PRIOR PRINTER'S NO. 3181 PRINTER'S NO. 3446
No. 2453 Session of 1992
INTRODUCED BY MURPHY, MICHLOVIC AND GAMBLE, MARCH 10, 1992
AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, APRIL 7, 1992
AN ACT
1 Amending Title 18 (Crimes and Offenses) of the Pennsylvania
2 Consolidated Statutes, further providing for insurance fraud;
3 and making an editorial change.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Sections 911(h) and 4117(a), (g) and (D), (E), <--
7 (F), (G), (H), (I) AND (j) of Title 18 of the Pennsylvania
8 Consolidated Statutes are amended to read:
9 § 911. Corrupt organizations.
10 * * *
11 (h) Definitions.--As used in this section:
12 (1) "Racketeering activity" means:
13 (i) any act which is indictable under any of the
14 following provisions of this title:
15 Chapter 25 (relating to criminal homicide)
16 Section 2706 (relating to terroristic threats)
17 Chapter 29 (relating to kidnapping)
18 Chapter 33 (relating to arson, etc.)
1 Chapter 37 (relating to robbery)
2 Chapter 39 (relating to theft and related
3 offenses)
4 Section 4108 (relating to commercial bribery and
5 breach of duty to act disinterestedly)
6 Section 4109 (relating to rigging publicly
7 exhibited contest)
8 Section 4117 (relating to [motor vehicle]
9 insurance fraud)
10 Chapter 47 (relating to bribery and corrupt
11 influence)
12 Chapter 49 (relating to perjury and other
13 falsification in official matters)
14 Section 5512 through 5514 (relating to gambling)
15 Chapter 59 (relating to public indecency)
16 (ii) any offense indictable under section 13 of the
17 act of April 14, 1972 (P.L.233, No.64), known as The
18 Controlled Substance, Drug, Device and Cosmetic Act
19 (relating to the sale and dispensing of narcotic drugs);
20 (iii) any conspiracy to commit any of the offenses
21 set forth in subparagraphs (i) and (ii) of this
22 paragraph; or
23 (iv) the collection of any money or other property
24 in full or partial satisfaction of a debt which arose as
25 the result of the lending of money or other property at a
26 rate of interest exceeding 25% per annum or the
27 equivalent rate for a longer or shorter period, where not
28 otherwise authorized by law.
29 Any act which otherwise would be considered racketeering
30 activity by reason of the application of this paragraph,
19920H2453B3446 - 2 -
1 shall not be excluded from its application solely because the
2 operative acts took place outside the jurisdiction of this
3 Commonwealth, if such acts would have been in violation of
4 the law of the jurisdiction in which they occurred.
5 (2) "Person" means any individual or entity capable of
6 holding a legal or beneficial interest in property.
7 (3) "Enterprise" means any individual, partnership,
8 corporation, association or other legal entity, and any union
9 or group of individuals associated in fact although not a
10 legal entity, engaged in commerce.
11 (4) "Pattern of racketeering activity" refers to a
12 course of conduct requiring two or more acts of racketeering
13 activity one of which occurred after the effective date of
14 this section.
15 (5) "Racketeering investigator" means an attorney,
16 investigator or investigative body so designated in writing
17 by the Attorney General and charged with the duty of
18 enforcing or carrying into effect the provisions of this
19 section.
20 (6) "Racketeering investigation" means any inquiry
21 conducted by any racketeering investigator for the purpose of
22 ascertaining whether any person has been involved in any
23 violation of this section or of any order, judgment, or
24 decree of any court duly entered in any case or proceeding
25 arising under this section.
26 (7) "Documentary material" means any book, paper,
27 record, recording, tape, report, memorandum, written
28 communication, or other document relating to the business
29 affairs of any person or enterprise.
30 § 4117. Insurance fraud.
19920H2453B3446 - 3 -
1 (a) Offense defined.--A person commits an offense if the
2 person does any of the following:
3 (1) Knowingly and with the intent to defraud a State or
4 local government agency files, presents or causes to be filed
5 with or presented to the government agency a document that
6 contains false, incomplete or misleading information
7 concerning any fact or thing material to the agency's
8 determination in approving or disapproving [a motor vehicle] <--
9 ANY insurance rate filing, [a motor vehicle] ANY insurance <--
10 transaction or ANY other [motor vehicle] insurance action <--
11 which is required or filed in response to an agency's
12 request.
13 (2) Knowingly and with the intent to defraud any insurer
14 or insured, presents or causes to be presented to any insurer <--
15 any statement forming a part of, or in support of, an
16 insurance claim that contains any false, incomplete or
17 misleading information concerning any fact or thing material
18 to the insurance claim.
