SUMMARY--Creates fraud control unit for insurance within office of attorney general. (BDR 18-950)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: Yes.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to insurance fraud; requiring the establishment of a fraud control unit for insurance within the office of the attorney general; transferring the duties for investigating insurance fraud from the commissioner of insurance to the fraud control unit for insurance; authorizing the fraud control unit for insurance to issue subpoenas to obtain documents relating to such an investigation; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
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Section 1 Chapter 228 of NRS is hereby amended by adding thereto a new section to read as follows:
1. The attorney general has primary jurisdiction to investigate and prosecute any act alleged to be insurance fraud.
2. The attorney general shall establish within his office a fraud control unit for insurance. The fraud control unit must consist of such persons as are necessary to carry out the duties set forth in this section, sections 4 to 7, inclusive, 15, 16 and 17 of this act, and NRS 679B.155 to 679B.158, inclusive, and 686A.281 to 686A.291, inclusive, including, without limitation, an attorney, an auditor and an investigator.
3. The attorney general, acting through the fraud control unit:
(a) Is the single state agency responsible for the prosecution of insurance fraud;
(b) Shall cooperate with the commissioner of insurance, insurers, and investigators and prosecutors of other states and the Federal Government in coordinating state and federal investigations and prosecutions involving insurance fraud;
(c) Shall protect the privacy of insurers and insured persons who are eligible to receive benefits pursuant to the provisions of Title 57 of NRS and shall establish procedures to prevent the misuse of information obtained in carrying out this section; and
(d) May, upon written request, inspect the records of any insurer, the commissioner of insurance and the division of insurance of the department of business and industry to investigate any act of insurance fraud.
4. To investigate any act of insurance fraud, the attorney general and members of the fraud control unit may conduct investigations into any activity related thereto occurring outside of this state, if necessary. To conduct these investigations, the attorney general and members of the fraud control unit may:
(a) Travel outside of this state;
(b) Cooperate with appropriate agencies or persons outside this state; and
(c) Designate those agencies or persons to conduct investigations for the attorney general.
5. When he is acting pursuant to this section, the attorney general may commence his investigation and file a criminal action without leave of court, and he has exclusive charge of the conduct of the prosecution.
6. The attorney general shall report the name of each person who has been convicted of insurance fraud to the commissioner of insurance.
7. As used in this section, "insurance fraud" has the meaning ascribed to it in section 15 of this act.
Sec. 2 NRS 477.030 is hereby amended to read as follows:
477.030 1. Except as otherwise provided in this section, the state fire marshal shall enforce all laws and adopt regulations relating to:
(a) The prevention of fire.
(b) The storage and use of combustibles, flammables and fireworks.
(c) The storage and use of explosives in any commercial construction, but not in mining or the control of avalanches.
(d) The safety, access, means and adequacy of exit in case of fire from mental and penal institutions, facilities for the care of children, foster homes, residential facilities for groups, facilities for intermediate care, nursing homes, hospitals, schools, all buildings, except private residences, which are occupied for sleeping purposes, buildings used for public assembly and all other buildings where large numbers of persons work, live or congregate for any purpose. As used in this paragraph, "public assembly" means a building or a portion of a building used for the gathering together of 50 or more persons for purposes of deliberation, education, instruction, worship, entertainment, amusement or awaiting transportation, or the gathering together of 100 or more persons in establishments for drinking or dining.
(e) The suppression and punishment of arson and fraudulent claims or practices in connection with fire losses.
The regulations of the state fire marshal apply throughout the state, but, except with respect to state-owned or state-occupied buildings, his authority to enforce them or conduct investigations under this chapter is limited to those counties whose population is less than 35,000, except in those local jurisdictions in other counties where he is requested to exercise that authority by the chief officer of the organized fire department of that jurisdiction.
2. The state fire marshal may set standards for equipment and appliances pertaining to fire safety or to be used for fire protection within this state, including the threads used on fire hose couplings and hydrant fittings.
