Senate
File
2305
-
Reprinted
SENATE
FILE
2305
BY
COMMITTEE
ON
COMMERCE
(SUCCESSOR
TO
SSB
3165)
(As
Amended
and
Passed
by
the
Senate
February
27,
2018
)
A
BILL
FOR
An
Act
relating
to
workers’
compensation
and
insurance
fraud
1
and
other
prohibited
health
service
provider
practices,
2
providing
penalties,
and
including
effective
date
and
3
applicability
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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Section
1.
NEW
SECTION
.
507F.1
Definitions.
1
As
used
in
this
chapter,
unless
the
context
otherwise
2
requires,
“workers’
compensation
insurer”
includes
any
insurer
3
as
defined
in
section
507A.3
that
issues
a
policy
of
workers’
4
compensation
liability
insurance
and
any
group
or
self-insured
5
plan
as
described
in
section
87.4.
6
Sec.
2.
NEW
SECTION
.
507F.2
Purpose
of
workers’
7
compensation
fraud
unit.
8
A
workers’
compensation
fraud
unit
is
created
within
the
9
insurance
fraud
bureau
within
the
insurance
division.
Upon
a
10
reasonable
determination
by
the
workers’
compensation
fraud
11
unit,
by
its
own
inquiries
or
as
a
result
of
complaints
filed
12
with
the
insurance
fraud
bureau
or
the
workers’
compensation
13
fraud
unit,
that
a
person
has
engaged
in,
is
engaging
in,
14
or
may
be
engaging
in
an
act
or
practice
that
violates
this
15
chapter,
the
workers’
compensation
fraud
unit
may
administer
16
oaths
and
affirmations,
issue
and
serve
subpoenas
ordering
the
17
attendance
of
witnesses,
collect
evidence
related
to
such
act
18
or
practice,
commence
a
suit,
and
prosecute
a
violation
of
this
19
chapter.
20
Sec.
3.
NEW
SECTION
.
507F.3
Workers’
compensation
21
fraudulent
practice
——
penalties.
22
1.
A
person
commits
the
offense
of
workers’
compensation
23
fraudulent
practice
if
the
person,
with
the
intent
to
defraud
24
a
workers’
compensation
insurer
does
any
act
that
constitutes
25
a
violation
of
section
507E.3.
26
2.
A
person
who
commits
an
offense
under
this
section
that
27
results
in
a
loss
to
a
workers’
compensation
insurer
of
ten
28
thousand
dollars
or
less
is,
upon
conviction,
guilty
of
a
class
29
“D”
felony.
30
3.
A
person
who
commits
an
offense
under
this
section
that
31
results
in
a
loss
to
a
workers’
compensation
insurer
of
more
32
than
ten
thousand
dollars
is,
upon
conviction,
guilty
of
a
33
class
“C”
felony.
34
4.
Fifty
percent
of
the
criminal
penalty
collected
under
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this
section
shall
be
deposited
in
the
workers’
compensation
1
fraud
penalty
fund
created
in
section
507F.5.
The
remaining
2
fifty
percent
of
the
criminal
penalty
collected
under
this
3
section
shall
be
deposited
pursuant
to
section
602.8108.
4
Sec.
4.
NEW
SECTION
.
507F.4
Restitution.
5
In
addition
to
the
criminal
penalties
established
in
this
6
chapter,
the
court
shall
order
a
person
who
commits
an
offense
7
under
this
chapter
to
pay
restitution
to
persons
aggrieved
by
8
the
violation.
Restitution
shall
be
ordered
in
addition
to
a
9
fine
and
the
possibility
of
imprisonment,
but
not
in
lieu
of
a
10
fine
and
the
possibility
of
imprisonment.
11
Sec.
5.
NEW
SECTION
.
507F.5
Fund
created.
12
A
workers’
compensation
fraud
penalty
fund
is
created
in
13
the
state
treasury
as
a
separate
fund
under
the
control
of
14
the
commissioner
of
insurance
for
purposes
of
this
chapter.
15
Notwithstanding
section
8.33,
any
balance
in
the
fund
on
June
16
30
of
each
fiscal
year
shall
not
revert
to
the
general
fund
of
17
the
state,
but
shall
be
available
for
purposes
of
this
chapter
18
in
subsequent
fiscal
years.
The
commissioner
of
insurance
may
19
request
additional
full
time
equivalent
positions
as
needed
and
20
the
request
shall
be
granted
so
long
as
sufficient
funds
are
21
within
the
workers’
compensation
fraud
penalty
fund.
22
Sec.
6.
NEW
SECTION
.
507F.6
Examination
of
information
23
outside
the
state.