19 (3) Knowingly and with the intent to defraud any insurer
20 or insured, assists, abets, solicits or conspires with <--
21 another to prepare or make any statement that is intended to
22 be presented to any insurer in connection with, or in support
23 of, an insurance claim that contains any false, incomplete or
24 misleading information concerning any fact or thing material
25 to the insurance claim.
26 (4) Engages in unlicensed agent or broker activity as
27 defined by the act of May 17, 1921 (P.L.789, No.285), known
28 as The Insurance Department Act of one thousand nine hundred
29 and twenty-one, knowingly and with the intent to defraud an
30 insurer or the public.
19920H2453B3446 - 4 -
1 (5) Knowingly benefits, directly or indirectly, from the
2 proceeds derived from a violation of this section due to the
3 assistance, conspiracy or urging of any person.
4 (6) Is the owner, administrator or employee of any
5 health care facility and knowingly allows the use of such
6 facility by any person in furtherance of a scheme or
7 conspiracy to violate any of the provisions of this section.
8 (7) Borrows or uses another person's financial
9 responsibility or other insurance identification card or
10 permits his financial responsibility or other insurance
11 identification card to be used by another, knowingly and with
12 intent to present a fraudulent insurance claim to an insurer.
13 * * * <--
14 (8) KNOWINGLY AND WITH THE INTENT TO DEFRAUD THE PUBLIC, <--
15 ENGAGES IN OR PROMOTES UNLICENSED INSURANCE ACTIVITIES AS
16 DEFINED UNDER THE ACT OF MAY 17, 1921 (P.L.789, NO.285),
17 KNOWN AS THE INSURANCE DEPARTMENT ACT OF ONE THOUSAND NINE
18 HUNDRED AND TWENTY-ONE, INCLUDING, BUT NOT LIMITED TO,
19 ACTIVITIES CONDUCTED THROUGH THE FRAUDULENT OPERATION OF A
20 MULTIPLE EMPLOYER WELFARE ARRANGEMENT OR MULTIPLE EMPLOYER
21 TRUST UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
22 1974 (PUBLIC LAW 93-406, 88 STAT. 829) OR OPERATION OF ANY
23 SUCH ARRANGEMENT WHICH FAILS TO QUALIFY UNDER THAT ACT.
24 (9) KNOWINGLY AND WITH THE INTENT TO DEFRAUD A PERSON,
25 ENGAGES IN OR PROMOTES A PATTERN OR PRACTICE OF MISCHARGING
26 RATES OR MISREPRESENTING POLICY COVERAGES, BENEFITS, TERMS OR
27 CONDITIONS.
28 * * *
29 (D) GRADING.--AN OFFENSE UNDER SUBSECTION (A)(1) THROUGH
30 [(7)] (9) IS A FELONY OF THE THIRD DEGREE. AN OFFENSE UNDER
19920H2453B3446 - 5 -
1 SUBSECTION (B) IS A MISDEMEANOR OF THE FIRST DEGREE.
2 [(E) RESTITUTION.--THE COURT MAY, IN ADDITION TO ANY OTHER
3 SENTENCE AUTHORIZED BY LAW, SENTENCE A PERSON CONVICTED OF
4 VIOLATING THIS SECTION TO MAKE RESTITUTION UNDER SECTION 1106
5 (RELATING TO RESTITUTION FOR INJURIES TO PERSON OR PROPERTY).]
