SB2499

Report Title:

Insurance Fraud; Immunity from Liability

 

Description:

Establishes immunity from civil liability for a person who reports insurance fraud, except in the case of malicious reporting or perjury.

THE SENATE	S.B. NO.	2499
TWENTY-FIRST LEGISLATURE, 2002
STATE OF HAWAII

A BILL FOR AN ACT

 

relating to insurance fraud.

 

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.

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 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 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.

(b) As used in this section:

"Insurance fraud" shall be as provided in section 431:10C-307.7.

"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, 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 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.

(b) As used in this section:

"Insurance fraud" shall be as provided 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 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 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.

(b) As used in this section:

"Insurance fraud" shall be as provided in section 431:10C-307.7.

"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.

INTRODUCED BY:	_____________________________