1.1                          A bill for an act 
  1.2             relating to insurance; prohibiting insurance fraud; 
  1.3             providing enforcement; prescribing criminal penalties; 
  1.4             amending Minnesota Statutes 1994, section 609.611. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  Minnesota Statutes 1994, section 609.611, is 
  1.7   amended to read: 
  1.8      609.611 [DEFRAUDING INSURER INSURANCE FRAUD.] 
  1.9      Subdivision 1.  [DEFRAUD; DAMAGES OR CONCEALS PROPERTY 
  1.10  INSURANCE FRAUD PROHIBITED.] Whoever with intent to injure or 
  1.11  defraud an insurer, damages, removes, or conceals any property 
  1.12  real or personal, whether the actor's own or that of another, 
  1.13  which is at the time insured by any person, firm, or corporation 
  1.14  against loss or damage; 
  1.15     (a) May be sentenced to imprisonment for not more than 
  1.16  three years or to payment of fine of not more than $5,000, or 
  1.17  both if the value insured for is less than $20,000; or 
  1.18     (b) May be sentenced to imprisonment for not more than five 
  1.19  years or to payment of fine of not more than $10,000, or both if 
  1.20  the value insured for is $20,000 or greater; 
  1.21     (c) Proof that the actor recovered or attempted to recover 
  1.22  on a policy of insurance by reason of the alleged loss is 
  1.23  relevant but not essential to establish the actor's intent to 
  1.24  defraud the insurer. the intent to defraud for the purpose of 
  1.25  depriving another of property or for pecuniary gain, commits, or 
  2.1   permits its employees or its agents to commit any of the 
  2.2   following acts, is guilty of insurance fraud and may be 
  2.3   sentenced as provided in subdivision 3: 
  2.4      (a) Presents, causes to be presented, or prepares with 
  2.5   knowledge or reason to believe that it will be presented, by or 
  2.6   on behalf of an insured, claimant, or applicant to an insurer, 
  2.7   insurance professional, or premium finance company in connection 
  2.8   with an insurance transaction or premium finance transaction, 
  2.9   any information that contains a false representation as to any 
  2.10  material fact, or that withholds or conceals a material fact 
  2.11  concerning any of the following: 
  2.12     (1) an application for, rating of, or renewal of, an 
  2.13  insurance policy; 
  2.14     (2) a claim for payment or benefit under an insurance 
  2.15  policy; 
  2.16     (3) a payment made according to the terms of an insurance 
  2.17  policy; 
  2.18     (4) an application used in a premium finance transaction; 
  2.19     (b) Presents, causes to be presented, or prepares with 
  2.20  knowledge or reason to believe that it will be presented, to or 
  2.21  by an insurer, insurance professional, or a premium finance 
  2.22  company in connection with an insurance transaction or premium 
  2.23  finance transaction, any information that contains a false 
  2.24  representation as to any material fact, or that withholds or 
  2.25  conceals a material fact, concerning any of the following: 
  2.26     (1) a solicitation for sale of an insurance policy or 
  2.27  purported insurance policy; 
  2.28     (2) an application for certificate of authority; 
  2.29     (3) the financial condition of an insurer; or 
  2.30     (4) the acquisition, formation, merger, affiliation, or 
  2.31  dissolution of an insurer; 
  2.32     (c) Solicits or accepts new or renewal insurance risks by 
  2.33  or for an insolvent insurer; 
  2.34     (d) Removes the assets or any record of assets, 
  2.35  transactions, and affairs or any material part thereof, from the 
  2.36  home office or other place of business of an insurer, or from 
  3.1   the place of safekeeping of an insurer, or destroys or 
  3.2   sequesters the same from the department of commerce. 
  3.3      (e) Diverts, misappropriates, converts, or embezzles funds 
  3.4   of an insurer, insured, claimant, or applicant for insurance in 
  3.5   connection with: 
  3.6      (1) an insurance transaction; 
  3.7      (2) the conducting of business activities by an insurer or 
  3.8   insurance professional; or 
  3.9      (3) the acquisition, formation, merger, affiliation, or 
  3.10  dissolution of any insurer. 
  3.11     Subd. 2.  [DEFRAUD; FALSE LOSS CLAIM STATUTE OF 
  3.12  LIMITATIONS.] Whoever intentionally makes a claim to an 
  3.13  insurance company that personal property was lost, stolen, 
  3.14  damaged, destroyed, misplaced, or disappeared, knowing the claim 
  3.15  to be false may be sentenced as provided in section 609.52, 
  3.16  subdivision 3.  The applicable statute of limitations provision 
  3.17  under section 628.26 shall not begin to run until the insurance 
  3.18  company or law enforcement agency is aware of the fraud, but in 
  3.19  no event may the prosecution be commenced later than seven years 
  3.20  after the claim was made act has occurred. 