6 (E) RESTITUTION AND FORFEITURE.--THE COURT MAY, IN ADDITION
7 TO IMPOSING ANY OTHER PENALTY AUTHORIZED BY LAW:
8 (1) ORDER RESTITUTION OF MONEYS OR PROPERTY OBTAINED OR
9 RETAINED UNLAWFULLY BY A PERSON FOUND TO BE IN VIOLATION OF
10 THIS SECTION. IF A COURT ORDERS FORFEITURE, IT SHALL FIRST
11 ORDER FULL RESTITUTION TO THE KNOWN VICTIMS OF THE OFFENSE.
12 (2) ORDER A PERSON TO FORFEIT, IN ACCORDANCE WITH 42
13 PA.C.S. CH. 68 (RELATING TO CONTROLLED SUBSTANCES
14 FORFEITURES), THE FOLLOWING TO THE COMMONWEALTH:
15 (I) MONEY, NEGOTIABLE INSTRUMENTS, SECURITIES,
16 COLLATERAL OR OTHER THINGS OF VALUE DERIVED FROM OR USED
17 TO FACILITATE INSURANCE FRAUD AS DEFINED IN THIS SECTION;
18 AND
19 (II) REAL OR PERSONAL PROPERTY USED OR INTENDED TO
20 BE USED, IN ANY MANNER OR PART, TO COMMIT OR FACILITATE
21 INSURANCE FRAUD AS DEFINED IN THIS SECTION.
22 (3) IMPOSE ANY OR ALL OF THE FOREGOING SANCTIONS
23 CONCURRENTLY.
24 (F) AUTHORIZATION TO USE PROPERTY.--THE ATTORNEY GENERAL AND
25 THE DISTRICT ATTORNEY SHALL UTILIZE PROPERTY AND PROCEEDS
26 THEREOF FORFEITED PURSUANT TO THIS SUBSECTION FOR ENFORCING THE
27 PROVISIONS OF THIS SECTION.
28 [(F)] (G) IMMUNITY.--AN INSURER, AND ANY AGENT, SERVANT OR
29 EMPLOYEE THEREOF ACTING IN THE COURSE AND SCOPE OF HIS
30 EMPLOYMENT, AND THE MOTOR VEHICLE FRAUD INDEX BUREAU, AS
19920H2453B3446 - 6 -
1 DESIGNATED BY THE INSURANCE COMMISSIONER PURSUANT TO 75 PA.C.S.
2 § 1821 (RELATING TO DESIGNATION), ACTING PURSUANT TO ITS PLAN OF
3 OPERATION, SHALL BE IMMUNE FROM CIVIL OR CRIMINAL LIABILITY
4 ARISING FROM THE SUPPLY OR RELEASE OF WRITTEN OR ORAL
5 INFORMATION TO ANY ENTITY DULY AUTHORIZED TO RECEIVE SUCH
6 INFORMATION BY FEDERAL OR STATE LAW, OR BY INSURANCE DEPARTMENT
7 REGULATIONS, ONLY IF BOTH OF THE FOLLOWING CONDITIONS EXIST:
8 (1) THE INFORMATION IS SUPPLIED TO THE AGENCY IN
9 CONNECTION WITH AN ALLEGATION OF FRAUDULENT CONDUCT ON THE
10 PART OF ANY PERSON RELATING TO A VIOLATION OF THIS SECTION;
11 AND
12 (2) THE INSURER, AGENT, SERVANT OR EMPLOYEE OR THE MOTOR
13 VEHICLE FRAUD INDEX BUREAU HAS REASON TO BELIEVE THAT THE
14 INFORMATION SUPPLIED IS RELATED TO THE ALLEGATION OF FRAUD.
15 [(g) Civil action.--An insurer or insured damaged as a <--
16 result of a violation of this section may sue therefor in any
17 court of competent jurisdiction to recover compensatory damages,
18 which may include reasonable investigation expenses, costs of
19 suit and attorney fees. An insurer or insured may recover <--
20 damages if the court determines that the defendant has engaged
21 in a pattern of violating this section.] <--
22 * * * <--
23 (H) CIVIL ACTION.--AN INSURER DAMAGED AS A RESULT OF A <--
24 VIOLATION OF THIS SECTION MAY SUE THEREFOR IN ANY COURT OF
25 COMPETENT JURISDICTION TO RECOVER COMPENSATORY DAMAGES WHICH MAY
26 INCLUDE REASONABLE INVESTIGATION EXPENSES, COSTS OF SUIT AND
27 ATTORNEY FEES. AN INSURER MAY RECOVER DAMAGES IF THE COURT
28 DETERMINES THAT THE DEFENDANT HAS ENGAGED IN A PATTERN OF
29 VIOLATING THIS SECTION. ANY OTHER PERSON DAMAGED AS A RESULT OF
30 A VIOLATION OF SUBSECTION (A)(4), (8) OR (9), WHERE A CONVICTION
19920H2453B3446 - 7 -
1 HAS OCCURRED, MAY SUE IN ANY COURT OF COMPETENT JURISDICTION TO
2 RECOVER COMPENSATORY DAMAGES, WHICH MAY INCLUDE REASONABLE
3 INVESTIGATION EXPENSES, COSTS OF SUIT AND ATTORNEY FEES.
4 [(H)] (I) CRIMINAL ACTION.--
5 (1) THE DISTRICT ATTORNEYS OF THE SEVERAL COUNTIES SHALL
6 HAVE AUTHORITY TO INVESTIGATE AND TO INSTITUTE CRIMINAL
7 PROCEEDINGS FOR ANY VIOLATION OF THIS SECTION.
8 (2) IN ADDITION TO THE AUTHORITY CONFERRED UPON THE
9 ATTORNEY GENERAL BY THE ACT OF OCTOBER 15, 1980 (P.L.950,
10 NO.164), KNOWN AS THE COMMONWEALTH ATTORNEYS ACT, THE
11 ATTORNEY GENERAL SHALL HAVE THE AUTHORITY TO INVESTIGATE AND
12 TO INSTITUTE CRIMINAL PROCEEDINGS FOR ANY VIOLATION OF THIS