3. The state fire marshal shall cooperate with the state forester firewarden in the preparation of regulations relating to standards for fire retardant roofing materials pursuant to paragraph (e) of subsection 1 of NRS 472.040.
4. The state fire marshal shall cooperate with the division of child and family services of the department of human resources in establishing reasonable minimum standards for overseeing the safety of and directing the means and adequacy of exit in case of fire from family foster homes and group foster homes.
5. The state fire marshal shall coordinate all activities conducted pursuant to the Fire Research and Safety Act of 1968, 15 U.S.C. [§§ 278f and 278g,] § 278f, and receive and distribute money allocated by the United States pursuant to that act.
6. Except as otherwise provided in subsection 10, the state fire marshal shall:
(a) Investigate any fire which occurs in a county whose population is less than 35,000, and from which a death results or which is of a suspicious nature.
(b) Investigate any fire which occurs in a county whose population is 35,000 or more, and from which a death results or which is of a suspicious nature, if requested to do so by the chief officer of the fire department in whose jurisdiction the fire occurs.
(c) Cooperate with the commissioner of insurance , the attorney general and the fraud control unit for insurance established pursuant to section 1 of this act in any investigation of a fraudulent claim under an insurance policy for any fire of a suspicious nature.
(d) Cooperate with any local fire department in the investigation of any report received pursuant to NRS 629.045.
(e) Provide specialized training in investigating the causes of fires if requested to do so by the chief officer of an organized fire department.
7. The state fire marshal shall put the Uniform Fire Incident Reporting System into effect throughout the state and publish at least annually a summary of data collected under the system.
8. The state fire marshal shall provide assistance and materials to local authorities, upon request, for the establishment of programs for public education and other fire prevention activities.
9. The state fire marshal shall:
(a) Assist in checking plans and specifications for construction;
(b) Provide specialized training to local fire departments; and
(c) Assist local governments in drafting regulations and ordinances,
on request or as he deems necessary.
10. In a county whose population is less than 35,000, the state fire marshal shall, upon request by a local government, delegate to the local government by interlocal agreement all or a portion of his authority or duties if the local government's personnel and programs are, as determined by the state fire marshal, equally qualified to perform those functions. If a local government fails to maintain the qualified personnel and programs in accordance with such an agreement, the state fire marshal shall revoke the agreement.
Sec. 3 Chapter 679B of NRS is hereby amended by adding thereto the provisions set forth as sections 4 to 7, inclusive, of this act.
Sec. 4 As used in NRS 679B.155 to 679B.158, inclusive, and sections 4 to 7, inclusive, of this act, unless the context otherwise requires, the words and terms defined in sections 5 and 6 of this act have the meanings ascribed to them in those sections.
Sec. 5 "Fraud control unit" means the fraud control unit for insurance established by the attorney general pursuant to section 1 of this act.
Sec. 6 "Insurance fraud" has the meaning ascribed to it in section 15 of this act.
Sec. 7 1. The books, records, payroll reports and other documents of a person that are pertinent to the investigation of insurance fraud must be open to inspection by an investigator for the attorney general in order to ascertain the correctness of such information and as may be necessary for the attorney general to carry out his duties pursuant to sections 1, 4 to 7, inclusive, 15, 16 and 17 of this act, and NRS 679B.155 to 679B.158, inclusive, and 686A.281 to 686A.291, inclusive.
2. If a person refuses to produce any book, record, payroll report or other document in conjunction with an investigation conducted by the fraud control unit, the attorney general may issue a subpoena to require the production of that document.
3. If a person refuses to produce any document as required by the subpoena, the attorney general may report to the district court by petition, setting forth that:
(a) Due notice has been given of the time and place of the production of the document;
(b) The person has been subpoenaed by the attorney general pursuant to this section; and
(c) The person has failed or refused to produce the document required by the subpoena,
and asking for an order of the court compelling the person to produce the document.
