SB 1164
Initials PRB/HG Page 1 Caucus & COW
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
First Regular Session
Senate: COM DPA 4-3-0-0 | 3d Read 16-14-0-0
House: COM DPA 6-2-2-0
SB 1164: workers' compensation; fraud investigations; adjudications
Sponsor: Senator Kaiser, LD 2
Caucus & COW
Overview
Requires the Industrial Commission of Arizona (ICA) to create a fraud unit to investigate workers'
compensation fraud.
History
The ICA is the state regulatory agency responsible for processing and adjudicating a workers'
compensation claim (Title 23, Chapter 6, A.R.S.). The ICA has exclusive jurisdiction over
complaints involving alleged unfair claim processing practices or bad faith by an employer, self-
insured employer, insurance carrier or claims processing representative relating to workers'
compensation. The ICA investigates allegations of unfair claim processing or bad faith either on
receiving a complaint or on its own motion (A.R.S. § 23-930).
Any person who knowingly makes a false statement or representation for a workers'
compensation claim in order to obtain any compensation, benefit or payment for themself or
another person is guilty of a class 6 felony, subject to a maximum of one and one-half years in
prison, a $50,000 fine. If the person is a claimant for compensation, the claimant must also forfeit
all rights to any further temporary or permanent disability compensation for the claim on which
the false statement or representation was made after conviction of the offense (A.R.S. § 23-1028).
An insurer that believes a fraudulent claim has been made must send information relative to the
claim to the director of the Department of Insurance and Financial Institutions (DIFI), including the
identity of parties claiming loss or damage as a result of an accident and any other information
DIFI's fraud unit may require. If the director determines, after an investigation, that fraud, deceit
or intentional misrepresentation in the submission of the claim exits, the director may report the
violations of the law to the reporting insurer, the appropriate licensing agency and to the
appropriate county attorney or the attorney general for prosecution (A.R.S. § 20-466).
Provisions
1. Directs the ICA to establish a fraud unit to investigate fraudulent activities, statements or
representations in connection with worker's compensation claims. (Sec. 1)
2. Allows the fraud unit to investigate fraud allegations on either the receival of a complaint or
on the fraud unit's own motion. (Sec. 1)
3. Stipulates any allegation involving an unfair claim processing practice or bad faith by an
employer, self-insured employer, insurance carrier or claims processing representative must
be addressed in accordance with the unfair claim processing practice statutes. (Sec. 1)
4. Requires the ICA to adopt rules to establish a process for receiving complaints and conducting
investigations and delineates requirements for such rules. (Sec. 1)
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note SB 1164
Initials PRB/HG Page 2 Caucus & COW
5. Permits the fraud unit to report violations of law to specified entities, if satisfied upon
investigation that the fraudulent activities, statements or representations were made in
connection with a workers' compensation, benefits or payments claim, including the
appropriate county attorney or the Attorney General for prosecution. (Sec. 1)
6. Specifies that the requirement for the fraud unit to investigate workers' compensation fraud
does not limit:
a) the authority of the ICA, DIFI or any other entity to pursue any remedy in accordance with
the unfair claim processing practice statutes or statutorily prescribed legal remedies;
b) the right of an insurance carrier, a self-insured employer or the ICA's Special Fund to issue
a notice affecting the status of a workers' compensation claim at any time, if prior
determination of compensability or entitlement to benefits was procured by fraud; or
c) the obligation of an insurer to report a workers' compensation fraud claim in accordance
with statutory requirements. (Sec. 1)
Amendments
Committee on Commerce
1. Adds that the fraud unit may report violations to the claimant or claimant's representative.
2. Removes language relating to the right of an insurance carrier, self-insured or the Special
Fund to issue a notice affecting the status of a workers' compensation claim.
3. Makes a clarifying change.