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Senate File 2305 - IntroducedA Bill ForAn Act 1relating to workers’ compensation and insurance fraud
2and other prohibited health service provider practices,
3providing appropriations and penalties, and including
4effective date and applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 507F.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
41. “Business entity” means a corporation, association,
5partnership, limited liability company, limited liability
6partnership, or other legal entity.
72. a. “Insurer” means a person entering into arrangements
8or contracts of insurance or reinsurance agreeing to perform
9any of the following acts:
10(1) Pay or indemnify another as to loss from certain
11contingencies called risks, including through reinsurance.
12(2) Pay or grant a specified amount or determinable benefit
13to another in connection with ascertainable risk contingencies.
14(3) Pay an annuity to another.
15(4) Act as surety.
16b. “Insurer” includes but is not limited to an insurance
17company, a self-insured business, or a group or self-insured
18plan as described in section 87.4.
193. “Statement” includes but is not limited to any notice,
20statement, proof of loss, receipt for payment, invoice,
21account, bill for services, diagnosis, prescription, hospital
22or physician record, X ray, test result, or other evidence of
23loss, injury, or expense.
24 Sec. 2. NEW SECTION. 507F.2 Purpose.
25A workers’ compensation fraud unit is created within the
26insurance fraud bureau within the insurance division. Upon a
27reasonable determination by the workers’ compensation fraud
28unit, by its own inquiries or as a result of complaints filed
29with the insurance fraud bureau or the workers’ compensation
30fraud unit, that a person has engaged in, is engaging in,
31or may be engaging in an act or practice that violates this
32chapter, the workers’ compensation fraud unit may administer
33oaths and affirmations, issue and serve subpoenas ordering the
34attendance of witnesses, collect evidence related to such act
35or practice, commence a suit, and prosecute a violation of this
-1-1chapter.
2 Sec. 3. NEW SECTION. 507F.3 Workers’ compensation attorney
3fraud — penalty.
41. An attorney or an attorney’s agent who acts unilaterally
5without an attorney’s knowledge commits workers’ compensation
6attorney fraud if the person, for the purpose of obtaining any
7benefit under chapter 85, 85A, 85B, 86, or 87 for oneself or on
8behalf of another person, knowingly does any of the following:
9a. Presents or causes to be presented to an insurer any
10oral or written statement, knowing the statement contains false
11information concerning a material fact.
12b. Employs any deception device, scheme, or artifice to
13defraud.
14c. Misrepresents, conceals, or suppresses any material fact
15to defraud.
16d. Makes a false entry in, fabricates, alters, conceals, or
17destroys a document to defraud.
18e. Assists, abets, solicits, or conspires with another in
19committing a violation of this chapter.
202. An attorney or an attorney’s agent who commits workers’
21compensation attorney fraud is, upon conviction, guilty
22of a class “D” felony. An attorney convicted of workers’
23compensation attorney fraud shall forfeit the ability to
24collect any attorney fees not already collected and shall
25refund attorney fees already collected from the client who was
26the subject of the worker’s compensation attorney fraud, unless
27the client commits workers’ compensation benefit fraud, in
28which case the attorney fees shall be forfeited to the victim
29compensation fund established in section 915.94.
303. Fifty percent of the criminal penalty collected under
31this section shall be deposited in the workers’ compensation
32fraud penalty fund created in section 507F.10. Fifty percent
33of the criminal penalty collected under this section shall be
34deposited pursuant to section 602.8108.
35 Sec. 4. NEW SECTION. 507F.4 Workers’ compensation benefit
-2-1fraud — penalty.
21. A person commits the offense of workers’ compensation
3benefit fraud if the person, for the purpose of obtaining any
4benefit under chapter 85, 85A, 85B, 86, or 87 for oneself or on
5behalf of another person, knowingly does any of the following:
6a. Presents or causes to be presented to an insurer, any
7oral or written statement, knowing that such statement contains
8false information concerning a material fact.
9b. Misrepresents, conceals, or suppresses any material fact
10to defraud.
11c. Makes a false entry in, fabricates, alters, conceals, or
12destroys a document to defraud.
13d. Assists, abets, solicits, or conspires with another in
14committing a violation of this chapter.
152. A person who commits workers’ compensation benefit
16fraud is, upon conviction, guilty of a class “D” felony. Upon
17conviction of this offense, a person shall forfeit all right to
18compensation under chapters 85, 85A, and 85B for the alleged
19injury which is the subject matter of the conviction.
203. Fifty percent of the criminal penalty collected under
21this section shall be deposited in the workers’ compensation
22fraud penalty fund created in section 507F.10. Fifty percent
23of the criminal penalty collected under this section shall be
24deposited pursuant to section 602.8108.
25 Sec. 5. NEW SECTION. 507F.5 Workers’ compensation health
26service provider fraud — penalty.
271. A health service provider or a health service provider’s
28agent who acts unilaterally without a health service
29providers’s knowledge commits workers’ compensation health
30service provider fraud if the person, for the purpose of
31obtaining any benefit or payment under chapter 85, 85A, 85B,
3286, or 87 for oneself or on behalf of another person, knowingly
33does any of the following:
34a. Presents or causes to be presented to an insurer any
35oral or written statement, knowing that such statement contains
-3-1false information concerning a material fact.
2b. Misrepresents, conceals, or suppresses any material fact
3to defraud.
4c. Makes a false entry in, fabricates, alters, conceals, or
5destroys a document to defraud.
6d. Bills for services not rendered, services rendered for
7a person other than the person identified on the bill, or
8services rendered for an injury or person not covered by the
9workers’ compensation laws.
10e. Assists, abets, solicits, or conspires with another in
11committing a violation of this chapter.
122. A health service provider or health service provider’s
13agent who commits workers’ compensation health service provider
14fraud is, upon conviction, guilty of a class “D” felony.
153. Fifty percent of the criminal penalty collected under
16this section shall be deposited in the workers’ compensation
17fraud penalty fund created in section 507F.10. Fifty percent
18of the criminal penalty collected under this section shall be
19deposited pursuant to section 602.8108.
20 Sec. 6. NEW SECTION. 507F.6 Workers’ compensation insurance
21carrier fraud — penalty.
221. An employee, agent, or contractor of an insurer commits
23workers’ compensation insurance carrier fraud if the person,
24for the purpose of obtaining any benefit or payment under
25chapter 85, 85A, 85B, 86, or 87 for oneself or on behalf of
26another person, knowingly does any of the following in the
27course of processing an insurance claim:
28a. Creates fraudulent claims and authorizes the payment of
29such claims to defraud the insurer.
30b. Authorizes the payment of claims known by the employee,
31agent, or contractor to be fraudulent to assist, abet, solicit,
32or conspire with another to defraud the insurer.