24
As
a
unit
within
the
insurance
fraud
bureau,
the
workers’
25
compensation
fraud
unit,
pursuant
to
section
507E.4,
may
obtain
26
and
examine
any
information
that
is
related
to
enforcement
of
27
this
chapter
in
possession
of
a
person
located
outside
the
28
state.
29
Sec.
7.
NEW
SECTION
.
507F.7
Confidentiality.
30
As
a
unit
within
the
insurance
fraud
bureau,
all
of
the
31
provisions
of
section
507E.5
shall
apply
to
the
workers’
32
compensation
fraud
unit.
33
Sec.
8.
NEW
SECTION
.
507F.8
Immunity
from
liability.
34
A
person
is
immune
from
civil
liability
for
acts
under
this
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chapter
if
the
person
meets
the
requirements
set
forth
in
1
section
507E.7.
2
Sec.
9.
NEW
SECTION
.
507F.9
Election
of
prosecution.
3
If
a
person
commits
an
offense
under
this
chapter,
the
4
prosecuting
attorney
may
elect
to
proceed
under
this
chapter
5
or
any
other
law
of
this
state.
6
Sec.
10.
NEW
SECTION
.
507F.10
Prosecuting
attorney
status.
7
1.
The
workers’
compensation
fraud
unit
shall
employ
at
8
least
one
full-time
prosecuting
attorney.
The
prosecuting
9
attorney,
having
specialized
knowledge
and
training,
shall
10
in
all
counties
in
this
state
prosecute
all
criminal
actions
11
which
may
be
brought
under
this
chapter
in
which
the
workers’
12
compensation
fraud
unit
may
be
interested,
when,
in
the
13
prosecuting
attorney’s
judgment,
the
interest
of
the
unit
14
requires
such
action.
15
2.
The
prosecuting
attorney
may
request
a
county
attorney
16
to
assist
with
or
handle
the
prosecution
of
a
criminal
action
17
which
may
be
brought
under
this
chapter.
18
3.
The
prosecuting
attorney
shall
report
to
the
19
commissioner
of
insurance.
20
Sec.
11.
NEW
SECTION
.
507F.11
Law
enforcement
officer
21
status.
22
As
a
unit
within
the
insurance
fraud
bureau,
all
of
the
23
provisions
of
section
507E.8
shall
apply
to
the
workers’
24
compensation
fraud
unit.
25
Sec.
12.
NEW
SECTION
.
507F.12
Suspension
of
benefits.
26
If
a
person
is
currently
receiving
or
has
a
pending
27
application
for
workers’
compensation
benefits
under
chapter
28
85,
85A,
or
85B
and
the
workers’
compensation
fraud
unit
makes
29
a
determination
to
file
charges
in
district
court
alleging
a
30
violation
of
this
chapter
by
a
person
receiving
benefits
under
31
chapter
85,
85A,
or
85B,
the
workers’
compensation
fraud
unit
32
shall
notify
the
workers’
compensation
commissioner,
who
shall
33
suspend
benefits
or
suspend
any
pending
application.
34
A
person
convicted
of
a
workers’
compensation
fraudulent
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practice
shall
be
prohibited
from
receiving
benefits
under
1
chapters
85,
85A,
and
85B
for
the
particular
claim
or
injury
2
giving
rise
to
the
criminal
action.
If
the
person
is
acquitted
3
or
the
charges
are
dismissed,
the
workers’
compensation
fraud
4
unit
shall
notify
the
workers’
compensation
commissioner
of
5
such
action
and
the
commissioner
shall
resume
the
payment
of
6
any
benefits
previously
suspended
or
resume
any
suspended
7
application.
A
person
whose
benefits
have
been
suspended
and
8
the
payment
of
benefits
resumed
has
the
option
to
receive
9
a
back
payment
in
a
lump
sum
upon
resumption
of
payment
of
10
benefits.
11
Sec.
13.
NEW
SECTION
.
507F.13
Rulemaking
authority.
12
The
commissioner
of
insurance
may
adopt
rules
pursuant
to
13
chapter
17A
to
administer
this
chapter.
14
Sec.
14.
Section
85.27,
subsections
3
and
4,
Code
2018,
are
15
amended
to
read
as
follows:
16
3.
A
medical
service
provided
under
this
chapter
or
chapter
17
85A
or
85B
shall
not
be
billed
at
a
rate
higher
than
a
health
18
service
provider’s
standard
retail
rate
for
the
medical
19
service.
A
health
service
provider
who
bills
and
receives
20
payment
in
excess
of
the
health
service
provider’s
standard
21
rate
for
a
medical
service
provided
to
treat
a
workers’
22
compensation
injury
shall
reimburse
the
employer
or
insurance
23
carrier
which
paid
for
the
medical
service
for
the
excess
24
payments
received
by
the
health
service
provider.