  3.21     Subd. 3.  [SENTENCE.] Whoever violates this provision may 
  3.22  be sentenced as provided in section 609.52, subdivision 3, based 
  3.23  on the greater of (i) the value of property, services, or other 
  3.24  benefit wrongfully obtained or attempted to obtain, or (ii) the 
  3.25  aggregate economic loss suffered by any person as a result of 
  3.26  the violation.  A person convicted of a violation of this 
  3.27  section must be ordered to pay restitution to persons aggrieved 
  3.28  by the violation.  Restitution must be ordered in addition to a 
  3.29  fine or imprisonment but not in lieu of a fine or imprisonment. 
  3.30     Subd. 4.  [DEFINITIONS.] (a) "Insurance policy" means the 
  3.31  written instrument in which are set forth the terms of any 
  3.32  certificate of insurance, binder of coverage, or contract of 
  3.33  insurance (including a certificate, binder, or contract issued 
  3.34  by a state-assigned risk plan); benefit plan; nonprofit hospital 
  3.35  service plan; motor club service plan; or surety bond, cash 
  3.36  bond, or any other alternative to insurance authorized by a 
  4.1   state's financial responsibility act. 
  4.2      (b) "Insurance professional" means sales agents, agencies, 
  4.3   managing general agents, brokers, producers, claims 
  4.4   representatives, adjusters, and third-party administrators. 
  4.5      (c) "Insurance transaction" means a transaction by, between 
  4.6   or among:  (1) an insurer or a person who acts on behalf of an 
  4.7   insurer; and (2) an insured, claimant, applicant for insurance, 
  4.8   public adjuster, insurance professional, practitioner, or any 
  4.9   person who acts on behalf of any of the foregoing, for the 
  4.10  purpose of obtaining insurance or reinsurance, calculating 
  4.11  insurance premiums, submitting a claim, negotiating or adjusting 
  4.12  a claim, or otherwise obtaining insurance, self-insurance, or 
  4.13  reinsurance or obtaining the benefits thereof or therefrom. 
  4.14     (d) "Insurer" means a person purporting to engage in the 
  4.15  business of insurance or authorized to do business in the state 
  4.16  or subject to regulation by the state, who undertakes to 
  4.17  indemnify another against loss, damage or liability arising from 
  4.18  a contingent or unknown event.  Insurer includes, but is not 
  4.19  limited to, an insurance company; self-insurer; reinsurer; 
  4.20  reciprocal exchange; interinsurer; risk retention group; Lloyd's 
  4.21  insurer; fraternal benefit society; surety; medical service, 
  4.22  dental, optometric, or any other similar health service plan; 
  4.23  and any other legal entity engaged or purportedly engaged in the 
  4.24  business of insurance, including any person or entity that falls 
  4.25  within the definition of insurer found within section 60A.951, 
  4.26  subdivision 5. 
  4.27     (e) "Premium" means consideration paid or payable for 
  4.28  coverage under an insurance policy.  Premium includes any 
  4.29  payment, whether due within the insurance policy term or 
  4.30  otherwise, and any deductible payment, whether advanced by the 
  4.31  insurer or insurance professional and subject to reimbursement 
  4.32  by the insured or otherwise, any self insured retention or 
  4.33  payment, whether advanced by the insurer or insurance 
  4.34  professional and subject to reimbursement by the insured or 
  4.35  otherwise, and any collateral or security to be provided to 
  4.36  collateralize obligations to pay any of the above. 
  5.1      (f) "Premium finance company" means a person engaged or 
  5.2   purporting to engage in the business of advancing money, 
  5.3   directly or indirectly, to an insurer or producer at the request 
  5.4   of an insured under the terms of a premium finance agreement, 
  5.5   including but not limited to, loan contracts, notes, agreements 
  5.6   or obligations, wherein the insured has assigned the unearned 
  5.7   premiums, accrued dividends, or loss payments as security for 
  5.8   such advancement in payment of premiums on insurance policies 
  5.9   only, but does not include the financing of insurance premiums 
  5.10  purchased in connection with the financing of goods or services. 
  5.11     (g) "Premium finance transaction" means a transaction by, 
  5.12  between, or among an insured, a producer or other party claiming 
  5.13  to act on behalf of an insured and a third-party premium finance 
  5.14  company, for the purposes of purportedly or actually advancing 
  5.15  money directly or indirectly to in insurer or producer at the 
  5.16  request of an insured under the terms of a premium finance 
  5.17  agreement, wherein the insured has assigned the unearned 
  5.18  premiums, accrued dividends or loan payments as security for 
  5.19  such advancement in payment of premiums on insurance policies 
  5.20  only, but does not include the financing of insurance premiums 
  5.21  purchased in connection with the financing of goods or services. 
  5.22     Sec. 2.  [INSURANCE FRAUD REVOLVING ACCOUNT.] 
  5.23     The attorney general shall deposit in a separate account in 
  5.24  the state treasury all money voluntarily contributed by 
  5.25  insurance companies for the investigation and prosecution of 
  5.26  insurance fraud.  Money in the account is appropriated to the 
  5.27  attorney general for that purpose.