332. An employee, agent, or contractor of an insurer who
34commits workers’ compensation insurance carrier fraud is, upon
35conviction, guilty of a class “D” felony.
-4- 13. Fifty percent of the criminal penalty collected under
2this section shall be deposited in the workers’ compensation
3fraud penalty fund created in section 507F.10. Fifty percent
4of the criminal penalty collected under this section shall be
5deposited pursuant to section 602.8108.
6 Sec. 7. NEW SECTION. 507F.7 Workers’ compensation insurance
7coverage fraud — penalty.
81. A person commits the offense of workers’ compensation
9insurance coverage fraud if the person, in connection with
10any application or renewal of an insurance policy providing
11workers’ compensation insurance coverage or to avoid payment
12of or reduce premiums due for that coverage, for oneself or
13another, knowingly does any of the following:
14a. Presents or causes to be presented to an insurer, any
15oral or written statement, knowing that such statement contains
16false information concerning a material fact to defraud.
17b. Misrepresents, conceals, or suppresses any material fact
18to defraud.
19c. Makes a false entry in, fabricates, alters, conceals, or
20destroys a document to defraud.
212. A person who commits workers’ compensation insurance
22coverage fraud is, upon conviction, guilty of a class “D”
23felony.
243. Fifty percent of the criminal penalty collected under
25this section shall be deposited in the workers’ compensation
26fraud penalty fund created in section 507F.10. Fifty percent
27of the criminal penalty collected under this section shall be
28deposited pursuant to section 602.8108.
29 Sec. 8. NEW SECTION. 507F.8 Workers’ compensation employer
30fraud — penalty.
311. A person commits the offense of workers’ compensation
32employer fraud if the person, for the purpose of obstructing an
33employee’s workers’ compensation claim under chapter 85, 85A,
3485B, 86, or 87, knowingly does any of the following:
35a. Presents or causes to be presented to an insurer any
-5-1oral or written statement, knowing that such statement contains
2false information concerning a material fact.
3b. Misrepresents, conceals, or suppresses any material fact
4to defraud.
5c. Makes a false entry in, fabricates, alters, conceals, or
6destroys a document to defraud.
7d. Assists, abets, solicits, or conspires with another in
8committing a violation of this chapter.
92. A person who commits workers’ compensation employer
10fraud is, upon conviction, guilty of a class “D” felony.
113. Fifty percent of the criminal penalty collected under
12this section shall be deposited in the workers’ compensation
13fraud penalty fund created in section 507F.10. Fifty percent
14of the criminal penalty collected under this section shall be
15deposited pursuant to section 602.8108.
16 Sec. 9. NEW SECTION. 507F.9 Restitution.
17In addition to the criminal penalties established in this
18chapter, the court shall order a person who commits an offense
19under this chapter to pay restitution to persons aggrieved by
20the violation. Restitution shall be ordered in addition to a
21fine and the possibility of imprisonment, but not in lieu of a
22fine and the possibility of imprisonment.
23 Sec. 10. NEW SECTION. 507F.10 Fund created.
24A workers’ compensation fraud penalty fund is created in
25the state treasury as a separate fund under the control of
26the commissioner of insurance for purposes of this chapter.
27All moneys deposited into the fund are appropriated to the
28insurance division of the department of commerce for the
29workers’ compensation fraud unit. Notwithstanding section
308.33, any balance in the fund on June 30 of each fiscal year
31shall not revert to the general fund of the state, but shall
32be available for purposes of this chapter in subsequent fiscal
33years. The commissioner of insurance may request additional
34full time equivalent positions as needed and the request shall
35be granted so long as sufficient funds are within the workers’
-6-1compensation fraud penalty fund.
2 Sec. 11. NEW SECTION. 507F.11 Examination of information
3outside the state.
4As a unit within the insurance fraud bureau, the workers’
5compensation fraud unit, pursuant to section 507E.4, may obtain
6and examine any information that is related to enforcement of
7this chapter in possession of a person located outside the
8state.
9 Sec. 12. NEW SECTION. 507F.12 Confidentiality.
10As a unit within the insurance fraud bureau, all of the
11provisions of section 507E.5 shall apply to the workers’
12compensation fraud unit.
13 Sec. 13. NEW SECTION. 507F.13 Immunity from liability.
14A person is immune from civil liability for acts under this
15chapter if the person meets the requirements set forth in
16section 507E.7.
17 Sec. 14. NEW SECTION. 507F.14 Election of prosecution.
18If a person commits an offense under this chapter, the
19prosecuting attorney may elect to proceed under this chapter
20or any other law of this state.
21 Sec. 15. NEW SECTION. 507F.15 Prosecuting attorney status.
221. The workers’ compensation fraud unit shall employ at
23least one full-time prosecuting attorney. The prosecuting
24attorney, having specialized knowledge and training, shall
25in all counties in this state prosecute all criminal actions
26which may be brought under this chapter in which the workers’
27compensation fraud unit may be interested, when, in the
28prosecuting attorney’s judgment, the interest of the unit
29requires such action.
302. The prosecuting attorney may request a county attorney
31to assist with or handle the prosecution of a criminal action
32which may be brought under this chapter.
333. The prosecuting attorney shall report to the
34commissioner of insurance.
35 Sec. 16. NEW SECTION. 507F.16 Law enforcement officer
-7-1status.
2As a unit within the insurance fraud bureau, all of the
3provisions of section 507E.8 shall apply to the workers’
4compensation fraud unit.
5 Sec. 17. NEW SECTION. 507F.17 Limitation of actions.
6An information or indictment asserting a violation of this
7chapter shall be commenced within five years after the last
8date of its commission.
9 Sec. 18. NEW SECTION. 507F.18 Suspension of benefits.
10If a person is currently receiving or has a pending
11application for workers’ compensation benefits under chapter
1285, 85A, or 85B and the workers’ compensation fraud unit makes
13a determination to file charges in district court alleging a
14violation of this chapter by a person receiving benefits under
15chapter 85, 85A, or 85B, the workers’ compensation fraud unit
16shall notify the workers’ compensation commissioner, who shall
17suspend benefits or suspend any pending application.
18A person convicted of workers’ compensation fraud shall be
19prohibited from receiving benefits under chapters 85, 85A,
20and 85B for the particular claim or injury giving rise to the
21criminal action. If the person is acquitted or the charges
22are dismissed, the workers’ compensation fraud unit shall
23notify the workers’ compensation commissioner of such action
24and the commissioner shall resume the payment of any benefits
25previously suspended or resume any suspended application. A
26person whose benefits have been suspended and the payment of
27benefits resumed has the option to receive a back payment in a
28lump sum upon resumption of payment of benefits.