4. Upon such petition, the court shall enter an order directing the person to appear before the court at a time and place to be fixed by the court in its order, the time to be not more than 10 days after the date of the order, and to show cause why he has not produced the document. A certified copy of the order must be served upon the person.
5. If it appears to the court that the subpoena was regularly issued by the attorney general, the court shall enter an order that the person produce the required document at the time and place fixed in the order. Failure to obey the order constitutes contempt of court.
Sec. 8 NRS 679B.155 is hereby amended to read as follows:
679B.155 To [investigate fraudulent claims for benefits from a policy of insurance,] assist the attorney general or other local, state or federal investigative and law enforcement agencies in investigating any act of insurance fraud, the commissioner may:
1. Designate employees of the division as investigators to carry out the provisions of NRS [679B.153] 679B.155 to 679B.158, inclusive [.] , and sections 4 to 7, inclusive, of this act.
2. Conduct investigations into such fraudulent activities occurring outside this state, if necessary. To conduct these investigations, the commissioner or his investigators may:
(a) Travel outside this state;
(b) Cooperate with appropriate agencies or persons outside this state; or
(c) Designate those agencies to conduct investigations for the commissioner.
[3. Assist officials of investigative or law enforcement agencies of any other state or the Federal Government who are investigating fraudulent claims and who request assistance from the commissioner.]
Sec. 9 NRS 679B.156 is hereby amended to read as follows:
679B.156 1. Every person in charge of an investigative or a law enforcement agency within this state shall [cooperate] :
(a) Cooperate with the commissioner , [or] his investigators [and shall furnish] , the attorney general and the fraud control unit; and
(b) Furnish the attorney general or the commissioner, upon [his] request, with any information necessary for [his] the investigation of [fraudulent claims.] insurance fraud.
2. The attorney general and the commissioner shall:
(a) Assist any official of an investigative or a law enforcement agency of this state, any other state or the Federal Government who requests assistance in investigating [fraudulent claims against an insurer;] any act of insurance fraud; and
(b) Furnish to those officials any information, not otherwise confidential, concerning his investigation or his report on [fraudulent claims.] any act of insurance fraud.
Sec. 10 NRS 679B.157 is hereby amended to read as follows:
679B.157 An insurer, an employee or a representative of an insurer, an official of an investigative or a law enforcement agency, an employee of the division , [or] the commissioner , the attorney general or a member of the fraud control unit, or a member of any organization which is established to detect and prevent insurance fraud is not subject to a criminal penalty or subject to civil liability for libel, slander or any similar cause of action in tort if he, without malice, discloses information on a fraudulent claim or suspicious fire.
Sec. 11 NRS 679B.158 is hereby amended to read as follows:
679B.158 1. The special investigative account is hereby established in the state general fund for exclusive use by the [commissioner.] attorney general and the fraud control unit for the investigation and prosecution of insurance fraud. The commissioner shall deposit all money received pursuant to this section with the state treasurer for credit to the account. Money remaining in the account at the end of any year does not lapse and may be used by the [commissioner] attorney general for the investigation and prosecution of insurance fraud in any subsequent year.
2. The [commissioner] attorney general shall authorize expenditures from the special investigative account to pay the expenses of the [program established pursuant to NRS 679B.153 and of any unit established in the office of the attorney general which investigates and prosecutes] fraud control unit for the investigation and prosecution of insurance fraud.
3. All of the costs of the [program established pursuant to NRS 679B.153] fraud control unit must be paid by the insurers authorized to transact insurance in this state. The commissioner shall annually determine the total cost and equally divide that amount among the insurers. The annual amount so assessed must not exceed $500 per authorized insurer. The commissioner may adopt regulations regarding the calculation and collection of the assessment.
Sec. 12 NRS 679B.159 is hereby amended to read as follows:
679B.159 1. Every insurer, agent, solicitor, broker, administrator or other person who has knowledge of a violation of any provision of this code shall promptly report the facts and circumstances pertaining to the violation to the [commissioner.] attorney general.
