SB3 Alabama 2010 1st Special Session

Summary

Primary Sponsor

Gerald H. AllenSenator

Republican

Co-Sponsors

Dick BrewbakerPaul BussmanBill HoltzclawPhillip W. WilliamsClay ScofieldGerald O. DialBryan TaylorTom WhatleyShadrack McGillGreg J. ReedHarri Anne SmithJ.T. WaggonerDel MarshBen H. BrooksTrip PittmanPaul SanfordArthur OrrScott BeasonJimmy HolleyMark Slade Blackwell

Session

First Special Session 2010

Title

Legislators, employment with other branch of state government or other state agencies, etc., including public education, during the time in office, prohibited, exceptions, liability for any violations, Attorney General to enforce, Legislative Double Dipping Prohibition Act (2010-21257)

Summary

SB3 creates an Insurance Fraud Investigation Unit in the Alabama Department of Insurance to define and prosecute insurance fraud, fund it with insurer assessments, and impose penalties and reporting requirements.

What This Bill Does

The bill defines insurance fraud and creates the Insurance Fraud Investigation Unit within the Department of Insurance to investigate suspected fraud, with powers to subpoena, arrest, and share records. It finances the unit through annual insurer assessments and a dedicated Insurance Fraud Unit Fund, with appropriations for 2010 and 2011. It establishes civil and criminal penalties, restitution, and license actions for violations, and requires reporting of suspected fraud along with confidentiality and immunity provisions for reporters and investigators. It also requires continuing education on ethics for licensees and imposes related rules for health maintenance organizations and other health-related provisions.

Who It Affects

• Insurers authorized to write insurance in Alabama (and their licensees) will pay annual assessments to fund the unit, be subject to penalties and license actions for fraud, and face reporting and ethics-education requirements.
• Health maintenance organizations (HMOs) operating in Alabama will be subject to licensing, privacy, and coverage-related provisions, and will interact with the new fraud unit and related insurance laws.

Key Provisions

• Creates the Insurance Fraud Investigation Unit within the Alabama Department of Insurance (Section 27-12A-40) with authority to conduct independent investigations, issue subpoenas, arrest, share records with law enforcement, and make criminal referrals.
• Defines 'insurance fraud' to cover fraudulent acts by insurers, reinsurers, brokers, and their agents in various insurance transactions (Section 27-12A-2).
• Imposes insurer funding through a $200 annual assessment per insurer to fund the Unit; creates the Insurance Fraud Unit Fund and authorizes appropriations for 2010 and 2011 (Sections 27-12A-41, 27-12A-42; Sections 3-4).
• Establishes civil penalties up to $15,000 per violation, plus civil/criminal penalties and restitution; authorizes suspension or revocation of a license or certificate of authority (Section 27-12A-8).
• Requires reporting of suspected fraud by those in the business of insurance; provides immunity from civil liability for reporters and investigators, with exceptions for willful, malicious, or bad-faith acts (Sections 27-12A-21, 27-12A-22); confidentiality of investigation records (Section 27-12A-23).
• Requires three hours of continuing education on insurance producer ethics or business practices for licensees (Section 27-12A-5).
• Gives the unit authority to operate outside Alabama, share information with other states, and perform investigations as needed (Section 27-12A-40 and related subsections).
• Allows the Commissioner to adopt rules to implement the act; affects various health-related chapters for HMOs and related health plans (Sections 27-12A-5, 10-4-115, 27-21A-23, and related amendments).
• Effective date set as the first day of the third month after passage; includes constitutional amendment considerations related to local fund expenditures (Section 8).

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Public Officers and Employees