29 Sec. 19. NEW SECTION. 507F.19 Rulemaking authority.
30The commissioner of insurance may adopt rules pursuant to
31chapter 17A to administer this chapter.
32 Sec. 20. Section 85.27, subsections 3 and 4, Code 2018, are
33amended to read as follows:
343. A medical service provided under this chapter or chapter
3585A or 85B shall not be billed at a rate higher than a health
-8-1service provider’s standard retail rate for the medical
2service. A health service provider who bills and receives
3payment in excess of the health service provider’s standard
4rate for a medical service provided to treat a workers’
5compensation injury shall reimburse the employer or insurance
6carrier which paid for the medical service for the excess
7payments received by the health service provider.
8Notwithstanding section 85.26, subsection 4, charges believed
9to be excessive or unnecessary may be referred by the
10employer, insurance carrier, or health service provider to the
11workers’ compensation commissioner for determination, and the
12commissioner may utilize the procedures provided in sections
1386.38 and 86.39, or set by rule, and conduct such inquiry as
14the commissioner deems necessary. Any health service provider
15charges not in dispute shall be paid directly to the health
16service provider prior to utilization of procedures provided
17in sections 86.38 and 86.39 or set by rule. A health service
18provider rendering treatment to an employee whose injury is
19compensable under this section agrees to be bound by such
20charges as allowed by the workers’ compensation commissioner
21and shall not recover in law or equity any amount in excess of
22charges set by the commissioner. When a dispute under this
23chapter, chapter 85A, or chapter 85B regarding reasonableness
24of a fee for medical services arises between a health service
25provider and an employer or insurance carrier, the health
26service provider, employer, or insurance carrier shall not seek
27payment from the injured employee. A health service provider
28shall not seek payment for fees in dispute from the insurance
29carrier or employer until the commissioner finds, pursuant to
30informal dispute resolution procedures established by rule by
31the commissioner, that the disputed amount is reasonable. This
32section does not affect the responsibility of an insurance
33carrier or an employer to pay amounts not in dispute or a
34health service provider’s right to receive payment from an
35employee’s nonoccupational plan as provided in section 85.38,
-9-1subsection 2.
24. For purposes of this section, the employer is obliged to
3furnish reasonable services and supplies to treat an injured
4employee, and has the right to choose the care. The employer
5retains the right to choose the employee’s care throughout the
6course of treatment for all services identified in subsection
71. The employer is not obliged to authorize a referral for
8care to a specific provider of services by an authorized
9treating medical provider and the employer has the right to
10choose any provider for the care. If the employer chooses the
11care, the employer shall hold the employee harmless for the
12cost of care until the employer notifies the employee that the
13employer is no longer authorizing all or any part of the care
14and the reason for the change in authorization. An employer
15is not liable for the cost of care that the employer arranges
16in response to a sudden emergency if the employee’s condition,
17for which care was arranged, is not related to the employment.
18The treatment must be offered promptly and be reasonably
19suited to treat the injury without undue inconvenience to the
20employee. If the employee has reason to be dissatisfied with
21the care offered, the employee should communicate the basis of
22such dissatisfaction to the employer, in writing if requested,
23following which the employer and the employee may agree to
24alternate care reasonably suited to treat the injury. If the
25employer and employee cannot agree on such alternate care,
26the commissioner may, upon application and reasonable proofs
27of the necessity therefor, allow and order other care. In an
28emergency, the employee may choose the employee’s care at the
29employer’s expense, provided the employer or the employer’s
30agent cannot be reached immediately. An application made under
31this subsection shall be considered an original proceeding
32for purposes of commencement and contested case proceedings
33under section 85.26. The hearing shall be conducted pursuant
34to chapter 17A. Before a hearing is scheduled, the parties
35may choose a telephone hearing or an in-person hearing. A
-10-1request for an in-person hearing shall be approved unless the
2in-person hearing would be impractical because of the distance
3between the parties to the hearing. The workers’ compensation
4commissioner shall issue a decision within ten working days of
5receipt of an application for alternate care made pursuant to a
6telephone hearing or within fourteen working days of receipt of
7an application for alternate care made pursuant to an in-person
8hearing. The employer shall notify an injured employee of the
9employee’s ability to contest the employer’s choice of care
10pursuant to this subsection.
11 Sec. 21. NEW SECTION. 85.37A Suspension of benefits for
12workers’ compensation fraud.
13Section 507F.18 requires the workers’ compensation
14commissioner to suspend a person’s benefits if the workers’
15compensation fraud unit has probable cause to believe that the
16person has violated chapter 507F.
17 Sec. 22. NEW SECTION. 86.39A Criminal penalty for workers’
18compensation attorney fraud.
19Chapter 507F sets forth criminal penalties for engaging in
20workers’ compensation fraud, including but not limited to fraud
21committed by an attorney.
22 Sec. 23. NEW SECTION. 507E.2A Definition of insurer.
23As used in this chapter, unless the context otherwise
24requires:
25a. “Insurer” means a person entering into arrangements or
26contracts of insurance or reinsurance agreeing to perform any
27of the following acts:
28(1) Pay or indemnify another as to loss from certain
29contingencies called risks, including through reinsurance.
30(2) Pay or grant a specified amount or determinable benefit
31to another in connection with ascertainable risk contingencies.
32(3) Pay an annuity to another.
33(4) Act as surety.
34b. “Insurer” includes but is not limited to an insurance
35company, a self-insured business, or a group or self-insured
-11-1plan as described in section 87.4.
2 Sec. 24. Section 507E.6, Code 2018, is amended to read as
3follows:
4507E.6 Duties of insurer and fraud bureau.
51. An insurer which believes that a claim or application
6for insurance coverage is being made which is a violation of
7section 507E.3 or believes that a violation of 507E.3A has
8occurred, shall provide, within sixty days of the receipt
9of such claim or application becoming aware of a possible
10violation, written notification to the bureau of the claim or
11application suspected violation on a form prescribed by the
12bureau, including any additional information requested by the
13bureau related to the claim or application or the party making
14the claim or application.
152. The fraud bureau shall review each notification and
16determine whether further investigation is warranted.
173. If the bureau determines that further investigation
18is warranted, the bureau shall conduct an independent
19investigation of the facts surrounding the claim or application
20for insurance coverage notification to determine the extent,
21if any, to which fraud occurred in the submission of the claim
22or application. If the notification pertains to workers’
23compensation insurance fraud, the bureau shall deliver the
24notice to the workers’ compensation fraud unit, which shall
25determine if an investigation and prosecution are warranted.
26Upon formal request made by the bureau, the insurer shall
27provide all additional information related to the notification
28within ten business days or a time period specifically
29identified by the bureau.