13 SECTION OR ANY SERIES OF SUCH VIOLATIONS INVOLVING MORE THAN
14 ONE COUNTY OF THE COMMONWEALTH OR INVOLVING ANY COUNTY OF THE
15 COMMONWEALTH AND ANOTHER STATE. NO PERSON CHARGED WITH A
16 VIOLATION OF THIS SECTION BY THE ATTORNEY GENERAL SHALL HAVE
17 STANDING TO CHALLENGE THE AUTHORITY OF THE ATTORNEY GENERAL
18 TO INVESTIGATE OR PROSECUTE THE CASE, AND, IF ANY SUCH
19 CHALLENGE IS MADE, THE CHALLENGE SHALL BE DISMISSED AND NO
20 RELIEF SHALL BE AVAILABLE IN THE COURTS OF THE COMMONWEALTH
21 TO THE PERSON MAKING THE CHALLENGE.
22 [(I)] (J) REGULATORY AND INVESTIGATIVE POWERS ADDITIONAL TO
23 THOSE NOW EXISTING.--NOTHING CONTAINED IN THIS SECTION SHALL BE
24 CONSTRUED TO LIMIT THE REGULATORY OR INVESTIGATIVE AUTHORITY OF
25 ANY DEPARTMENT OR AGENCY OF THE COMMONWEALTH WHOSE FUNCTIONS
26 MIGHT RELATE TO PERSONS, ENTERPRISES OR MATTERS FALLING WITHIN
27 THE SCOPE OF THIS SECTION.
28 [(j)] (K) Definitions.--As used in this section, the <--
29 following words and phrases shall have the meanings given to
30 them in this subsection:
19920H2453B3446 - 8 -
1 "Insurance claim." A claim for payment or other benefit
2 pursuant to an insurance policy or agreement for coverage of
3 health or hospital services.
4 "Insurance policy." A document setting forth the terms and
5 conditions of a contract of insurance or agreement for the
6 coverage of health or hospital services.
7 "Insured." An insurance policyholder. <--
8 "Insurer." A company, association or exchange defined by
9 section 101 of the act of May 17, 1921 (P.L.682, No.284), known
10 as The Insurance Company Law of 1921; an unincorporated
11 association of underwriting members; a hospital plan
12 corporation; a professional health services plan corporation; a
13 health maintenance organization; a fraternal benefit society;
14 [and] a self-insured health care entity under the act of October <--
15 15, 1975 (P.L.390, No.111), known as the Health Care Services
16 Malpractice Act; AND ONE WHO PURPORTS TO ACT AS AN INSURER. <--
17 "Person." An individual, corporation, partnership,
18 association, joint-stock company, trust or unincorporated
19 organization. The term includes any individual, corporation,
20 association, partnership, reciprocal exchange, interinsurer,
21 Lloyd's insurer, fraternal benefit society, beneficial
22 association and any other legal entity engaged or proposing to
23 become engaged, either directly or indirectly, in the business
24 of insurance, including agents, brokers, adjusters and health
25 care plans as defined in 40 Pa.C.S. Chs. 61 (relating to
26 hospital plan corporations), 63 (relating to professional health
27 services plan corporations), 65 (relating to fraternal benefit
28 societies) and 67 (relating to beneficial societies) and the act
29 of December 29, 1972 (P.L.1701, No.364), known as the Health
30 Maintenance Organization Act. For purposes of this section,
19920H2453B3446 - 9 -
1 health care plans, fraternal benefit societies and beneficial
2 societies shall be deemed to be engaged in the business of
3 insurance.
4 "SELF-INSURED ENTITY." AN ENTITY PROVIDING BENEFITS AND <--
5 QUALIFIED IN THE MANNER SET FORTH IN 75 PA.C.S. § 1787 (RELATING
6 TO SELF-INSURANCE) AND A PERSON, CORPORATION, COMPANY OR OTHER
7 ENTITY ACTING AS AN INSURER OR SELF-INSURER.
8 "Statement." Any oral or written presentation or other
9 evidence of loss, injury or expense, including, but not limited
10 to, any notice, statement, proof of loss, bill of lading,
11 receipt for payment, invoice, account, estimate of property
12 damages, bill for services, diagnosis, prescription, hospital or
13 doctor records, X-ray, test result or computer-generated
14 documents.
15 Section 2. This act shall take effect immediately.
C6L18DGS/19920H2453B3446 - 10 -