New Jersey-2024-S2558-Introduced

An Act concerning insurance fraud and amending P.L.1983, c.320.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 3 of P.L.1983, c.320 (C.17:33A-3) is amended to read as follows:

3. As used in [this act] P.L.1983, c.320 (C.17:33A-1 et seq.):

"Attorney General" means the Attorney General of New Jersey or his designated representatives.

"Bureau" means the Bureau of Fraud Deterrence established by section 8 of P.L.1983, c.320 (C.17:33A-8).

"Commissioner" means the Commissioner of Banking and Insurance.

"Hospital" means any general hospital, mental hospital, convalescent home, nursing home or any other institution, whether operated for profit or not, which maintains or operates facilities for health care.

"Insurance company" means:

a. Any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person engaged in the business of insurance pursuant to Subtitle 3 of Title 17 of the Revised Statutes (R.S.17:17-1 et seq.), or Subtitle 3 of Title 17B of the New Jersey Statutes (N.J.S.17B:17-1 et seq.);

b. Any medical service corporation operating pursuant to P.L.1940, c.74 (C.17:48A-1 et seq.);

c. Any hospital service corporation operating pursuant to P.L.1938, c.366 (C.17:48-1 et seq.);

d. Any health service corporation operating pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.);

e. Any dental service corporation operating pursuant to P.L.1968, c.305 (C.17:48C-1 et seq.);

f. Any dental plan organization operating pursuant to P.L.1979, c.478 (C.17:48D-1 et seq.);

g. Any insurance plan operating pursuant to P.L.1970, c.215 (C.17:29D-1);

h. The New Jersey Insurance Underwriting Association operating pursuant to P.L.1968, c.129 (C.17:37A-1 et seq.);

i. (Deleted by amendment, P.L.2010, c.32)

j. Any risk retention group or purchasing group operating pursuant to the "Liability Risk Retention Act of 1986," 15 U.S.C.s.3901 et seq.; and

k. Any health maintenance organization operating pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.).

"Pattern" means five or more related violations of P.L.1983, c.320 (C.17:33A-1 et seq.). Violations are related if they involve either the same victim, or same or similar actions on the part of the person or practitioner charged with violating P.L.1983, c.320 (C.17:33A-1 et seq.).

"Person" means a person as defined in R.S.1:1-2, and shall include, unless the context otherwise requires, a practitioner.

"Principal residence" means that residence at which a person spends the majority of his time. Principal residence may be an abode separate and distinct from a person's domicile. Mere seasonal or weekend residence within this State does not constitute principal residence within this State.

"Practitioner" means a licensee of this State authorized to practice medicine and surgery, psychology, chiropractic, or law or any other licensee of this State whose services are compensated, directly or indirectly, by insurance proceeds, or a licensee similarly licensed in other states and nations or the practitioner of any nonmedical treatment rendered in accordance with a recognized religious method of healing.

"Producer" means an insurance producer as defined in section 3 of P.L.2001, c.210 (C.17:22A-28), licensed to transact the business of insurance in this State pursuant to the provisions of the "New Jersey Insurance Producer Licensing Act of 2001," P.L.2001, c.210 (C.17:22A-26 et seq.).

"Self-insured entity" means a public or private entity that retains the risk and responsibility for paying for losses from contingent events for beneficiaries of its self-insured plan, in accordance with the terms of its self-insured plan, from its own funds or from its own funds together with funds contributed by or on behalf of the beneficiaries of the self-insured plan.

"Self-insured plan" means any plan of benefits for losses incurred from contingent events, which may include health, bodily injury, property damage, liability, disability, life, workers' compensation or other benefits not prohibited by law, offered by a self-insured entity to its employees, members, officers, owners or other persons entitled to benefits under the terms of the self-insured plan.

"Statement" includes, but is not limited to, any application, writing, notice, expression, statement, proof of loss, bill of lading, receipt, invoice, account, estimate of property damage, bill for services, diagnosis, prescription, hospital or physician record, X-ray, test result or other evidence of loss, injury or expense.