304. The bureau shall report any alleged violation of law
31disclosed by the investigation to the appropriate licensing
32agency or prosecuting authority having jurisdiction with
33respect to such violation.
34 Sec. 25. Section 507E.8, Code 2018, is amended to read as
35follows:
-12- 1507E.8 Law enforcement officer status.
21. Bureau investigators shall have the power and status
3of law enforcement officers who by the nature of their duties
4may be required to perform the duties of a peace officer when
5making arrests for criminal violations established as a result
6of their investigations pursuant to this chapter or chapter
7507F.
82. The general laws applicable to arrests by law enforcement
9officers of the state also apply to bureau investigators.
10Bureau investigators shall have the power to execute arrest
11warrants and search warrants for the same criminal violations,
12serve subpoenas issued for the examination, investigation, and
13trial of all offenses identified through their investigations,
14and arrest upon probable cause without warrant a person found
15in the act of committing a violation of the provisions of this
16chapter or chapter 507F.
17 Sec. 26. EFFECTIVE DATE. This Act, being deemed of
18immediate importance, takes effect upon enactment.
19 Sec. 27. APPLICABILITY. This Act applies on the effective
20date of this Act to acts of fraud or prohibited health service
21providers’ practices committed on or after the effective date
22of this Act.
23EXPLANATION
24The inclusion of this explanation does not constitute agreement with
25the explanation’s substance by the members of the general assembly.
26This bill relates to workers’ compensation and insurance
27fraud and other prohibited health service provider practices.
28The bill creates new Code chapter 507F dedicated to workers’
29compensation fraud, codified following the existing insurance
30fraud Code chapter 507E.
31The bill establishes a workers’ compensation fraud unit
32(unit) within the insurance fraud bureau within the insurance
33division. The purpose of the unit is to investigate and
34prosecute workers’ compensation fraud. Unit investigators have
35the power and status of law enforcement officers. The bill
-13-1requires the unit to employ at least one full-time prosecuting
2attorney to prosecute all criminal actions which may be brought
3under this Code chapter in which the unit may be interested,
4when, in the prosecuting attorney’s judgment, the interest of
5the unit requires such action.
6The bill provides an election of prosecution. If a person
7commits an offense under this Code chapter, the prosecuting
8attorney may elect to proceed under this Code chapter or any
9other law of this state. The prosecuting attorney may be the
10unit prosecuting attorney or a county attorney.
11The bill sets forth criminal penalties for engaging in
12workers’ compensation fraud, including fraud committed by
13employers, workers, insurers, health service providers,
14employees of insurers, and attorneys. Specifically, the bill
15penalizes as a class “D” felony the following forms of workers’
16compensation fraud: benefit fraud, insurance coverage fraud,
17employer fraud, health service provider fraud, insurance
18carrier fraud, and attorney fraud. The elements for each crime
19are enumerated in the bill. A class “D” felony is punishable
20by confinement for no more than five years and a fine of at
21least $750 but not more than $7,500. The bill provides that
22in addition to any other applicable penalties, a court shall
23order a person to pay restitution to persons aggrieved by the
24violation, if a person commits an offense under this Code
25chapter. The bill requires 50 percent of the criminal penalty
26collected under this Code chapter to be deposited in a fund
27created in the bill. Moneys in the fund are appropriated to
28the insurance division of the department of commerce to the
29unit for the benefit of the workers’ compensation fraud unit.
30The new workers’ compensation fraud Code chapter
31incorporates by reference the following provisions from the
32insurance fraud Code chapter 507E: 507E.4 (examination of
33information outside the state), 507E.5 (confidentiality), and
34507E.7 (immunity from liability).
35The new Code chapter also defines insurer. “Insurer” means
-14-1a person entering into arrangements or contracts of insurance
2or reinsurance agreeing to perform any of the following acts:
3pay or indemnify another as to loss from certain contingencies
4called risks, including through reinsurance; pay or grant
5a specified amount or determinable benefit to another in
6connection with ascertainable risk contingencies; pay an
7annuity to another; or act as surety. Insurer includes but is
8not limited to an insurance company, a self-insured business,
9or a group or self-insured plan as described in Code section
1087.4.
11The new Code chapter limits commencement of actions
12for violations of the Code chapter to within five years of
13commission of workers’ compensation fraud.
14The bill provides that if a person is currently receiving
15or has a pending application for workers’ compensation
16benefits under Code chapter 85, 85A, or 85B and the workers’
17compensation fraud unit makes a determination to file charges
18in district court alleging a violation of the new Code chapter
19by a person receiving benefits under Code chapter 85, 85A, or
2085B, the workers’ compensation fraud unit shall notify the
21workers’ compensation commissioner, who shall suspend benefits
22or suspend any pending application. The bill provides that
23a person convicted of workers’ compensation fraud shall be
24prohibited from receiving benefits under Code chapters 85,
2585A, and 85B for the particular claim or injury giving rise to
26the criminal action. The bill provides that if the person is
27acquitted or the charges are dismissed, a person’s benefits
28or application will be resumed. The bill provides that a
29person has an option to receive a lump sum for back payment of
30benefits upon resumption of benefits.
31The new Code chapter grants the commissioner of insurance
32rulemaking authority.
33The bill amends Code chapter 507E to provide a definition of
34insurer. Insurer, for the purposes of that Code chapter, means
35the same as defined in new Code chapter 507F.
-15- 1The bill also amends Code section 507E.6 (duties of insurer)
2to provide for a process when an insurer alerts the insurance
3fraud bureau of workers’ compensation fraud. The bill provides
4that if the notification pertains to workers’ compensation
5insurance fraud, the insurance fraud bureau shall deliver the
6notice to the workers’ compensation fraud unit.
7The bill amends Code chapter 85 to provide that the employer
8retains the right to choose the employee’s physician throughout
9the course of treatment, including the choice of specialists.
10The employer is not obliged to authorize a referral for care
11with a specific provider of services.
12The bill amends Code chapter 85 to reference suspension of
13benefits under new Code chapter 507F.
14The bill amends Code chapter 86 to reference the criminal
15penalty for fraudulent attorney fees under new Code chapter
16507F.
17The bill also amends Code chapter 85 to provide that
18medical services provided under Code chapter 85, 85A, or 85B
19shall not be billed at a rate higher than the health service
20provider’s standard retail rate for that medical service. The
21bill provides that a health service provider who bills and
22receives payment in excess of the health service provider’s
23standard retail rate for medical services to treat a workers’
24compensation-covered injury shall reimburse the company which
25paid for the medical services for the excess payments.
26The bill takes effect upon enactment and applies to acts
27of fraud or prohibited health service providers’ practices
28committed on or after enactment.
