THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GODSHALL, MICOZZIE, CLYMER, DeLUCA, HARHART, HENNESSEY, SWANGER AND J. TAYLOR, FEBRUARY 3, 2011

REFERRED TO COMMITTEE ON JUDICIARY, FEBRUARY 3, 2011  

AN ACT

Amending Title 42 (Judiciary and Judicial Procedure) of the

Pennsylvania Consolidated Statutes, providing for insurance

fraud forfeiture; and further providing for seized property.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 42 of the Pennsylvania Consolidated

Statutes is amended by adding a section to read:

§ 6801.2.  Insurance fraud forfeiture.

(a)  Forfeitures generally.--The following shall be subject

to forfeitures to the Commonwealth, and no property right shall

exist in them:

(1)  All assets, foreign or domestic:

(i)  Of an individual, entity or organization engaged

in planning, perpetrating or engaging in insurance fraud

as defined by section 2601 of the act of May 17, 1921

(P.L.682, No.284), known as The Insurance Company Law of

1921, and all assets, foreign or domestic, affording a

person a source of influence over such an entity or

organization.

(ii)  Acquired or maintained by a person with the

intent and for the purpose of supporting, planning,

conducting or concealing an act in this Commonwealth

which violates 18 Pa.C.S. § 4117 (relating to insurance

fraud).

(iii)  Derived from, involved in or used or intended

to be used to commit an act in this Commonwealth which

violates 18 Pa.C.S. § 4117.

(2)  All assets within this Commonwealth:

(i)  Of an individual, entity or organization engaged

in planning or perpetrating an act which violates 18

Pa.C.S. § 4117.

(ii)  Acquired or maintained with the intent and for

the purpose of supporting, planning, conducting or

concealing an act which violates 18 Pa.C.S. § 4117.

(iii)  Derived from, involved in or used or intended

to be used to commit an act which violates 18 Pa.C.S. §

4117.

(b)  Process and seizures.--Property subject to forfeiture

under this section may be seized by the law enforcement

authority upon process issued by a court of common pleas having

jurisdiction over the property. Seizure without process may be

made if any of the following apply:

(1)  The seizure is incident to an arrest, a search under

a search warrant or an inspection under an administrative

inspection warrant.

(2)  The property subject to seizure has been the subject

of a prior judgment in favor of the Commonwealth in a

criminal injunction or forfeiture proceeding under this

chapter.

(3)  There is probable cause to believe that the property

is dangerous to health or safety.

(4)  There is probable cause to believe that the property

has been or is intended to be used in the commission of an

act which violates 18 Pa.C.S. § 4117.

(c)  Seizure without process.--In the event seizure is made

without process, proceedings for the issuance of process shall

be instituted forthwith.

(d)  Custody of property.--Property taken or detained under

this section shall not be subject to replevin but is deemed to

be in the custody of the law enforcement authority, subject only

to the orders and decrees of the court of common pleas having

jurisdiction over the forfeiture proceedings and of the district

attorney or the Attorney General. When property is seized under

this section, the law enforcement authority shall place the

property under seal and either:

(1)  remove the property to a place determined by the law

enforcement authority; or

(2)  request that the district attorney or Attorney

General take custody of the property and remove it to an

appropriate location for disposition in accordance with law.

(e)  Use of property held in custody.--Whenever property is

forfeited under this section, it shall be transferred to the

custody of the district attorney if the law enforcement

authority seizing the property has local or county jurisdiction

or of the Attorney General if the law enforcement authority

seizing the property has Statewide jurisdiction. The district

attorney or the Attorney General, where appropriate, may:

(1)  Retain the property for official use.

(2)  Sell any forfeited property which is not required to

be destroyed by law and which is not harmful to the public,

the proceeds from any such sale to be used to pay all proper

expenses of the proceedings for forfeiture and sale,

including expenses of seizure, maintenance of custody,

advertising and court costs. The balance of the proceeds

shall be dealt with under subsections (f) and (g).

(f)  Use of cash or proceeds of property.--Cash or proceeds

of forfeited property shall be placed in the custody of and

maintained by law enforcement until a court of common pleas

having jurisdiction over the property equitably distributes the

property accordingly:

(1)  Any losses suffered by an insurer, as defined by

section 2601 of The Insurance Company Law of 1921, shall be

paid in full when possible as restitution with the balance,

if any, being apportioned equitably among law enforcement

seizing the property.

(2)  If full restitution cannot be made for lack of

sufficient cash and proceeds, then the court shall equitably

distribute the cash and proceeds among the insurers and law

enforcement.

(g)  Authorization to utilize property.--The district

attorney and the Attorney General shall utilize forfeited

property or proceeds thereof for the purpose of enforcing the

provisions of this act. In appropriate cases, the district

attorney and the Attorney General may designate proceeds from

forfeited property to be utilized for fraud prevention programs.

