Text: SF02086 Text: SF02088 Text: SF02000 - SF02099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 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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