(cf: P.L.2021, c.167, s.1)

2. Section 4 of P.L.1983, c.320 (C.17:33A-4) is amended to read as follows:

4. a. A person or a practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if he:

(1) Presents or causes to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, a self-insured plan, or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.), knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or

(2) Prepares or makes any written or oral statement that is intended to be presented to any insurance company, a self-insured entity, the Unsatisfied Claim and Judgment Fund, or any claimant thereof in connection with, or in support of or opposition to any claim for payment or other benefit pursuant to an insurance policy, a self-insured plan, or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.), knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or

(3) Conceals or knowingly fails to disclose the occurrence of an event which affects any person's initial or continued right or entitlement to: (a) any insurance benefit or payment; [or] (b) the amount of any benefit or payment to which the person is entitled; (c) any benefits or payment under a self-insured plan; or

(4) Prepares or makes any written or oral statement, intended to be presented to any insurance company or producer for the purpose of obtaining:

(a) a motor vehicle insurance policy, that the person to be insured maintains a principal residence in this State when, in fact, that person's principal residence is in a state other than this State; or

(b) an insurance policy, knowing that the statement contains any false or misleading information concerning any fact or thing material to an insurance application or contract;

(5) Conceals or knowingly fails to disclose any evidence, written or oral, which may be relevant to a finding that a violation of the provisions of paragraph (4) of this subsection a. has or has not occurred; or

(6) Prepares, presents or causes to be presented to any insurer or other person, or demands or requires the issuance of, a certificate of insurance that contains any false or misleading information concerning the policy of insurance to which the certificate makes reference, or assists, abets, solicits or conspires with another to do any of these acts. As used in this paragraph, "certificate of insurance" means a document or instrument, regardless of how titled or described, that is, or purports to be, prepared or issued by an insurer or insurance producer as evidence of property or casualty insurance coverage. The term shall not include a policy of insurance, insurance binder, policy endorsement, or automobile insurance identification or information card.

b. A person or practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if he knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.).

c. A person or practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if, due to the assistance, conspiracy or urging of any person or practitioner, he knowingly benefits, directly or indirectly, from the proceeds derived from a violation of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.).

d. A person or practitioner who is the owner, administrator or employee of any hospital violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if he knowingly allows the use of the facilities of the hospital by any person in furtherance of a scheme or conspiracy to violate any of the provisions of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.).

e. A person or practitioner violates [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) if, for pecuniary gain, for himself or another, he directly or indirectly solicits any person or practitioner to engage, employ or retain either himself or any other person to manage, adjust or prosecute any claim or cause of action, against any person, for damages for negligence, or, for pecuniary gain, for himself or another, directly or indirectly solicits other persons to bring causes of action to recover damages for personal injuries or death, or for pecuniary gain, for himself or another, directly or indirectly solicits other persons to make a claim for personal injury protection benefits pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.); provided, however, that this subsection shall not apply to any conduct otherwise permitted by law or by rule of the Supreme Court.

f. A person who operates a motor vehicle on the public highways of this State, which motor vehicle is insured by a policy issued under the laws of another state, and who maintains a principal residence in this State or who has his motor vehicle principally garaged in this State violates the provisions of P.L.1983, c.320 (C.17:33A-1 et seq.) if he has knowingly prepared or made any written or oral statement, presented to any insurance company or producer licensed to transact the business of insurance under the laws of that other state, and which resulted in obtaining a motor vehicle insurance policy for his motor vehicle in that other state, that the person to be insured:

(1) Maintains a principal residence in the other state when, in fact, that person's principal residence is in this State; or

(2) Has his vehicle principally garaged in the other state, when, in fact, that person has his motor vehicle principally garaged in this State.

This subsection shall not apply to a person who insures a vehicle in another state, as permitted by and in accordance with the laws of that state, based on a second residence, or attendance at an educational institution, in that other state, if in obtaining the policy the person truthfully discloses to the insurance company or producer the state of the person's principal residence and the state where the vehicle is principally garaged.

g. A person, organization, or business violates the provisions of P.L.1983, c.320 (C.17:33A-1 et seq.) if such person, organization, or business purposely or knowingly:

(1) Makes a false or misleading statement, representation, or submission, including failing to properly classify employees in violation of state wage, benefit and tax laws as defined in section 1 of P.L.2009, c.194 (C.34:1A-1.11), for the purpose of evading the full payment of insurance benefits or premiums; or

(2) Coerces, solicits, or encourages, or employs, contracts, or otherwise conspires with a person to coerce, solicit, or encourage, any individual to make a false or misleading statement, representation or submission concerning any fact that is material to a claim for insurance benefits, or the payment of insurance benefits or insurance premiums, for the purpose of wrongfully obtaining the benefits or of evading the full payment of the insurance benefits or insurance premiums.