-16-asf/rj
2and other prohibited health service provider practices,
3providing appropriations and penalties, and including
4effective date and applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 507F.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
41. “Business entity” means a corporation, association,
5partnership, limited liability company, limited liability
6partnership, or other legal entity.
72. a. “Insurer” means a person entering into arrangements
8or contracts of insurance or reinsurance agreeing to perform
9any of the following acts:
10(1) Pay or indemnify another as to loss from certain
11contingencies called risks, including through reinsurance.
12(2) Pay or grant a specified amount or determinable benefit
13to another in connection with ascertainable risk contingencies.
14(3) Pay an annuity to another.
15(4) Act as surety.
16b. “Insurer” includes but is not limited to an insurance
17company, a self-insured business, or a group or self-insured
18plan as described in section 87.4.
193. “Statement” includes but is not limited to any notice,
20statement, proof of loss, receipt for payment, invoice,
21account, bill for services, diagnosis, prescription, hospital
22or physician record, X ray, test result, or other evidence of
23loss, injury, or expense.
24 Sec. 2. NEW SECTION. 507F.2 Purpose.
25A workers’ compensation fraud unit is created within the
26insurance fraud bureau within the insurance division. Upon a
27reasonable determination by the workers’ compensation fraud
28unit, by its own inquiries or as a result of complaints filed
29with the insurance fraud bureau or the workers’ compensation
30fraud unit, that a person has engaged in, is engaging in,
31or may be engaging in an act or practice that violates this
32chapter, the workers’ compensation fraud unit may administer
33oaths and affirmations, issue and serve subpoenas ordering the
34attendance of witnesses, collect evidence related to such act
35or practice, commence a suit, and prosecute a violation of this
-1-1chapter.
2 Sec. 3. NEW SECTION. 507F.3 Workers’ compensation attorney
3fraud — penalty.
41. An attorney or an attorney’s agent who acts unilaterally
5without an attorney’s knowledge commits workers’ compensation
6attorney fraud if the person, for the purpose of obtaining any
7benefit under chapter 85, 85A, 85B, 86, or 87 for oneself or on
8behalf of another person, knowingly does any of the following:
9a. Presents or causes to be presented to an insurer any
10oral or written statement, knowing the statement contains false
11information concerning a material fact.
12b. Employs any deception device, scheme, or artifice to
13defraud.
14c. Misrepresents, conceals, or suppresses any material fact
15to defraud.
16d. Makes a false entry in, fabricates, alters, conceals, or
17destroys a document to defraud.
18e. Assists, abets, solicits, or conspires with another in
19committing a violation of this chapter.
202. An attorney or an attorney’s agent who commits workers’
21compensation attorney fraud is, upon conviction, guilty
22of a class “D” felony. An attorney convicted of workers’
23compensation attorney fraud shall forfeit the ability to
24collect any attorney fees not already collected and shall
25refund attorney fees already collected from the client who was
26the subject of the worker’s compensation attorney fraud, unless
27the client commits workers’ compensation benefit fraud, in
28which case the attorney fees shall be forfeited to the victim
29compensation fund established in section 915.94.
303. Fifty percent of the criminal penalty collected under
31this section shall be deposited in the workers’ compensation
32fraud penalty fund created in section 507F.10. Fifty percent
33of the criminal penalty collected under this section shall be
34deposited pursuant to section 602.8108.
35 Sec. 4. NEW SECTION. 507F.4 Workers’ compensation benefit
-2-1fraud — penalty.
21. A person commits the offense of workers’ compensation
3benefit fraud if the person, for the purpose of obtaining any
4benefit under chapter 85, 85A, 85B, 86, or 87 for oneself or on
5behalf of another person, knowingly does any of the following:
6a. Presents or causes to be presented to an insurer, any
7oral or written statement, knowing that such statement contains
8false information concerning a material fact.
9b. Misrepresents, conceals, or suppresses any material fact
10to defraud.
11c. Makes a false entry in, fabricates, alters, conceals, or
12destroys a document to defraud.
13d. Assists, abets, solicits, or conspires with another in
14committing a violation of this chapter.
152. A person who commits workers’ compensation benefit
16fraud is, upon conviction, guilty of a class “D” felony. Upon
17conviction of this offense, a person shall forfeit all right to
18compensation under chapters 85, 85A, and 85B for the alleged
19injury which is the subject matter of the conviction.
203. Fifty percent of the criminal penalty collected under
21this section shall be deposited in the workers’ compensation
22fraud penalty fund created in section 507F.10. Fifty percent
23of the criminal penalty collected under this section shall be
24deposited pursuant to section 602.8108.
25 Sec. 5. NEW SECTION. 507F.5 Workers’ compensation health
26service provider fraud — penalty.
271. A health service provider or a health service provider’s
28agent who acts unilaterally without a health service
29providers’s knowledge commits workers’ compensation health
30service provider fraud if the person, for the purpose of
31obtaining any benefit or payment under chapter 85, 85A, 85B,
3286, or 87 for oneself or on behalf of another person, knowingly
33does any of the following:
34a. Presents or causes to be presented to an insurer any
35oral or written statement, knowing that such statement contains
-3-1false information concerning a material fact.
2b. Misrepresents, conceals, or suppresses any material fact
3to defraud.
4c. Makes a false entry in, fabricates, alters, conceals, or
5destroys a document to defraud.
6d. Bills for services not rendered, services rendered for
7a person other than the person identified on the bill, or
8services rendered for an injury or person not covered by the
9workers’ compensation laws.
10e. Assists, abets, solicits, or conspires with another in
11committing a violation of this chapter.
122. A health service provider or health service provider’s
13agent who commits workers’ compensation health service provider
14fraud is, upon conviction, guilty of a class “D” felony.
153. Fifty percent of the criminal penalty collected under
16this section shall be deposited in the workers’ compensation
17fraud penalty fund created in section 507F.10. Fifty percent
18of the criminal penalty collected under this section shall be
19deposited pursuant to section 602.8108.
20 Sec. 6. NEW SECTION. 507F.6 Workers’ compensation insurance
21carrier fraud — penalty.
221. An employee, agent, or contractor of an insurer commits
23workers’ compensation insurance carrier fraud if the person,
24for the purpose of obtaining any benefit or payment under
25chapter 85, 85A, 85B, 86, or 87 for oneself or on behalf of
26another person, knowingly does any of the following in the
27course of processing an insurance claim:
28a. Creates fraudulent claims and authorizes the payment of
29such claims to defraud the insurer.
30b. Authorizes the payment of claims known by the employee,
31agent, or contractor to be fraudulent to assist, abet, solicit,
32or conspire with another to defraud the insurer.