2. If a person who submits information pursuant to subsection 1 so requests, the [commissioner] attorney general shall keep the person's name and the information confidential.
Sec. 13 NRS 679B.190 is hereby amended to read as follows:
679B.190 1. The commissioner shall carefully preserve in the division and in permanent form all papers and records relating to the business and transactions of the division and shall hand them over to his successor in office.
2. Except as otherwise provided in subsections 3, 5 and 6 and other provisions of this code and NRS 616B.015, the papers and records must be open to public inspection.
3. Any records or information in the possession of the division related to an investigation and prosecution of insurance fraud by the attorney general and the fraud control unit for insurance established pursuant to section 1 of this act or an examination conducted by the commissioner is confidential for the period of the investigation or examination unless:
(a) The attorney general or commissioner , as appropriate, releases, in the manner that he deems appropriate, all or any part of the records or information for public inspection after determining that the release of the records or information:
(1) Will not harm [his] the investigation or examination or the person who is being investigated or examined; or
(2) Serves the interests of a policyholder, the shareholders of the insurer or the public; or
(b) A court orders the release of the records or information after determining that the production of the records or information will not damage any investigation being conducted by the [commissioner.] fraud control unit.
4. The commissioner may destroy unneeded or obsolete records and filings in the division in accordance with provisions and procedures applicable in general to administrative agencies of this state.
5. The commissioner may classify as confidential certain records and information obtained from a governmental agency or other sources upon the express condition that they remain confidential.
6. All information and documents in the possession of [the] :
(a) The attorney general and the fraud control unit which are related to cases or matter under investigation; or
(b) The division or any of its employees which are related to cases
or matters under [investigation or] examination by the commissioner or his staff ,
are confidential for the entire period of the investigation or examination and may not be made public unless the attorney general or commissioner , as appropriate, finds the existence of an imminent threat of harm to the safety or welfare of the policyholder, shareholders or the public and determines that the interests of the policyholder, shareholders or the public will be served by publication thereof, in which event [he] the attorney general or commissioner may make a record public or publish [all or] any part of the record in any manner he deems appropriate.
Sec. 14 Chapter 686A of NRS is hereby amended by adding thereto the provisions set forth as sections 15, 16 and 17 of this act.
Sec. 15 "Insurance fraud" includes the following acts or omissions:
1. Knowingly and willfully presenting or causing to be presented any statement to an insurer, a reinsurer, a producer, a broker or any agent thereof, if the person who presents or causes the presentation of the statement knows that the statement contains false, incomplete or misleading information concerning any fact material to an application for the issuance of a policy of insurance pursuant to this Title.
2. Presenting or causing to be presented any statement as a part of, or in support of, a claim for payment or other benefits under a policy of insurance issued pursuant to this Title, if the person who presents or causes the presentation of the statement knows that the statement contains false, incomplete or misleading information concerning any fact material to that claim.
3. Assisting, abetting, soliciting or conspiring with another person to present or cause to be presented any statement to an insurer, reinsurer, producer, broker or any agent thereof, if the person who assists, abets, solicits or conspires knows that the statement contains false, incomplete or misleading information concerning any fact material to an application for the issuance of a policy of insurance pursuant to this Title or a claim for payment or other benefits under such a policy.
4. Acting, or failing to act, with the intent of defrauding or deceiving an insurer, a reinsurer, a producer, a broker or any agent thereof, in order to obtain a policy of insurance pursuant to this Title or any proceeds or other benefits under such a policy.
5. Any knowing and willful act of a practitioner, an insurer or any agent thereof to assist, conspire with or urge another person to commit any act or omission specified in this section through deceit, misrepresentation or other fraudulent means.
6. Knowingly and willfully accepting any proceeds or other benefits under a policy of insurance issued pursuant to this Title, if the person knows that the proceeds or other benefits are derived from any act or omission specified in this section.
