SB354 Alabama 2011 Session

Summary

Primary Sponsor

Ben H. Brooks

Republican

Co-Sponsor

Rusty Glover

Session

Regular Session 2011

Title

Insurance fraud, defined, investigations by Insurance Department, civil immunity for reporting fraud, Insurance Fraud Unit and fund created in Insurance Department, civil and criminal penalties, six year filing limit, Secs. 27-12A-1 to 27-12A-8, incl., 27-12A-20 to 27-12A-24, incl., 27-12A-40 to 27-12A-42, incl., added; Secs. 10-4-115, 27-21A-23 am'd.

Description

Under existing law, material or fraudulent misrepresentations, omissions, concealment of facts, and incorrect statements in insurance transactions are prohibited and an insurance producer who violates these prohibitions may have his or her license revoked.

This bill would specifically define insurance fraud by a person, an insurer, a reinsurer, a broker, or their respective agents.

This bill would authorize the Department of Insurance to investigate suspected insurance fraud and would also allow the reporting to certain public officers of suspected insurance fraud.

This bill would also offer civil immunity for certain persons reporting and investigating suspected insurance fraud and would require confidentiality of information and files.

This bill would create the Insurance Fraud Unit within the office of the Department of Insurance to investigate suspected insurance fraud and would provide powers and remedies in enforcing this bill.

The bill would provide for assessments on insurers to fund the unit, for the establishment of the Insurance Fraud Unit Fund, and would make appropriations from the fund for the fiscal years ending September 30, 2011, and September 30, 2012.

This bill would provide civil penalties up to $5,000 per violation or suspension of license or certificate of authority. This bill would also provide for civil and criminal penalties in addition to restitution to the aggrieved party and would limit the filing of a cause of action to six years.

The bill would also authorize the Commissioner of Insurance to promulgate rules to administer this act.

The bill would also specify that health maintenance organizations would be subject to rules of the commissioner adopted pursuant to Sections 27-7-43 and 27-7-44, Code of Alabama 1975, relating to licensing and privacy.

Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, prohibits a general law whose purpose or effect would be to require a new or increased expenditure of local funds from becoming effective with regard to a local governmental entity without enactment by a 2/3 vote unless: it comes within one of a number of specified exceptions; it is approved by the affected entity; or the Legislature appropriates funds, or provides a local source of revenue, to the entity for the purpose.

The purpose or effect of this bill would be to require a new or increased expenditure of local funds within the meaning of the amendment. However, the bill does not require approval of a local governmental entity or enactment by a 2/3 vote to become effective because it comes within one of the specified exceptions contained in the amendment.

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Subjects

Insurance Department