for an
insurance license;
(13) THE PERSON HAS FAILED TO REPORT A FELONY CONVICTION AS
REQUIRED UNDER SECTION 3905.491 OF THE REVISED
CODE.
(B) The license of a partnership or corporation may be
suspended, revoked, or refused if the superintendent finds, after
notice and hearing under Chapter 119. of the Revised Code, that
an individual licensee's violation was known or should have been
known by one or more of the partners, officers, directors, or
managers acting on behalf of the partnership or corporation and
such violation was not reported to the department of insurance or
corrective action taken in relation to the violation.
(C) Before denying, revoking, suspending, or refusing to
continue or renew any license or imposing any penalty under this
section, the superintendent shall provide notice and an
opportunity for hearing, under Chapter 119. of the Revised Code,
to the licensee or applicant and any insurer represented by the
licensee or applicant.
(D) The superintendent may modify any order under this
section and restore a license of or issue a license to a person
if the superintendent finds, after notice and opportunity for
hearing provided to affected parties, that the person can
demonstrate all of the following:
(1) The person has made restitution for all pecuniary
losses caused by his THE PERSON'S violation;
(2) The person's character and reputation have been
rehabilitated so that the person possesses the personal
qualifications required for the initial issuance of a license;
(3) If the order was an order of revocation based on a
conviction for felony based on evidence of acts or omissions
related to the insurance business, that two years have elapsed
since the effective date of the order, or if the order was an
order denying a license because of such a conviction, that two
years have elapsed since the date of the conviction;
(4) If required by the superintendent, the person passes
the examination required for an initial issuance of the license.
(E) The superintendent shall consider the following
standards in denying a license, imposing suspensions,
revocations, or refusals of continuations or renewals of
licenses:
(1) Whether the person acted in good faith and without
knowledge of his THE violation and makes restitution for any
pecuniary losses suffered by other persons as a result of his THE
PERSON'S actions. In such cases, the maximum suspension shall be ninety
days.
(2) Whether, within the meanings defined in section
2901.22 of the Revised Code, the person acted purposely,
knowingly, recklessly, or negligently;
(3) Whether the amount of money or the nature of the
property involved in the violation would, if it were the subject
of a criminal offense, make a theft offense a misdemeanor or a
felony;
(4) The degree of trust placed in the person by, and the
incompetency, inexperience, or susceptibility to undue influence
or duress of, any other person involved;
(5) The effect of the violation upon the perception by
insureds and insurance customers of the ethics and integrity of
the insurance industry;
(6) The extent to which the person's conduct departed from
the customary and usual ethical standards of persons engaged in
the insurance business;
(7) Such other factors as the superintendent determines to
be appropriate under the circumstances.
Sec. 3905.491. ANY PERSON WHO IS CONVICTED OF A FELONY WHILE
LICENSED AS AN AGENT OR SOLICITOR UNDER THIS CHAPTER SHALL
REPORT THE CONVICTION TO THE SUPERINTENDENT OF INSURANCE WITHIN
THIRTY DAYS OF THE ENTRY DATE OF THE JUDGMENT OF CONVICTION.
WITHIN THAT THIRTY-DAY PERIOD, THE PERSON SHALL ALSO PROVIDE THE
SUPERINTENDENT WITH A COPY OF THE JUDGMENT, THE PROBATION OR
COMMITMENT ORDER, AND ANY OTHER RELEVANT DOCUMENTS.
Sec. 3999.31. (A) As used in this section:
(1) "Fraudulent insurance act" means an act committed by a
person who, knowingly and with intent to defraud, presents,
causes to be presented, or prepares with knowledge or belief that
it will be presented to or by an insurer, purported insurer,
broker, or any agent thereof, any written statement as part of,
or in support of, an application for the issuance of, or the
rating of a policy or contract for property insurance, casualty
insurance, life insurance, sickness and accident insurance, or an
annuity, or a claim for payment or other benefit pursuant to such
a policy or contract, that the person knows to contain materially
false information concerning any fact material thereto, or
conceals, for the purpose of misleading, information concerning
any fact material thereto. "Fraudulent insurance act" also
includes any such written statement, claim, or concealment in
relation to such an insurance policy or contract that constitutes
a criminal offense under Title XXIX or XXXIX of the Revised Code.
(2) "Person" includes, but is not limited to, the
superintendent of insurance, the national association of
insurance commissioners, any insurer, any organization
established to detect or prevent fraudulent insurance acts, and
any officer, director, trustee, representative, agent, broker, or
employee of the superintendent, association, insurer,
organization, or person.
(B) In the absence of fraud or bad faith, no person is
subject to liability for damages or any other civil liability for
libel, slander, or other relevant tort cause of action by virtue
of filing reports, without malice, or furnishing other
information, without malice, required under Title XXXIX of the
Revised Code or required by the superintendent under authority
granted by that title, and no liability for damages or any other
civil cause of action of any nature arises against a person for
providing or receiving information relating to suspected
fraudulent INSURANCE acts that is furnished to or received from any of
the following:
(1) Any law enforcement official, or any agent or employee
of such official;
(2) Other persons subject to the provisions of Title
xxxix XXXIX of the Revised Code;
(3) The division of insurance fraud of the department of
insurance SUPERINTENDENT AND ANY DESIGNEE OF THE SUPERINTENDENT,
any insurance frauds bureau, the national association
of insurance commissioners, or any organization established to
detect and prevent fraudulent insurance acts; or
(4) Any other person involved in the detection or
prevention of fraudulent insurance acts.
