Report Title:

Health Care Insurance Fraud; Civil Immunity in Reporting

 

Description:

Use the definition of insurance fraud found in the motor vehicle insurance law to apply by reference in the health insurance laws; provides civil immunity to persons reporting fraud in health insurance. (SD2)

 

THE HOUSE OF REPRESENTATIVES

H.B. NO.

2207

TWENTY-FIRST LEGISLATURE, 2002

H.D. 1

STATE OF HAWAII

S.D. 2

 

A BILL FOR AN ACT

 

relating to INSURANCE FRAUD.

 

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

SECTION 1. The legislature finds that 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.

The Hawaii Medical Service Association estimates that 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 are 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, the Legislature amended Hawaii's insurance code to strengthen the law regarding insurance fraud reporting for motor vehicle insurance. Insurance fraud, however, 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, to help identify and prevent fraud against the health care industry.

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

SECTION 2. Chapter 431:10A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§431:10A-    Civil immunity for persons reporting fraud. A person shall not be subject to civil liability for providing information under this article, including filing a report, furnishing oral or written evidence, or giving testimony concerning suspected, anticipated, or completed offense of insurance fraud as defined in section 431:10C-307.7(a), to the commissioner, the National Association of Insurance Commissioners, any federal, state, or county law enforcement or regulatory agency, or another insurer, if the information provided is for the sole purpose of preventing, investigating, or prosecuting insurance fraud, except if the person has acted with malice or committed perjury.

As used in this section, "malice" means having actual knowledge regarding the falsity of any information being provided under this section."

SECTION 3. Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to article I be appropriately designated and to read as follows:

"§432:1-    Civil immunity for persons reporting fraud. A person shall not be subject to civil liability for providing information under this article, including filing a report, furnishing oral or written evidence, or giving testimony concerning suspected, anticipated, or completed offense of insurance fraud as defined in section 431:10C-307.7(a), to the commissioner, the National Association of Insurance Commissioners, any federal, state, or county law enforcement or regulatory agency, or another insurer, if the information provided is for the sole purpose of preventing, investigating, or prosecuting insurance fraud, except if the person has acted with malice or committed perjury.

As used in this section, "malice" means having actual knowledge regarding the falsity of any information being provided under this section."

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

"§432D- Civil immunity for persons reporting fraud. A person shall not be subject to civil liability for providing information under this chapter, including filing a report, furnishing oral or written evidence, or giving testimony concerning suspected, anticipated, or completed offense of insurance fraud as defined in section 431:10C-307.7(a), to the commissioner, the National Association of Insurance Commissioners, any federal, state, or county law enforcement or regulatory agency, or another insurer, if the information provided is for the sole purpose of preventing, investigating, or prosecuting insurance fraud, except if the person has acted with malice or committed perjury.

As used in this section, "malice" means having actual knowledge regarding the falsity of any information being provided under this section."

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.