25
Notwithstanding
section
85.26,
subsection
4
,
charges
believed
26
to
be
excessive
or
unnecessary
may
be
referred
by
the
27
employer,
insurance
carrier,
or
health
service
provider
to
the
28
workers’
compensation
commissioner
for
determination,
and
the
29
commissioner
may
utilize
the
procedures
provided
in
sections
30
86.38
and
86.39
,
or
set
by
rule,
and
conduct
such
inquiry
as
31
the
commissioner
deems
necessary.
Any
health
service
provider
32
charges
not
in
dispute
shall
be
paid
directly
to
the
health
33
service
provider
prior
to
utilization
of
procedures
provided
34
in
sections
86.38
and
86.39
or
set
by
rule.
A
health
service
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provider
rendering
treatment
to
an
employee
whose
injury
is
1
compensable
under
this
section
agrees
to
be
bound
by
such
2
charges
as
allowed
by
the
workers’
compensation
commissioner
3
and
shall
not
recover
in
law
or
equity
any
amount
in
excess
of
4
charges
set
by
the
commissioner.
When
a
dispute
under
this
5
chapter
,
chapter
85A
,
or
chapter
85B
regarding
reasonableness
6
of
a
fee
for
medical
services
arises
between
a
health
service
7
provider
and
an
employer
or
insurance
carrier,
the
health
8
service
provider,
employer,
or
insurance
carrier
shall
not
seek
9
payment
from
the
injured
employee.
A
health
service
provider
10
shall
not
seek
payment
for
fees
in
dispute
from
the
insurance
11
carrier
or
employer
until
the
commissioner
finds,
pursuant
to
12
informal
dispute
resolution
procedures
established
by
rule
by
13
the
commissioner,
that
the
disputed
amount
is
reasonable.
This
14
section
does
not
affect
the
responsibility
of
an
insurance
15
carrier
or
an
employer
to
pay
amounts
not
in
dispute
or
a
16
health
service
provider’s
right
to
receive
payment
from
an
17
employee’s
nonoccupational
plan
as
provided
in
section
85.38,
18
subsection
2
.
19
4.
For
purposes
of
this
section
,
the
employer
is
obliged
to
20
furnish
reasonable
services
and
supplies
to
treat
an
injured
21
employee,
and
has
the
right
to
choose
the
care.
The
employer
22
retains
the
right
to
choose
the
employee’s
care
for
all
23
services
throughout
the
course
of
treatment.
If
the
employer
24
chooses
the
care,
the
employer
shall
hold
the
employee
harmless
25
for
the
cost
of
care
until
the
employer
notifies
the
employee
26
that
the
employer
is
no
longer
authorizing
all
or
any
part
of
27
the
care
and
the
reason
for
the
change
in
authorization.
An
28
employer
is
not
liable
for
the
cost
of
care
that
the
employer
29
arranges
in
response
to
a
sudden
emergency
if
the
employee’s
30
condition,
for
which
care
was
arranged,
is
not
related
to
31
the
employment.
The
treatment
must
be
offered
promptly
32
and
be
reasonably
suited
to
treat
the
injury
without
undue
33
inconvenience
to
the
employee.
If
the
employee
has
reason
to
34
be
dissatisfied
with
the
care
offered,
the
employee
should
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communicate
the
basis
of
such
dissatisfaction
to
the
employer,
1
in
writing
if
requested,
following
which
the
employer
and
the
2
employee
may
agree
to
alternate
care
reasonably
suited
to
3
treat
the
injury.
If
the
employer
and
employee
cannot
agree
4
on
such
alternate
care,
the
commissioner
may,
upon
application
5
and
reasonable
proofs
of
the
necessity
therefor,
allow
and
6
order
other
care.
In
an
emergency,
the
employee
may
choose
7
the
employee’s
care
at
the
employer’s
expense,
provided
the
8
employer
or
the
employer’s
agent
cannot
be
reached
immediately.
9
An
application
made
under
this
subsection
shall
be
considered
10
an
original
proceeding
for
purposes
of
commencement
and
11
contested
case
proceedings
under
section
85.26
.
The
hearing
12
shall
be
conducted
pursuant
to
chapter
17A
.
Before
a
hearing
13
is
scheduled,
the
parties
may
choose
a
telephone
hearing
or
14
an
in-person
hearing.
A
request
for
an
in-person
hearing
15
shall
be
approved
unless
the
in-person
hearing
would
be
16
impractical
because
of
the
distance
between
the
parties
to
the
17
hearing.
The
workers’
compensation
commissioner
shall
issue
a
18
decision
within
ten
working
days
of
receipt
of
an
application
19
for
alternate
care
made
pursuant
to
a
telephone
hearing
or
20
within
fourteen
working
days
of
receipt
of
an
application
for
21
alternate
care
made
pursuant
to
an
in-person
hearing.