Sec. 16 "Investigative or law enforcement agency" includes:
1. The state fire marshal;
2. The chief or other officer of the fire department in whose jurisdiction a fire occurred;
3. The district attorney of the county where any fraudulent activity has occurred or a fraudulent claim has been made; and
4. Any other officer of an agency in this state who has the authority to investigate the fraudulent activity or claim.
Sec. 17 "Practitioner" means:
1. A physician, dentist, nurse, dispensing optician, optometrist, physical therapist, podiatric physician, psychologist, chiropractor, doctor of Oriental medicine in any form, director or technician of a medical laboratory, pharmacist or other provider of health services who is authorized to engage in his occupation by the laws of this state or another state; and
2. An attorney admitted to practice law in this state or any other state.
Sec. 18 NRS 686A.281 is hereby amended to read as follows:
686A.281 As used in NRS 686A.281 to 686A.291, inclusive, and sections 15, 16 and 17 of this act, unless the context otherwise requires, the [term "investigative or law enforcement agency" includes:
1. The state fire marshal;
2. The district attorney of the county where any fraudulent activity has occurred or a fraudulent claim has been made;
3. The chief or other officer of the fire department where a fire occurred; and
4. Any other agency in this state who has the authority to investigate the fraudulent claims or activities.] words and terms defined in sections 15, 16 and 17 of this act have the meanings ascribed to them in those sections.
Sec. 19 NRS 686A.283 is hereby amended to read as follows:
686A.283 1. Any person, insurer or authorized representative of an insurer, who believes, or has reason to believe, that [a fraudulent claim for benefits under a policy of insurance has been made,] insurance fraud has occurred or is about to [be made,] occur, shall report any information concerning that [claim] activity to the [commissioner] attorney general on a form prescribed by the [commissioner.] attorney general. The commissioner shall forward all information which he receives concerning a fraudulent claim to the attorney general and the fraud control unit for insurance established pursuant to section 1 of this act.
2. The [commissioner] attorney general shall:
(a) Review each report of [a fraudulent claim;] insurance fraud; and
(b) Determine whether an investigation should be made of the facts in the report.
3. During his investigation, the [commissioner] attorney general shall determine whether there is probable cause to believe that [there was deceit, fraud or an intentional misrepresentation of a material fact in the claim.
4. If the commissioner determines that the provisions of NRS 686A.010 to 686A.310, inclusive, have been violated he shall report his findings to the] insurance fraud has occurred or is about to occur.
4. A district attorney of [the] any county where [the violation occurred.] any fraudulent activity has occurred or a fraudulent claim has been made may, with the permission of the attorney general or at the request of the attorney general, institute proceedings in the name of the State of Nevada.
Sec. 20 NRS 686A.285 is hereby amended to read as follows:
686A.285 1. If an insurer [believes] has a reasonable suspicion that a loss to an insured may have been caused by other than an accidental or natural occurrence, the insurer shall notify the [commissioner] attorney general in writing of the insurer's reasons for [so believing.] the suspicion.
2. Any insurer making such a report shall provide the [commissioner] attorney general with any information the insurer obtained during its investigation of the claim.
3. If the loss referred to in subsection 1 is believed to be caused by fire, the insurer shall also so notify an investigative or law enforcement agency.
Sec. 21 NRS 686A.287 is hereby amended to read as follows:
686A.287 1. Every insurer shall provide information [on a fraudulent claim] concerning insurance fraud to the attorney general, the commissioner, any investigative or law enforcement agency or any agency of the Federal Government if the insurer receives a request in writing for that information.
2. The information requested from an insurer may include:
(a) Information about the policy of insurance on the property which was demolished or destroyed, including information from the application for insurance;
(b) Information on previous claims made by the insured;
(c) Records of the premiums paid for the policy of insurance; and
(d) Information concerning the insurer's investigation of the claim, including statements of any person, information submitted as proof of the loss or any other relevant information on the claim.