(C) The superintendent of insurance and any agent,
employee, or designee of the superintendent or any personnel of
the division of insurance fraud of the department of insurance,
or any insurance frauds bureau, in the absence of malice, fraud,
or bad faith, is not subject to civil liability for libel,
slander, or other relevant tort and no civil cause of action of
any nature arises against such a person by virtue of the
publication of any report or bulletin related to the official
activities of the superintendent or of the division of insurance
fraud of the department of insurance, or of any insurance frauds
bureau in relation to fraudulent insurance acts.
(D) Nothing in this section is intended to abrogate or
modify in any way any common law or statutory privilege or
immunity enjoyed by any person.
(E) Nothing in this section shall be construed to negate,
supersede, or otherwise affect section 3911.06, 3911.07, 3915.05,
or 3923.04 of the Revised Code.
(F) This section may be cited as the conference of
insurance legislators/national association of insurance
commissioners model immunity act.
Sec. 3999.41. (A) EXCEPT AS PROVIDED IN DIVISION (D) OF
THIS SECTION, EVERY INSURER, AS DEFINED IN DIVISION
(A) OF SECTION 3999.36 OF THE REVISED CODE,
SHALL ADOPT AN ANTIFRAUD PROGRAM AND SHALL SPECIFY IN A WRITTEN
PLAN THE PROCEDURES IT WILL FOLLOW WHEN INSTANCES OF INSURANCE
FRAUD OR SUSPECTED INSURANCE FRAUD ARE BROUGHT TO ITS ATTENTION.
THE INSURER SHALL IDENTIFY IN THE WRITTEN PLAN THE PERSON OR
PERSONS RESPONSIBLE FOR THE INSURER'S ANTIFRAUD PROGRAM.
(B)(1) AN INSURER SHALL DEVELOP A WRITTEN PLAN
REQUIRED BY DIVISION (A) OF THIS SECTION WITHIN NINETY
DAYS AFTER OBTAINING ITS LICENSE TO TRANSACT BUSINESS WITHIN
THIS STATE OR WITHIN NINETY DAYS AFTER BEGINNING TO ENGAGE IN
THE BUSINESS OF INSURANCE WITHIN THIS STATE AND SHALL THEREAFTER MAINTAIN SUCH
A WRITTEN PLAN.
(2) AN INSURER ENGAGED IN THE BUSINESS OF INSURANCE WITHIN THIS
STATE ON THE EFFECTIVE DATE OF THIS SECTION SHALL DEVELOP A
WRITTEN PLAN REQUIRED BY DIVISION (A) OF THIS SECTION
WITHIN NINETY DAYS AFTER THE EFFECTIVE DATE OF THIS SECTION AND SHALL
THEREAFTER MAINTAIN SUCH A WRITTEN PLAN.
(C) IF AN INSURER MODIFIES THE PROCEDURES IT FOLLOWS FOR
INSTANCES OF INSURANCE FRAUD OR SUSPECTED INSURANCE FRAUD, OR IF
THERE IS A CHANGE IN THE PERSON OR PERSONS RESPONSIBLE FOR THE
INSURER'S ANTIFRAUD PROGRAM, THE INSURER SHALL MODIFY THE WRITTEN PLAN IT
MAINTAINS PURSUANT TO THIS SECTION.
(D) THE REQUIREMENTS OF THIS SECTION ARE NOT APPLICABLE TO ANY
INSURER IDENTIFIED IN DIVISION (A) OF THIS SECTION THAT IS NOT
ENGAGED IN WRITING DIRECT INSURANCE IN THIS STATE.
Sec. 3999.42. (A) IF AN INSURER, AS DEFINED IN DIVISION
(A) OF SECTION 3999.36 OF THE REVISED CODE,
HAS A REASONABLE BELIEF THAT A PERSON IS PERPETRATING OR
FACILITATING AN INSURANCE FRAUD, AS ESTABLISHED BY SECTION
2913.47 OF THE REVISED CODE, OR HAS DONE SO, THE
INSURER SHALL NOTIFY THE DEPARTMENT OF INSURANCE.
(B) THE NOTIFICATION REQUIRED BY DIVISION (A) OF
THIS SECTION SHALL BE MADE IN ACCORDANCE WITH RULES ADOPTED BY
THE DEPARTMENT OF INSURANCE.
(C) DIVISION (A) OF THIS SECTION DOES NOT REQUIRE
NOTIFICATION OF THE DEPARTMENT OF INSURANCE IF THE INSURANCE
FRAUD INVOLVES A CLAIM OF AN AMOUNT LESS THAN ONE THOUSAND
DOLLARS.
(D) THIS SECTION APPLIES TO INSURANCE FRAUD PERPETRATED
OR FACILITATED BY ANY PERSON, INCLUDING, BUT NOT LIMITED TO, ANY
APPLICANT, POLICYHOLDER, SUBSCRIBER, OR ENROLLEE, OR ANY
OFFICER, DIRECTOR, MANAGER, EMPLOYEE, REPRESENTATIVE, OR AGENT
OF THE INSURER.
Section 2. That existing sections 3901.44, 3905.49,
and 3999.31 of the Revised Code are hereby repealed.
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