1.1                          A bill for an act 
  1.2             relating to insurance; regulating insurance fraud; 
  1.3             creating an insurance fraud unit in the department of 
  1.4             commerce; prescribing its powers and duties; 
  1.5             prescribing penalties; appropriating money; proposing 
  1.6             coding for new law in Minnesota Statutes, chapter 60A. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  [60A.96] [PURPOSE.] 
  1.9      The Minnesota legislature finds that the business of 
  1.10  insurance involves many transactions that have potential for 
  1.11  fraud, abuse, and other illegal activities.  Sections 60A.96 to 
  1.12  60A.967 are intended to permit full utilization of the expertise 
  1.13  of the commissioner to investigate and discover fraudulent 
  1.14  insurance acts more effectively, halt fraudulent insurance acts, 
  1.15  and assist and receive assistance from state, local, and federal 
  1.16  law enforcement and regulatory agencies in enforcing laws 
  1.17  prohibiting fraudulent insurance acts. 
  1.18     Sec. 2.  [60A.961] [DEFINITIONS.] 
  1.19     Subdivision 1.  [SCOPE.] For the purposes of sections 
  1.20  60A.96 to 60A.967, the terms in this section have the meanings 
  1.21  given them.  
  1.22     Subd. 2.  [BUSINESS OF INSURANCE.] "Business of insurance" 
  1.23  means the writing of insurance or the reinsuring of risks by an 
  1.24  insurer, including acts necessary or incidental to writing 
  1.25  insurance or reinsuring risks and the activities of persons who 
  1.26  act as or are officers, directors, agents, or employees of 
  2.1   insurers, or who are other persons authorized to act on their 
  2.2   behalf. 
  2.3      Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
  2.4   commissioner of insurance, the commissioner's designees, or the 
  2.5   department of commerce. 
  2.6      Subd. 4.  [FRAUDULENT INSURANCE ACT.] "Fraudulent insurance 
  2.7   act" means an act or omission committed by a person who 
  2.8   knowingly and with intent to defraud, commits, or conceals any 
  2.9   information concerning one or more of the following: 
  2.10     (1) presenting, causing to be presented, or preparing with 
  2.11  knowledge or belief that it will be presented to or by an 
  2.12  insurer, a reinsurer, broker, or its agent, false information as 
  2.13  part of, in support of, or concerning one or more of the 
  2.14  following: 
  2.15     (i) an application for the issuance or renewal of an 
  2.16  insurance policy; 
  2.17     (ii) the rating of an insurance policy; 
  2.18     (iii) a claim for payment or benefit under an insurance 
  2.19  policy; 
  2.20     (iv) premiums paid on an insurance policy; 
  2.21     (v) payments made under the terms of an insurance policy; 
  2.22     (vi) a document filed with the commissioner or the chief 
  2.23  insurance regulatory official of another jurisdiction; 
  2.24     (vii) the financial condition of an insurer or reinsurer; 
  2.25     (viii) the formation, acquisition, merger, reconsolidation, 
  2.26  dissolution, or withdrawal from one or more lines of insurance 
  2.27  in all or part of this state by an insurer or reinsurer; or 
  2.28     (ix) the issuance of written evidence of insurance; 
  2.29     (2) solicitation or acceptance of new or renewal insurance 
  2.30  risks on behalf of an insurer or other person engaged in the 
  2.31  business of insurance by a person who knows or should know that 
  2.32  the insurer or other person responsible for the risk is 
  2.33  insolvent at the time of the transaction; 
  2.34     (3) removal, concealment, alteration, or destruction of the 
  2.35  assets or records of an insurer, reinsurer, or other person 
  2.36  engaged in the business of insurance; 
  3.1      (4) willful embezzlement, abstracting, purloining, or 
  3.2   conversion of money, funds, premiums, credits, or other property 
  3.3   of an insurer, reinsurer, or person engaged in the business of 
  3.4   insurance; or 
  3.5      (5) transaction of the business of insurance in violation 
  3.6   of laws requiring a license, certificate of authority, or other 
  3.7   legal authority for the transaction of the business of insurance.
  3.8      Subd. 5.  [INSURANCE.] "Insurance" means a contract or 
  3.9   arrangement in which one undertakes to: 
  3.10     (1) pay or indemnify another as to loss from certain 
  3.11  contingencies called "risks"; 
  3.12     (2) pay or grant a specified amount or determinable benefit 
  3.13  to another in connection with ascertainable risk contingencies; 
  3.14     (3) pay an annuity to another; or 
  3.15     (4) act as surety. 
  3.16     Subd. 6.  [INSURER.] "Insurer" means a person entering into 
  3.17  arrangements or contracts of insurance or reinsurance, a 
  3.18  fraternal benefit society, a nonprofit health service 
  3.19  corporation, and a health maintenance organization.  A person is 
  3.20  an insurer regardless of whether the person is acting in 
  3.21  violation of laws requiring a certificate of authority or 
  3.22  regardless of whether the person denies being an insurer. 
  3.23     Subd. 7.  [NAIC.] "NAIC" means the National Association of 
  3.24  Insurance Commissioners. 
  3.25     Subd. 8.  [PERSON.] "Person" means an individual, a 
  3.26  corporation, a partnership, a limited liability company, an 
  3.27  association, a joint stock company, a trust, an unincorporated 
  3.28  organization, or any similar entity or any combination of these 
  3.29  persons. 
