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1 1 Section 1. NEW SECTION. 507F.1 SHORT TITLE.
1 2 This chapter shall be known and may be cited as the
1 3 "Insurance Fraud Civil Remedies Act".
1 4 Sec. 2. NEW SECTION. 507F.2 DEFINITIONS.
1 5 For purposes of this chapter:
1 6 1. "Conceal" means to take affirmative action to prevent
1 7 others from discovering information.
1 8 2. "Insurance policy" means an insurance policy as defined
1 9 in section 507B.2.
1 10 3. "Insurance professional" means a person or any other
1 11 legal entity engaged in the business of insurance, including
1 12 producers, brokers, adjusters, and third-party administrators.
1 13 4. "Insurance transaction" means a transaction by,
1 14 between, or among an insurer, or a person who acts on behalf
1 15 of an insurer, and an insured, claimant, applicant for
1 16 insurance, public adjuster, insurance professional,
1 17 practitioner, or any person who acts on behalf of any of those
1 18 persons, for the purpose of obtaining insurance or
1 19 reinsurance, calculating insurance premiums, submitting a
1 20 claim, negotiating or adjusting a claim, or otherwise
1 21 obtaining insurance, self-insurance, or reinsurance, or
1 22 obtaining the benefits of insurance.
1 23 5. "Insurer" means a person engaged in the business of
1 24 insurance, as defined in section 507A.3.
1 25 6. "Premium" includes any premium or consideration paid or
1 26 payable for coverage under a group or individual insurance
1 27 policy.
1 28 7. "Reckless" means without reasonable belief of the truth
1 29 of representations made, or, for the purposes of section
1 30 507E.3, subsection 1, paragraph "c", with a high degree of
1 31 awareness of probable insolvency.
1 32 8. "Withhold" means to fail to disclose facts or
1 33 information which any law, other than this chapter, requires
1 34 to be disclosed. Mere failure to disclose does not constitute
1 35 withholding if the person failing to disclose reasonably
2 1 believes that no duty to disclose applies.
2 2 Sec. 3. NEW SECTION. 507F.3 UNLAWFUL INSURANCE PRACTICE.
2 3 Any person who commits, participates in, or aids, abets, or
2 4 conspires to commit, or solicits another person to commit, or
2 5 permits the person's employees or agents to commit any of the
2 6 following acts with an intent to induce reliance, commits an
2 7 unlawful insurance practice:
2 8 1. Presents, causes to be presented, or prepares with
2 9 knowledge or belief that it will be presented, by or on behalf
2 10 of an insured, claimant, or applicant to an insurer or
2 11 insurance professional in connection with an insurance
2 12 transaction, any information that the person knows to contain
2 13 false representations, or representations the falsity of which
2 14 the person has recklessly disregarded, as to any material
2 15 fact, or that withholds or conceals a material fact,
2 16 concerning any of the following:
2 17 a. The application for, rating of, or renewal of any
2 18 insurance policy.
2 19 b. A claim for payment or benefit pursuant to any
2 20 insurance policy.
2 21 c. Payments made in accordance with the terms of any
2 22 insurance policy.
2 23 2. Presents, causes to be presented, or prepares with
2 24 knowledge or belief that it will be presented, to or by an
2 25 insurer or insurance professional, in connection with an
2 26 insurance transaction, any information that contains false
2 27 representations as to any material fact, or that withholds or
2 28 conceals a material fact, concerning any of the following:
2 29 a. The solicitation for sale of any insurance policy or
2 30 purported insurance policy.
2 31 b. An application for certificate of authority.
2 32 c. The financial condition of any insurer.
2 33 d. The acquisition, formation, merger, affiliation, or
2 34 dissolution of any insurer.
2 35 3. Solicits or accepts new or renewal insurance risks by
3 1 or for an insurer that the person knows was insolvent or the
3 2 insolvency of which the person recklessly disregards.
3 3 Sec. 4. NEW SECTION. 507F.4 CIVIL REMEDIES.
3 4 1. A person who suffers an injury to the person's business
3 5 or property by reason of a violation of section 507F.3,
3 6 subsection 1, may recover all of the following from the person
3 7 violating section 507F.3:
3 8 a. Any profit, benefit, compensation, or payment received
3 9 by the person violating section 507F.3 that directly resulted
3 10 from the violation.
3 11 b. Reasonable attorney fees and related legal expenses,
3 12 including internal legal expenses and court costs.
3 13 An action maintained under this subsection shall not be
3 14 certified as a class action and shall not be made part of a
3 15 class action.
3 16 2. A person who suffers an injury to the person's business
3 17 or property by reason of a violation of section 507F.3,
3 18 subsection 2, may recover all of the following from the person
3 19 violating section 507F.3:
3 20 a. Any profit, benefit, compensation, or payment received
3 21 by the person violating section 507F.3 that directly resulted
3 22 from the violation.
3 23 b. Reasonable attorney fees and related legal expenses,
3 24 including internal legal expenses and court costs.
3 25 c. All other pecuniary damages directly resulting from the
3 26 violation of section 507F.3.
3 27 d. Reasonable investigative fees based on a reasonable
3 28 estimate of the time and expense incurred in the investigation
3 29 of the violation of section 507F.3.
3 30 e. A civil penalty not to exceed forty thousand dollars
3 31 per violation.
3 32 An action maintained under this subsection shall not be
3 33 certified as a class action and shall not be made part of a
3 34 class action.