(cf: P.L.2021, c.167, s.2)

3. Section 7 of P.L.1983, c.320 (C.17:33A-7) is amended to read as follows:

7. a. Any insurance company or self-insured entity damaged as the result of a violation of any provision of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) may sue therefor in any court of competent jurisdiction to recover compensatory damages, which shall include reasonable investigation expenses, costs of suit and attorneys fees.

b. A successful claimant under subsection a. shall recover treble damages if the court determines that the defendant has engaged in a pattern of violating [this act] P.L.1983, c.320 (C.17:33A-1 et seq.).

c. A claimant under this section shall mail a copy of the initial claim, amended claim, counterclaims, briefs and legal memoranda to the commissioner at the time of filing of such documents with the court wherein the matter is pending. A successful claimant shall report to the commissioner, on a form prescribed by the commissioner, the amount recovered and such other information as is required by the commissioner.

d. Upon receipt of notification of the filing of a claim by an insurer, the commissioner may join in the action for the purpose of seeking judgment for the payment of a civil penalty authorized under section 5 of [this act] P.L.1983, c.320 (C.17:33A-5). If the commissioner prevails, the court may also award court costs and reasonable attorney fees actually incurred by the commissioner.

e. No action shall be brought by an insurance company or self-insured entity under this section more than six years after the cause of action has accrued.

(cf: P.L.1997, c.151, s.5.)

4. Section 11 of P.L.1983, c.320 (C.17:33A-11) is amended to read as follows:

11. Papers, documents, reports, or evidence relative to the subject of an investigation under [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) shall not be subject to public inspection except as specifically provided in [this act] P.L.1983, c.320 (C.17:33A-1 et seq.). The commissioner shall not detain subpenaed records after an investigation is closed or, if a claim for a civil penalty is filed by the commissioner pursuant to section 5 of P.L.1983, c.320 (C.17:33A-5) or subsection d. of section 7 of P.L.1983, c.320 (C.17:33A-7), upon final disposition of the claim by a court of competent jurisdiction, whichever shall be the later date. Subpenaed records shall be returned to the persons from whom they were obtained. The commissioner may, in his discretion, make relevant papers, documents, reports, or evidence available to the Attorney General, an appropriate licensing authority, law enforcement agencies, an insurance company, self-insured entity, or insurance claimant injured by a violation of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.), consistent with the purposes of [this act] P.L.1983, c.320 (C.17:33A-1 et seq.) and under such conditions as he deems appropriate. Such papers, documents, reports, or evidence shall not be subject to subpena, unless the commissioner consents, or until, after notice to the commissioner and a hearing, a court of competent jurisdiction determines that the commissioner would not be unnecessarily hindered by such subpena. Division investigators and insurance company fraud investigators shall not be subject to subpena in civil actions by any court of this State to testify concerning any matter of which they have knowledge pursuant to a pending insurance fraud investigation by the division, or a pending claim for civil penalties initiated by the commissioner.

(cf: P.L.1997, c.151, s.7.)

5. This act shall take effect immediately.

STATEMENT

This bill includes self-insured entities and plans under certain provisions of the "New Jersey Insurance Fraud Prevention Act." Specifically, the bill provides that persons or practitioners violate that act if they:

(1) Present or cause to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to a self-insured plan, knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim;

(2) Prepare or make any written or oral statement that is intended to be presented to a self-insured entity, or in support of or opposition to any claim for payment or other benefit to a self-insured plan, knowing that the statement contains false or misleading information concerning anything material to the claim; or

(3) Conceal or knowingly fail to disclose the occurrence of an event which affects any person's initial or continued right or entitlement to any benefit or payment under a self-insured plan.

Under the bill, a "self-insured entity" is a public or private entity that retains the risk and responsibility for paying for losses from contingent events for beneficiaries of its self-insured plan, in accordance with the terms of its self-insured plan, from its own funds or from its own funds together with funds contributed by or on behalf of the beneficiaries of the self-insured plan. A "self-insured plan" is any plan of benefits for losses incurred from contingent events, which may include health, bodily injury, property damage, liability, disability, life, workers' compensation or other benefits not prohibited by law, offered by a self-insured entity to its employees, members, officers, owners or other persons entitled to benefits under the terms of the self-insured plan.

The bill provides that self-insured entities damaged as the result of a violation of any provision of the "New Jersey Insurance Fraud Prevention Act" may bring suit in a court of competent jurisdiction to recover compensatory damages.

The bill provides that the Commissioner of Banking and Insurance may make relevant papers, documents, reports, or evidence available to a self-insured entity injured by a violation of the "New Jersey Insurance Fraud Prevention Act" consistent with the purposes of that act and under such conditions as the commissioner deems appropriate.