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Regular Session, 2010
SENATE BILL NO. 792 (Substitute for Senate Bill No. 136 by Senator Morrish)
BY SENATOR MORRISH
PUBLIC SFTY/CORRECT DEPT. Provides relative to the insurance fraud investigation
unit. (8/15/10)
AN ACT1
To amend and reenact R.S. 40:1421, the introductory paragraph of 1422(A), 1422(C), the2
introductory paragraph of 1427, 1427(1) and (3), 1428(A)(1) and (4)(b)(ii) and (C),3
and 1429 and to enact R.S. 22:2134(B)(3)(e) and R.S. 40:1428(A)(4)(b)(iv), relative4
to the insurance fraud investigation unit within the Department of Public Safety and5
Corrections, public safety services, office of state police; to provide for definitions;6
to provide for powers and duties of the unit; to provide for reporting; to provide7
relative to the Insurance Fraud Investigation Fund; to extend the termination date of8
the unit; and to provide for related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 22:2134(B)(3)(e) is hereby enacted to read as follows:11
§2134. Automobile Theft and Insurance Fraud Prevention Authority Fund12
* * *13
B. Any monies in the Automobile Theft and Insurance Fraud Prevention14
Authority Fund shall be administered only by the director of the authority, upon a15
majority vote of the board, in the following order of priority:16
* * *17 SB NO. 792
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(3) To achieve the purposes and objectives of this Part, which may include1
but not be limited to the following:2
* * *3
(e) Conducting educational and public awareness programs designed to4
inform the citizens of the state on methods of combating insurance fraud and5
preventing motor vehicle theft.6
* * *7
Section 2. R.S. 40:1421, the introductory paragraph of 1422(A) and 1422(C), the8
introductory paragraph of 1427, 1427(1) and (3), 1428(A)(1) and (4)(b)(ii) and (C), and 14299
are hereby amended and reenacted and R.S. 40:1428(A)(4)(b)(iv) is hereby enacted to read10
as follows:11
§1421. Definitions12
As used in this Chapter, the following words shall have the following13
meanings:14
(1) "Commissioner" means commissioner of insurance.15
(2) "Fraud unit" or "unit" means the insurance fraud investigation unit within16
the Department of Public Safety and Corrections, office of state police.17
(3) "Fraud support unit" means the insurance fraud support unit within the18
Department of Justice.19
(4) "Insurance fraud" means any commission or attempted commission of20
criminal acts or practices as provided in R.S. 22:1923, 1924, or 1925 which involves21
any type of insurance as provided in R.S. 22:47.22
(5) "Insurance fraud section" means the Louisiana Automobile Theft23
and Insurance Fraud Prevention Authority within the Louisiana Department24
of Insurance.25
(5)(6) "Insurance policy" means a contract or other written instrument26
between an insured and insurer setting forth the obligations and responsibilities of27
each party.28
(6)(7) "Insurance premium finance company" means a person engaged or29 SB NO. 792
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purporting to engage in the business of advancing money, directly or indirectly, to1
an insurer or producer at the request of an insured pursuant to the terms of a premium2
finance agreement, including but not limited to loan contracts, notes, agreements, or3
obligations, wherein the insured has assigned the unearned premiums, accrued4
dividends, or loss payments as security for such advancement in payment of5
premiums on insurance policies only, and does not include the financing of insurance6
premiums purchased in connection with the financing of goods and services.7
(7)(8) "Insurance professional" means an adjuster, agent, managing general8
agent, surplus lines broker, reinsurance intermediary, insurance consultant, broker,9
or attorney-in-fact.10
(8)(9) "Insurance transaction", "insurance business", and "business of11
insurance" include solicitation, negotiations preliminary to execution of an insurance12
contract, execution of an insurance contract and the transaction of matters subsequent13
to execution of a contract and arising out of it, and matters arising out of any14
relationship among or between an insured, an insurer, and a third party for which an15
insurance policy provides coverage.16
(9)(10) "Insured" means any person covered by an insurance policy.17
(10)(11) "Insurer" means any person or company subject to regulation18
pursuant to Title 22 of the Louisiana Revised Statutes of 1950.19
(12) "LATIFPA" means the Louisiana Automobile Theft and Insurance20