  3.30     Subd. 9.  [POLICY.] "Policy" means an individual or group 
  3.31  policy, group certificate, contract, or arrangement of insurance 
  3.32  affecting the rights of a resident of this state or bearing a 
  3.33  reasonable relation to this state, regardless of whether 
  3.34  delivered or issued for delivery in this state. 
  3.35     Subd. 10.  [REINSURANCE.] "Reinsurance" means a contract or 
  3.36  arrangement under which an insurer procures insurance for itself 
  4.1   in another insurer as to all or part of an insurance risk of the 
  4.2   originating insurer. 
  4.3      Sec. 3.  [60A.963] [FRAUDULENT INSURANCE ACTS AND 
  4.4   INTERFERENCE PROHIBITED.] 
  4.5      (a) A person shall not commit, attempt to commit, or 
  4.6   conspire to commit, aid, or abet a fraudulent insurance act. 
  4.7      (b) A person shall not interfere with the enforcement of 
  4.8   the provisions of sections 60A.96 to 60A.967. 
  4.9      Sec. 4.  [60A.965] [CREATION AND PURPOSE OF THE INSURANCE 
  4.10  FRAUD UNIT.] 
  4.11     (a) The Minnesota insurance fraud unit is established 
  4.12  within the department of commerce.  The commissioner shall 
  4.13  appoint the full-time supervisory and investigative personnel of 
  4.14  the insurance fraud unit, who shall be qualified by training and 
  4.15  experience to perform the duties of their positions.  The 
  4.16  commissioner shall also appoint clerical and other staff 
  4.17  necessary for the insurance fraud unit to carry out its duties 
  4.18  and responsibilities under sections 60A.96 to 60A.967. 
  4.19     (b) It shall be the duty of the insurance fraud unit to: 
  4.20     (1) initiate independent inquiries and conduct independent 
  4.21  investigations when the insurance fraud unit has cause to 
  4.22  believe that a fraudulent insurance act may be, is being, or has 
  4.23  been committed; 
  4.24     (2) review reports or complaints of alleged fraudulent 
  4.25  insurance activities from federal, state, and local law 
  4.26  enforcement and regulatory agencies, persons engaged in the 
  4.27  business of insurance, and the public to determine whether the 
  4.28  reports require further investigation and to conduct these 
  4.29  investigations; and 
  4.30     (3) conduct independent examinations of alleged fraudulent 
  4.31  insurance acts and undertake independent studies to determine 
  4.32  the extent of fraudulent insurance acts. 
  4.33     (c) The insurance fraud unit shall have the authority to: 
  4.34     (1) inspect, copy, or collect records and evidence; 
  4.35     (2) serve subpoenas; 
  4.36     (3) administer oaths and affirmations; 
  5.1      (4) share records and evidence with federal, state, or 
  5.2   local law enforcement or regulatory agencies; 
  5.3      (5) execute search warrants and arrest warrants for 
  5.4   criminal violations of this act; 
  5.5      (6) arrest upon probable cause without warrant a person 
  5.6   found in the act of violating or attempting to violate a 
  5.7   provision of sections 60A.96 to 60A.967; 
  5.8      (7) make criminal referrals to prosecuting authorities; and 
  5.9      (8) conduct investigations outside of this state.  
  5.10     If the information the insurance fraud unit seeks to obtain 
  5.11  is located outside this state, the person from whom the 
  5.12  information is sought may make the information available to the 
  5.13  insurance fraud unit to examine at the place where the 
  5.14  information is located.  The insurance fraud unit may designate 
  5.15  representatives, including officials of the state in which the 
  5.16  matter is located, to inspect the information on behalf of the 
  5.17  insurance fraud unit, and the insurance fraud unit may respond 
  5.18  to similar requests from officials of other states. 
  5.19     Sec. 5.  [60A.967] [PENALTIES.] 
  5.20     A person who violates sections 60A.96 to 60A.967 is subject 
  5.21  to one or more of the following: 
  5.22     (a) suspension or revocation of license or certificate of 
  5.23  authority, civil penalties of up to $...... per violation, or 
  5.24  both.  Suspension or revocation of license or certificate of 
  5.25  authority and imposition of civil penalties shall be pursuant to 
  5.26  an order of the commissioner issued under section 45.027.  The 
  5.27  commissioner's order may require a person found to be in 
  5.28  violation of sections 60A.96 to 60A.967 to make restitution to 
  5.29  persons aggrieved by the violations; 
  5.30     (b) a person convicted of a violation of sections 60A.96 to 
  5.31  60A.967 by a court of competent jurisdiction shall be fined 
  5.32  $......., imprisoned for a term of not less than one year per 
  5.33  violation, or both.  A person convicted of a violation of 
  5.34  sections 60A.96 to 60A.967 shall be ordered to pay restitution 
  5.35  to persons aggrieved by the violation.  Restitution shall be 
  5.36  ordered in addition to a fine or imprisonment but not in lieu of 
  6.1   a fine or imprisonment; or 
  6.2      (c) a person convicted of a violation of sections 60A.96 to 
  6.3   60A.967 under paragraph (b) shall be disqualified from engaging 
  6.4   in the business of insurance.  Other persons shall not willfully 
  6.5   permit the participation of a person convicted under paragraph 
  6.6   (b) in the business of insurance. 
  6.7      Sec. 6.  [APPROPRIATION.] 
  6.8      $....... is appropriated from the general fund to the 
  6.9   commissioner of commerce for the purposes of sections 1 to 5.