332. An employee, agent, or contractor of an insurer who
34commits workers’ compensation insurance carrier fraud is, upon
35conviction, guilty of a class “D” felony.
-4- 13. Fifty percent of the criminal penalty collected under
2this section shall be deposited in the workers’ compensation
3fraud penalty fund created in section 507F.10. Fifty percent
4of the criminal penalty collected under this section shall be
5deposited pursuant to section 602.8108.
6 Sec. 7. NEW SECTION. 507F.7 Workers’ compensation insurance
7coverage fraud — penalty.
81. A person commits the offense of workers’ compensation
9insurance coverage fraud if the person, in connection with
10any application or renewal of an insurance policy providing
11workers’ compensation insurance coverage or to avoid payment
12of or reduce premiums due for that coverage, for oneself or
13another, knowingly does any of the following:
14a. Presents or causes to be presented to an insurer, any
15oral or written statement, knowing that such statement contains
16false information concerning a material fact to defraud.
17b. Misrepresents, conceals, or suppresses any material fact
18to defraud.
19c. Makes a false entry in, fabricates, alters, conceals, or
20destroys a document to defraud.
212. A person who commits workers’ compensation insurance
22coverage fraud is, upon conviction, guilty of a class “D”
23felony.
243. Fifty percent of the criminal penalty collected under
25this section shall be deposited in the workers’ compensation
26fraud penalty fund created in section 507F.10. Fifty percent
27of the criminal penalty collected under this section shall be
28deposited pursuant to section 602.8108.
29 Sec. 8. NEW SECTION. 507F.8 Workers’ compensation employer
30fraud — penalty.
311. A person commits the offense of workers’ compensation
32employer fraud if the person, for the purpose of obstructing an
33employee’s workers’ compensation claim under chapter 85, 85A,
3485B, 86, or 87, knowingly does any of the following:
35a. Presents or causes to be presented to an insurer any
-5-1oral or written statement, knowing that such statement contains
2false information concerning a material fact.
3b. Misrepresents, conceals, or suppresses any material fact
4to defraud.
5c. Makes a false entry in, fabricates, alters, conceals, or
6destroys a document to defraud.
7d. Assists, abets, solicits, or conspires with another in
8committing a violation of this chapter.
92. A person who commits workers’ compensation employer
10fraud is, upon conviction, guilty of a class “D” felony.
113. Fifty percent of the criminal penalty collected under
12this section shall be deposited in the workers’ compensation
13fraud penalty fund created in section 507F.10. Fifty percent
14of the criminal penalty collected under this section shall be
15deposited pursuant to section 602.8108.
16 Sec. 9. NEW SECTION. 507F.9 Restitution.
17In addition to the criminal penalties established in this
18chapter, the court shall order a person who commits an offense
19under this chapter to pay restitution to persons aggrieved by
20the violation. Restitution shall be ordered in addition to a
21fine and the possibility of imprisonment, but not in lieu of a
22fine and the possibility of imprisonment.
23 Sec. 10. NEW SECTION. 507F.10 Fund created.
24A workers’ compensation fraud penalty fund is created in
25the state treasury as a separate fund under the control of
26the commissioner of insurance for purposes of this chapter.
27All moneys deposited into the fund are appropriated to the
28insurance division of the department of commerce for the
29workers’ compensation fraud unit. Notwithstanding section
308.33, any balance in the fund on June 30 of each fiscal year
31shall not revert to the general fund of the state, but shall
32be available for purposes of this chapter in subsequent fiscal
33years. The commissioner of insurance may request additional
34full time equivalent positions as needed and the request shall
35be granted so long as sufficient funds are within the workers’
-6-1compensation fraud penalty fund.
2 Sec. 11. NEW SECTION. 507F.11 Examination of information
3outside the state.
4As a unit within the insurance fraud bureau, the workers’
5compensation fraud unit, pursuant to section 507E.4, may obtain
6and examine any information that is related to enforcement of
7this chapter in possession of a person located outside the
8state.
9 Sec. 12. NEW SECTION. 507F.12 Confidentiality.
10As a unit within the insurance fraud bureau, all of the
11provisions of section 507E.5 shall apply to the workers’
12compensation fraud unit.
13 Sec. 13. NEW SECTION. 507F.13 Immunity from liability.
14A person is immune from civil liability for acts under this
15chapter if the person meets the requirements set forth in
16section 507E.7.
17 Sec. 14. NEW SECTION. 507F.14 Election of prosecution.
18If a person commits an offense under this chapter, the
19prosecuting attorney may elect to proceed under this chapter
20or any other law of this state.
21 Sec. 15. NEW SECTION. 507F.15 Prosecuting attorney status.
221. The workers’ compensation fraud unit shall employ at
23least one full-time prosecuting attorney. The prosecuting
24attorney, having specialized knowledge and training, shall
25in all counties in this state prosecute all criminal actions
26which may be brought under this chapter in which the workers’
27compensation fraud unit may be interested, when, in the
28prosecuting attorney’s judgment, the interest of the unit
29requires such action.
302. The prosecuting attorney may request a county attorney
31to assist with or handle the prosecution of a criminal action
32which may be brought under this chapter.
333. The prosecuting attorney shall report to the
34commissioner of insurance.
35 Sec. 16. NEW SECTION. 507F.16 Law enforcement officer
-7-1status.
2As a unit within the insurance fraud bureau, all of the
3provisions of section 507E.8 shall apply to the workers’
4compensation fraud unit.
5 Sec. 17. NEW SECTION. 507F.17 Limitation of actions.
6An information or indictment asserting a violation of this
7chapter shall be commenced within five years after the last
8date of its commission.
9 Sec. 18. NEW SECTION. 507F.18 Suspension of benefits.
10If a person is currently receiving or has a pending
11application for workers’ compensation benefits under chapter
1285, 85A, or 85B and the workers’ compensation fraud unit makes
13a determination to file charges in district court alleging a
14violation of this chapter by a person receiving benefits under
15chapter 85, 85A, or 85B, the workers’ compensation fraud unit
16shall notify the workers’ compensation commissioner, who shall
17suspend benefits or suspend any pending application.
18A person convicted of workers’ compensation fraud shall be
19prohibited from receiving benefits under chapters 85, 85A,
20and 85B for the particular claim or injury giving rise to the
21criminal action. If the person is acquitted or the charges
22are dismissed, the workers’ compensation fraud unit shall
23notify the workers’ compensation commissioner of such action
24and the commissioner shall resume the payment of any benefits
25previously suspended or resume any suspended application. A
26person whose benefits have been suspended and the payment of
27benefits resumed has the option to receive a back payment in a
28lump sum upon resumption of payment of benefits.