Sec. 22 NRS 686A.289 is hereby amended to read as follows:
686A.289 1. Any insurer giving information to the attorney general, the commissioner or any investigative or law enforcement agency concerning an act or omission alleged [fraudulent claim] to be insurance fraud is entitled to receive, upon completion of the investigation or prosecution of the [claim,] insurance fraud, whichever occurs later, any relevant information concerning the [claim.] fraudulent activity.
2. The attorney general, the commissioner or any investigative or law enforcement agency receiving information from another person, agency or insurer shall:
(a) Keep the information confidential and not release the information except pursuant to subsection 1;
(b) Provide information concerning its investigation of the [claim] insurance fraud to the insurer reporting the [claim] fraudulent activity upon the completion of its investigation or a criminal prosecution, whichever occurs later; and
(c) Provide any documents necessary or allow its employees or agents to testify in any action by or against the insurer if the insurer or its insured furnished the information for the investigation or a criminal prosecution.
Sec. 23 NRS 686A.291 is hereby amended to read as follows:
686A.291 [1. A person commits insurance fraud if he knowingly and willfully:
(a) Presents or causes to be presented any statement to an insurer, a reinsurer, a producer, a broker or any agent thereof, known by him to contain false, incomplete or misleading information concerning any fact material to an application for the issuance of a policy of insurance pursuant to this Title.
(b) Presents or causes to be presented any statement as a part of, or in support of, a claim for payment or other benefits under a policy of insurance issued pursuant to this Title, known by him to contain false, incomplete or misleading information concerning any fact material to that claim.
(c) Assists, abets, solicits or conspires with another person to present or cause to be presented any statement to an insurer, reinsurer, producer, broker or any agent thereof, known by him to contain false, incomplete or misleading information concerning any fact material to an application for the issuance of a policy of insurance pursuant to this Title or a claim for payment or other benefits under such a policy.
(d) Acts or fails to act with the intent of defrauding or deceiving an insurer, a reinsurer, a producer, a broker or any agent thereof, in order to obtain a policy of insurance pursuant to this Title or any proceeds or other benefits under such a policy.
(e) As a practitioner, an insurer or any agent thereof, acts to assist, conspire with or urge another person to violate any provision of this section through deceit, misrepresentation or other fraudulent means.
(f) Accepts any proceeds or other benefits under a policy of insurance issued pursuant to this Title known by him to be derived from any act or omission which violates any provision of this section.
2.] A person who commits insurance fraud is guilty of a category D felony and shall be punished as provided in NRS 193.130.
[3. For the purposes of this section, "practitioner" means:
(a) A physician, dentist, nurse, dispensing optician, optometrist, physical therapist, podiatric physician, psychologist, chiropractor, doctor of Oriental medicine in any form, director or technician of a medical laboratory, pharmacist or other provider of health services who is authorized to engage in his occupation by the laws of this state or another state; and
(b) An attorney admitted to practice law in this state or any other state.]
Sec. 24 NRS 679B.153 and 679B.154 are hereby repealed.
Sec. 25 1. Except as otherwise provided in subsection 2, the commissioner of insurance shall, on or before November 1, 1997, transfer all investigations of fraudulent activities relating to a policy of insurance issued in accordance with the provisions of Title 57 of NRS which he is conducting on that date and all records relating thereto to the fraud control unit for insurance established pursuant to section 1 of this act.
2. The commissioner of insurance shall not transfer an investigation or any records relating thereto to the fraud control unit for insurance if an information or a complaint has been filed relating to that investigation.
TEXT OF REPEALED SECTIONS
679B.153 Program to investigate acts or practices of fraud. The commissioner shall establish a program within the division to investigate any act or practice which:
1. Violates the provisions of NRS 686A.010 to 686A.310, inclusive; or
2. Defrauds or is an attempt to defraud an insurer.
679B.154 Commissioner required to investigate fraudulent claims for benefits. The commissioner, through his investigators, shall investigate fraudulent claims for benefits under an insurance policy.