3 35 3. a. A violation of section 507E.3, subsection 2, is a
4 1 violation of section 714.16, subsection 2, paragraph "a". All
4 2 the powers conferred upon the attorney general to accomplish
4 3 the objectives and carry out the duties prescribed pursuant to
4 4 section 714.16 are also conferred upon the attorney general to
4 5 enforce section 507E.3, including, but not limited to, the
4 6 power to issue subpoenas, adopt rules which shall have the
4 7 force of law, and seek injunctive relief and civil penalties.
4 8 b. In seeking reimbursement pursuant to section 714.16,
4 9 subsection 7, from a person who has committed a violation of
4 10 section 507E.3, the attorney general may seek an order from
4 11 the court that the person pay to the attorney general on
4 12 behalf of consumers the amounts for which the person would be
4 13 liable under section 507E.3, for each consumer who has a cause
4 14 of action pursuant to section 507E.3. Section 714.16, as it
4 15 relates to consumer reimbursement, shall apply to consumer
4 16 reimbursement pursuant to this section.
4 17 4. Any court in which a civil action has been commenced
4 18 pursuant to this section may stay or limit proceedings
4 19 regarding the same or related conduct or may transfer or
4 20 consolidate the actions or allow the plaintiffs in the actions
4 21 to participate in the action brought pursuant to this section.
4 22 5. An insurer shall not pay damages awarded under this
4 23 section, or provide a defense or moneys for a defense, on
4 24 behalf of an insured under a contract of insurance or
4 25 indemnification. A third party who has asserted a claim
4 26 against an insured shall have no cause of action under this
4 27 section against the insurer of the insured arising out of the
4 28 insurer's processing or settlement of the third party's claim.
4 29 An obligee under a surety bond shall not have a cause of
4 30 action under this section against the surety arising out of
4 31 the surety's processing or settlement of the obligee's claim
4 32 against the bond.
4 33 Sec. 5. NEW SECTION. 507F.5 EXCLUSIVITY OF REMEDIES.
4 34 1. The remedies expressly provided in section 507F.4 shall
4 35 be the only remedies for violations of this chapter and no
5 1 additional remedies shall be implied.
5 2 2. The remedies available under section 507F.4 shall not
5 3 be used in conjunction with or in addition to any other
5 4 remedies available at law or in equity to duplicate recovery
5 5 for the same element of economic damage.
5 6 3. This chapter shall not limit or abrogate any right of
5 7 action that would have existed in the absence of this chapter,
5 8 but an action based on such a right shall not rely on this
5 9 chapter to establish a standard of conduct or for any other
5 10 purpose.
5 11 EXPLANATION
5 12 This bill creates new Code chapter 507F, providing civil
5 13 remedies for insurance fraud.
5 14 The new Code section 507F.2 provides definitions, including
5 15 "conceal", "insurance policy", "insurance professional",
5 16 "insurance transaction", and "withhold".
5 17 The bill sets out in new Code section 507F.3 circumstances
5 18 in which the false representation of a material fact or
5 19 withholding or concealment of a material fact in the
5 20 application for, claim for payment or benefit pursuant to, or
5 21 payments made in accordance with any insurance policy are
5 22 unlawful insurance practices. A person who acts with reckless
5 23 disregard for the falsity of representations may also be
5 24 liable under this section. Also included as unlawful
5 25 insurance practices are the solicitation for sale of any
5 26 insurance policy or purported policy; false representation of
5 27 a material fact or the withholding or concealing of a material
5 28 fact in an application for certificate of authority; false
5 29 representation relating to the financial condition of any
5 30 insurer, or the acquisition, formation, merger, affiliation,
5 31 or dissolution of any insurer; and the solicitation or
5 32 acceptance of new or renewal insurance risks by or for an
5 33 insolvent insurer. The Code section makes unlawful any
5 34 attempt to commit such acts, and any aiding and assisting, or
5 35 commission or attempted commission of unlawful insurance
6 1 practices.
6 2 The bill provides, in new Code section 507F.4, civil
6 3 remedies for persons injured as a result of violations of the
6 4 prohibitions against unlawful insurance practices. The civil
6 5 remedies for violation of Code section 507F.3, unlawful
6 6 insurance practices, may include recovery of profit, benefit,
6 7 compensation, or payment received by the person violating the
6 8 Code section, as well as attorney fees and legal expenses.
6 9 The action for civil remedies cannot be certified as, nor made
6 10 part of, a class action. Civil remedies for violation of Code
6 11 section 507F.3, fraudulent insurance practices, include
6 12 pecuniary damages directly resulting from the violation,
6 13 reasonable investigative fees, and a civil penalty not to
6 14 exceed $40,000 per violation.
6 15 New Code section 507E.4 also deems a violation of Code
6 16 section 507E.3, subsection 2, as a violation of Code section
6 17 714.16, subsection 2, paragraph "a", relating to consumer
6 18 frauds. The attorney general may seek relief on behalf of
6 19 consumers in accordance with that Code section.
6 20 The bill grants the court certain rights to stay and to
6 21 consolidate actions regarding the same or similar conduct.
6 22 The bill also prohibits insurers from providing a defense
6 23 or money for a defense, and limits the rights of third-party
6 24 claimants and surety bond obligees.
6 25 The bill provides that the remedies provided in the new
6 26 Code chapter are the exclusive remedies for the violations set
6 27 out in the Code chapter.
6 28 LSB 5928XS 79
6 29 jj/cls/14.1
Text: SF02086 Text: SF02088 Text: SF02000 - SF02099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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