29 Sec. 19. NEW SECTION. 507F.19 Rulemaking authority.
30The commissioner of insurance may adopt rules pursuant to
31chapter 17A to administer this chapter.
32 Sec. 20. Section 85.27, subsections 3 and 4, Code 2018, are
33amended to read as follows:
343. A medical service provided under this chapter or chapter
3585A or 85B shall not be billed at a rate higher than a health
-8-1service provider’s standard retail rate for the medical
2service. A health service provider who bills and receives
3payment in excess of the health service provider’s standard
4rate for a medical service provided to treat a workers’
5compensation injury shall reimburse the employer or insurance
6carrier which paid for the medical service for the excess
7payments received by the health service provider.
8Notwithstanding section 85.26, subsection 4, charges believed
9to be excessive or unnecessary may be referred by the
10employer, insurance carrier, or health service provider to the
11workers’ compensation commissioner for determination, and the
12commissioner may utilize the procedures provided in sections
1386.38 and 86.39, or set by rule, and conduct such inquiry as
14the commissioner deems necessary. Any health service provider
15charges not in dispute shall be paid directly to the health
16service provider prior to utilization of procedures provided
17in sections 86.38 and 86.39 or set by rule. A health service
18provider rendering treatment to an employee whose injury is
19compensable under this section agrees to be bound by such
20charges as allowed by the workers’ compensation commissioner
21and shall not recover in law or equity any amount in excess of
22charges set by the commissioner. When a dispute under this
23chapter, chapter 85A, or chapter 85B regarding reasonableness
24of a fee for medical services arises between a health service
25provider and an employer or insurance carrier, the health
26service provider, employer, or insurance carrier shall not seek
27payment from the injured employee. A health service provider
28shall not seek payment for fees in dispute from the insurance
29carrier or employer until the commissioner finds, pursuant to
30informal dispute resolution procedures established by rule by
31the commissioner, that the disputed amount is reasonable. This
32section does not affect the responsibility of an insurance
33carrier or an employer to pay amounts not in dispute or a
34health service provider’s right to receive payment from an
35employee’s nonoccupational plan as provided in section 85.38,
-9-1subsection 2.
24. For purposes of this section, the employer is obliged to
3furnish reasonable services and supplies to treat an injured
4employee, and has the right to choose the care. The employer
5retains the right to choose the employee’s care throughout the
6course of treatment for all services identified in subsection
71. The employer is not obliged to authorize a referral for
8care to a specific provider of services by an authorized
9treating medical provider and the employer has the right to
10choose any provider for the care. If the employer chooses the
11care, the employer shall hold the employee harmless for the
12cost of care until the employer notifies the employee that the
13employer is no longer authorizing all or any part of the care
14and the reason for the change in authorization. An employer
15is not liable for the cost of care that the employer arranges
16in response to a sudden emergency if the employee’s condition,
17for which care was arranged, is not related to the employment.
18The treatment must be offered promptly and be reasonably
19suited to treat the injury without undue inconvenience to the
20employee. If the employee has reason to be dissatisfied with
21the care offered, the employee should communicate the basis of
22such dissatisfaction to the employer, in writing if requested,
23following which the employer and the employee may agree to
24alternate care reasonably suited to treat the injury. If the
25employer and employee cannot agree on such alternate care,
26the commissioner may, upon application and reasonable proofs
27of the necessity therefor, allow and order other care. In an
28emergency, the employee may choose the employee’s care at the
29employer’s expense, provided the employer or the employer’s
30agent cannot be reached immediately. An application made under
31this subsection shall be considered an original proceeding
32for purposes of commencement and contested case proceedings
33under section 85.26. The hearing shall be conducted pursuant
34to chapter 17A. Before a hearing is scheduled, the parties
35may choose a telephone hearing or an in-person hearing. A
-10-1request for an in-person hearing shall be approved unless the
2in-person hearing would be impractical because of the distance
3between the parties to the hearing. The workers’ compensation
4commissioner shall issue a decision within ten working days of
5receipt of an application for alternate care made pursuant to a
6telephone hearing or within fourteen working days of receipt of
7an application for alternate care made pursuant to an in-person
8hearing. The employer shall notify an injured employee of the
9employee’s ability to contest the employer’s choice of care
10pursuant to this subsection.
11 Sec. 21. NEW SECTION. 85.37A Suspension of benefits for
12workers’ compensation fraud.
13Section 507F.18 requires the workers’ compensation
14commissioner to suspend a person’s benefits if the workers’
15compensation fraud unit has probable cause to believe that the
16person has violated chapter 507F.
17 Sec. 22. NEW SECTION. 86.39A Criminal penalty for workers’
18compensation attorney fraud.
19Chapter 507F sets forth criminal penalties for engaging in
20workers’ compensation fraud, including but not limited to fraud
21committed by an attorney.
22 Sec. 23. NEW SECTION. 507E.2A Definition of insurer.
23As used in this chapter, unless the context otherwise
24requires:
25a. “Insurer” means a person entering into arrangements or
26contracts of insurance or reinsurance agreeing to perform any
27of the following acts:
28(1) Pay or indemnify another as to loss from certain
29contingencies called risks, including through reinsurance.
30(2) Pay or grant a specified amount or determinable benefit
31to another in connection with ascertainable risk contingencies.
32(3) Pay an annuity to another.
33(4) Act as surety.
34b. “Insurer” includes but is not limited to an insurance
35company, a self-insured business, or a group or self-insured
-11-1plan as described in section 87.4.
2 Sec. 24. Section 507E.6, Code 2018, is amended to read as
3follows:
4507E.6 Duties of insurer and fraud bureau.
51. An insurer which believes that a claim or application
6for insurance coverage is being made which is a violation of
7section 507E.3 or believes that a violation of 507E.3A has
8occurred, shall provide, within sixty days of the receipt
9of such claim or application becoming aware of a possible
10violation, written notification to the bureau of the claim or
11application suspected violation on a form prescribed by the
12bureau, including any additional information requested by the
13bureau related to the claim or application or the party making
14the claim or application.
152. The fraud bureau shall review each notification and
16determine whether further investigation is warranted.
173. If the bureau determines that further investigation
18is warranted, the bureau shall conduct an independent
19investigation of the facts surrounding the claim or application
20for insurance coverage notification to determine the extent,
21if any, to which fraud occurred in the submission of the claim
22or application. If the notification pertains to workers’
23compensation insurance fraud, the bureau shall deliver the
24notice to the workers’ compensation fraud unit, which shall
25determine if an investigation and prosecution are warranted.
26Upon formal request made by the bureau, the insurer shall
27provide all additional information related to the notification
28within ten business days or a time period specifically
29identified by the bureau.