The
22
employer
shall
notify
an
injured
employee
of
the
employee’s
23
ability
to
contest
the
employer’s
choice
of
care
pursuant
to
24
this
subsection
.
25
Sec.
15.
NEW
SECTION
.
85.37A
Suspension
of
benefits
for
26
workers’
compensation
fraud.
27
Section
507F.12
requires
the
workers’
compensation
28
commissioner
to
suspend
a
person’s
benefits
if
the
workers’
29
compensation
fraud
unit
makes
a
determination
to
file
charges
30
in
district
court
alleging
the
person
has
violated
chapter
31
507F.
32
Sec.
16.
NEW
SECTION
.
86.39A
Criminal
penalty
for
workers’
33
compensation
fraud.
34
Chapter
507F
sets
forth
criminal
penalties
for
committing
a
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workers’
compensation
fraudulent
practice.
1
Sec.
17.
Section
507E.6,
Code
2018,
is
amended
to
read
as
2
follows:
3
507E.6
Duties
of
insurer
and
fraud
bureau
.
4
1.
An
insurer
which
believes
that
a
claim
or
application
5
for
insurance
coverage
is
being
made
which
is
a
violation
of
6
section
507E.3
or
believes
that
a
violation
of
section
507E.3A
7
has
occurred,
shall
provide,
within
sixty
days
of
the
receipt
8
of
such
claim
or
application
becoming
aware
of
a
possible
9
violation
,
written
notification
to
the
bureau
of
the
claim
or
10
application
suspected
violation
on
a
form
prescribed
by
the
11
bureau
,
including
any
additional
information
requested
by
the
12
bureau
related
to
the
claim
or
application
or
the
party
making
13
the
claim
or
application
.
14
2.
The
fraud
bureau
shall
review
each
notification
and
15
determine
whether
further
investigation
is
warranted.
16
3.
If
the
bureau
determines
that
further
investigation
17
is
warranted,
the
bureau
shall
conduct
an
independent
18
investigation
of
the
facts
surrounding
the
claim
or
application
19
for
insurance
coverage
notification
to
determine
the
extent,
20
if
any,
to
which
fraud
occurred
in
the
submission
of
the
claim
21
or
application
.
If
the
notification
pertains
to
workers’
22
compensation
insurance
fraud,
the
bureau
shall
deliver
the
23
notice
to
the
workers’
compensation
fraud
unit,
which
shall
24
determine
if
an
investigation
and
prosecution
are
warranted.
25
Upon
formal
request
made
by
the
bureau,
the
insurer
shall
26
provide
all
additional
information
related
to
the
notification
27
within
ten
business
days
or
a
time
period
specifically
28
identified
by
the
bureau.
29
4.
The
bureau
shall
report
any
alleged
violation
of
law
30
disclosed
by
the
investigation
to
the
appropriate
licensing
31
agency
or
prosecuting
authority
having
jurisdiction
with
32
respect
to
such
violation.
33
Sec.
18.
Section
507E.8,
Code
2018,
is
amended
to
read
as
34
follows:
35
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S.F.
2305
507E.8
Law
enforcement
officer
status.
1
1.
Bureau
investigators
shall
have
the
power
and
status
2
of
law
enforcement
officers
who
by
the
nature
of
their
duties
3
may
be
required
to
perform
the
duties
of
a
peace
officer
when
4
making
arrests
for
criminal
violations
established
as
a
result
5
of
their
investigations
pursuant
to
this
chapter
or
chapter
6
507F
.
7
2.
The
general
laws
applicable
to
arrests
by
law
enforcement
8
officers
of
the
state
also
apply
to
bureau
investigators.
9
Bureau
investigators
shall
have
the
power
to
execute
arrest
10
warrants
and
search
warrants
for
the
same
criminal
violations,
11
serve
subpoenas
issued
for
the
examination,
investigation,
and
12
trial
of
all
offenses
identified
through
their
investigations,
13
and
arrest
upon
probable
cause
without
warrant
a
person
found
14
in
the
act
of
committing
a
violation
of
the
provisions
of
this
15
chapter
or
chapter
507F
.
16
Sec.
19.
EFFECTIVE
DATE.
This
Act,
being
deemed
of
17
immediate
importance,
takes
effect
upon
enactment.
18
Sec.
20.
APPLICABILITY.
This
Act
applies
on
and
after
the
19
effective
date
of
this
Act
to
acts
of
workers’
compensation
20
fraudulent
practices
or
prohibited
health
service
providers’
21
practices
committed
on
or
after
the
effective
date
of
this
Act.
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