(h)  Annual audit of forfeited property.--It shall be the

responsibility of every county in this Commonwealth to provide,

through the controller, board of auditors or other appropriate

auditor and the district attorney, an annual audit of all

forfeited property and proceeds obtained under this section. The

audit shall not be made public but shall be submitted to the

Office of Attorney General. The county shall report all

forfeited property and proceeds obtained under this section and

the disposition thereof to the Office of Attorney General by

September 30 of each year.

(i)  Annual report; confidential information regarding

property.--The Attorney General shall annually submit a report

to the Appropriations Committee and Judiciary Committee of the

Senate and the Appropriations Committee and Judiciary Committee

of the House of Representatives specifying the forfeited

property or proceeds thereof obtained under this section. The

report shall give an accounting of all proceeds derived from the

sale of forfeited property and the use made of unsold forfeited

property. The Attorney General shall adopt procedures and

guidelines governing the release of information by the district

attorney to protect the confidentiality of forfeited property or

proceeds used in ongoing insurance fraud activities.

(j)  Proceeds and appropriations.--The proceeds or future

proceeds from property forfeited under this section shall be in

addition to any appropriation made to the Office of Attorney

General.

Section 2.  Section 6802(a)(5), (f), (j) and (k) of Title 42

are amended to read:

§ 6802.  Procedure with respect to seized property subject to

liens and rights of lienholders.

(a)  General procedure.--The proceedings for the forfeiture

or condemnation of property, the sale of which is provided for

in this chapter, shall be in rem, in which the Commonwealth

shall be the plaintiff and the property the defendant. A

petition shall be filed in the court of common pleas of the

judicial district where the property is located, verified by

oath or affirmation of an officer or citizen, containing the

following:

* * *

(5)  An allegation that the property is subject to

forfeiture pursuant to section 6801(a) (relating to

controlled substances forfeiture) [or], 6801.1(a) (relating

to terrorism forfeiture) or 6801.2(a) (relating to insurance

fraud forfeiture) and an averment of material facts upon

which the forfeiture action is based.

* * *

(f)  Preservation of the property subject for forfeiture.--

Upon application of the Commonwealth, the court may enter a

restraining order or injunction, require the execution of a

satisfactory performance bond or take any other action to

preserve the availability of property described in section

6801(a) [or], 6801.1(a) or 6801.2(a) for forfeiture under this

section either:

(1)  upon the filing of an information or an indictment

charging an offense in this Commonwealth for which criminal

forfeiture may be ordered under this chapter and alleging

that the property with respect to which the order is sought

would be subject to forfeiture; or

(2)  prior to the filing of such an indictment or

information, if, after notice to persons appearing to have an

interest in the property and an opportunity for a hearing,

the court determines that:

(i)  there is a substantial probability that the

Commonwealth will prevail on the issue of forfeiture and

that failure to enter the order will result in the

property being destroyed, removed from the jurisdiction

of the court or otherwise made unavailable for

forfeiture; and

(ii)  the need to preserve the availability of the

property through the entry of the requested order

outweighs the hardship on any party against whom the

order is to be entered.

However, an order entered pursuant to this paragraph shall be

effective for not more than 90 days unless extended by the

court for good cause shown or unless an indictment or

information described in paragraph (1) has been filed.

* * *

(j)  Owner's burden of proof.--At the time of the hearing, if

the Commonwealth produces evidence that the property in question

was unlawfully used, possessed or otherwise subject to

forfeiture under section 6801(a) [or], 6801.1(a) or 6801.2(a),

the burden shall be upon the claimant to show:

(1)  That the claimant is the owner of the property or

the holder of a chattel mortgage or contract of conditional

sale thereon.

(2)  That the claimant lawfully acquired the property.

(3)  That it was not unlawfully used or possessed by him.

In the event that it shall appear that the property was

unlawfully used or possessed by a person other than the

claimant, then the claimant shall show that the unlawful use

or possession was without his knowledge or consent. Such

absence of knowledge or consent must be reasonable under the

circumstances presented.

(k)  Court-ordered release of property.--If a person claiming

the ownership of or right of possession to or claiming to be the

holder of a chattel mortgage or contract of conditional sale

upon the property, the disposition of which is provided for in

this section, prior to the sale presents a petition to the court

alleging over the property lawful ownership, right of

possession, a lien or reservation of title and if, upon public

hearing, due notice of which having been given to the Attorney

General or the district attorney, the claimant shall prove by

competent evidence to the satisfaction of the court that the

property was lawfully acquired, possessed and used by him or, it

appearing that the property was unlawfully used by a person

other than the claimant, that the unlawful use was without the

claimant's knowledge or consent, then the court may order the

property returned or delivered to the claimant. Such absence of

knowledge or consent must be reasonable under the circumstances

presented. Otherwise, it shall be retained for official use or

sold in accordance with section 6801(e) [or], 6801.1(f) or

6801.2(f).

Section 3.  This act shall take effect immediately.