304. The bureau shall report any alleged violation of law
31disclosed by the investigation to the appropriate licensing
32agency or prosecuting authority having jurisdiction with
33respect to such violation.
34 Sec. 25. Section 507E.8, Code 2018, is amended to read as
35follows:
-12- 1507E.8 Law enforcement officer status.
21. Bureau investigators shall have the power and status
3of law enforcement officers who by the nature of their duties
4may be required to perform the duties of a peace officer when
5making arrests for criminal violations established as a result
6of their investigations pursuant to this chapter or chapter
7507F.
82. The general laws applicable to arrests by law enforcement
9officers of the state also apply to bureau investigators.
10Bureau investigators shall have the power to execute arrest
11warrants and search warrants for the same criminal violations,
12serve subpoenas issued for the examination, investigation, and
13trial of all offenses identified through their investigations,
14and arrest upon probable cause without warrant a person found
15in the act of committing a violation of the provisions of this
16chapter or chapter 507F.
17 Sec. 26. EFFECTIVE DATE. This Act, being deemed of
18immediate importance, takes effect upon enactment.
19 Sec. 27. APPLICABILITY. This Act applies on the effective
20date of this Act to acts of fraud or prohibited health service
21providers’ practices committed on or after the effective date
22of this Act.
23EXPLANATION
24The inclusion of this explanation does not constitute agreement with
25the explanation’s substance by the members of the general assembly.
26This bill relates to workers’ compensation and insurance
27fraud and other prohibited health service provider practices.
28The bill creates new Code chapter 507F dedicated to workers’
29compensation fraud, codified following the existing insurance
30fraud Code chapter 507E.
31The bill establishes a workers’ compensation fraud unit
32(unit) within the insurance fraud bureau within the insurance
33division. The purpose of the unit is to investigate and
34prosecute workers’ compensation fraud. Unit investigators have
35the power and status of law enforcement officers. The bill
-13-1requires the unit to employ at least one full-time prosecuting
2attorney to prosecute all criminal actions which may be brought
3under this Code chapter in which the unit may be interested,
4when, in the prosecuting attorney’s judgment, the interest of
5the unit requires such action.
6The bill provides an election of prosecution. If a person
7commits an offense under this Code chapter, the prosecuting
8attorney may elect to proceed under this Code chapter or any
9other law of this state. The prosecuting attorney may be the
10unit prosecuting attorney or a county attorney.
11The bill sets forth criminal penalties for engaging in
12workers’ compensation fraud, including fraud committed by
13employers, workers, insurers, health service providers,
14employees of insurers, and attorneys. Specifically, the bill
15penalizes as a class “D” felony the following forms of workers’
16compensation fraud: benefit fraud, insurance coverage fraud,
17employer fraud, health service provider fraud, insurance
18carrier fraud, and attorney fraud. The elements for each crime
19are enumerated in the bill. A class “D” felony is punishable
20by confinement for no more than five years and a fine of at
21least $750 but not more than $7,500. The bill provides that
22in addition to any other applicable penalties, a court shall
23order a person to pay restitution to persons aggrieved by the
24violation, if a person commits an offense under this Code
25chapter. The bill requires 50 percent of the criminal penalty
26collected under this Code chapter to be deposited in a fund
27created in the bill. Moneys in the fund are appropriated to
28the insurance division of the department of commerce to the
29unit for the benefit of the workers’ compensation fraud unit.
30The new workers’ compensation fraud Code chapter
31incorporates by reference the following provisions from the
32insurance fraud Code chapter 507E: 507E.4 (examination of
33information outside the state), 507E.5 (confidentiality), and
34507E.7 (immunity from liability).
35The new Code chapter also defines insurer. “Insurer” means
-14-1a person entering into arrangements or contracts of insurance
2or reinsurance agreeing to perform any of the following acts:
3pay or indemnify another as to loss from certain contingencies
4called risks, including through reinsurance; pay or grant
5a specified amount or determinable benefit to another in
6connection with ascertainable risk contingencies; pay an
7annuity to another; or act as surety. Insurer includes but is
8not limited to an insurance company, a self-insured business,
9or a group or self-insured plan as described in Code section
1087.4.
11The new Code chapter limits commencement of actions
12for violations of the Code chapter to within five years of
13commission of workers’ compensation fraud.
14The bill provides that if a person is currently receiving
15or has a pending application for workers’ compensation
16benefits under Code chapter 85, 85A, or 85B and the workers’
17compensation fraud unit makes a determination to file charges
18in district court alleging a violation of the new Code chapter
19by a person receiving benefits under Code chapter 85, 85A, or
2085B, the workers’ compensation fraud unit shall notify the
21workers’ compensation commissioner, who shall suspend benefits
22or suspend any pending application. The bill provides that
23a person convicted of workers’ compensation fraud shall be
24prohibited from receiving benefits under Code chapters 85,
2585A, and 85B for the particular claim or injury giving rise to
26the criminal action. The bill provides that if the person is
27acquitted or the charges are dismissed, a person’s benefits
28or application will be resumed. The bill provides that a
29person has an option to receive a lump sum for back payment of
30benefits upon resumption of benefits.
31The new Code chapter grants the commissioner of insurance
32rulemaking authority.
33The bill amends Code chapter 507E to provide a definition of
34insurer. Insurer, for the purposes of that Code chapter, means
35the same as defined in new Code chapter 507F.
-15- 1The bill also amends Code section 507E.6 (duties of insurer)
2to provide for a process when an insurer alerts the insurance
3fraud bureau of workers’ compensation fraud. The bill provides
4that if the notification pertains to workers’ compensation
5insurance fraud, the insurance fraud bureau shall deliver the
6notice to the workers’ compensation fraud unit.
7The bill amends Code chapter 85 to provide that the employer
8retains the right to choose the employee’s physician throughout
9the course of treatment, including the choice of specialists.
10The employer is not obliged to authorize a referral for care
11with a specific provider of services.
12The bill amends Code chapter 85 to reference suspension of
13benefits under new Code chapter 507F.
14The bill amends Code chapter 86 to reference the criminal
15penalty for fraudulent attorney fees under new Code chapter
16507F.
17The bill also amends Code chapter 85 to provide that
18medical services provided under Code chapter 85, 85A, or 85B
19shall not be billed at a rate higher than the health service
20provider’s standard retail rate for that medical service. The
21bill provides that a health service provider who bills and
22receives payment in excess of the health service provider’s
23standard retail rate for medical services to treat a workers’
24compensation-covered injury shall reimburse the company which
25paid for the medical services for the excess payments.
26The bill takes effect upon enactment and applies to acts
27of fraud or prohibited health service providers’ practices
28committed on or after enactment.
-16-asf/rj