Fraud Prevention Authority within the Louisiana Department of Insurance.21
§1422. Insurance fraud investigation unit; powers and duties22
A. There is hereby created an insurance fraud investigation unit in the23
Department of Public Safety and Corrections, public safety services, office of state24
police and the unit shall be solely dedicated to the investigation of property and25
casualty, worker's compensation, life, and health insurance fraud. The purposes26
of this unit shall be to:27
* * *28
C. The police employees of the unit shall have the same duties and powers29 SB NO. 792
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as are provided for other police employees of the office in R.S. 40:1379 and such1
other duties as are assigned by the deputy secretary of public safety services of the2
Department of Public Safety and Corrections. The police employees of the unit3
shall complete the National Insurance Crime Training Academy, phases 1, 2,4
and 3, and Fraud Claims Law Specialist program, within the first two years of5
assignment to the unit.6
* * *7
§1427. Reports8
The insurance fraud investigation unit, fraud support unit, and insurance9
fraud section shall each submit an annual report to the governor and the insurance10
committees of each house of the legislature no later than February fifteenth of each11
year on the progress made in deterring insurance fraud. Such report shall detail:12
(1) All expenditures and receipts of the insurance fraud investigation unit,13
fraud support unit, and insurance fraud section.14
* * *15
(3) The results achieved as a consequence of such expenditures, including16
the number of notifications or inquiries received, the number of inquiries and17
investigations undertaken, the number of inquiries to which an investigation was not18
initiated, the number of arrests, the number of files presented to prosecutors, the19
number of prosecutions, the number of convictions, and the total dollar amount of20
restitution resulting from the operation of the insurance fraud investigation unit,21
fraud support unit, and insurance fraud section.22
* * *23
§1428. Special assessment; creation of fund24
A.(1) Except as provided in Paragraph (2) of this Subsection, the25
commissioner of insurance may assess a fee on the direct premiums received by each26
insurer licensed by the Department of Insurance to conduct business in this state.27
Such fee shall be imposed by rule adopted by the commissioner in accordance with28
the Administrative Procedure Act. The total fees assessed for any year shall not29 SB NO. 792
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exceed the amount necessary to pay the costs of investigation, enforcement, public1
education and public awareness, and prosecution of insurance fraud in this state2
by the programs to which funds are allocated in Paragraph (4) of this Subsection.3
The total fee assessed in any year shall not exceed an amount equal to 0.0003754
multiplied times the annual direct premium dollars received that are subject to the5
fee.6
* * *7
(4) * * *8
(b) Except as otherwise provided in Subparagraph (a) of this Paragraph, the9
fees collected shall be used solely for the purposes of this Subpart and shall be10
allocated as follows:11
* * *12
(ii) Fifteen Ten percent of the fees collected shall be allocated to the13
Department of Justice to be used solely for the insurance fraud support unit.14
* * *15
(iv) Five percent of the fees collected shall be allocated to the Louisiana16
Automobile Theft and Insurance Fraud Prevention Authority for use pursuant17
to the purposes set forth in R.S. 22:2134(B)(3)(e).18
* * *19
C. After compliance with the requirements of Article VII, Section 9(B) of the20
Constitution of Louisiana relative to the Bond Security and Redemption Fund, an21
amount equal to that deposited as required by Subsection B of this Section shall be22
credited to a special fund hereby created in the state treasury to be known as the23
Insurance Fraud Investigation Fund. The monies in this fund shall be used solely as24
provided by Subsection A of this Section and only in the amounts appropriated by25
the legislature. All unexpended and unencumbered monies in this fund at the end of26
the fiscal year shall remain in such fund. The monies shall be irrevocably27
dedicated and deposited in the Insurance Fraud Investigation Fund and shall28
be used solely as provided in Subsection A of this Section and only in the29 SB NO. 792
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amounts appropriated by the legislature. Monies in the fund shall be1
appropriated, administered, and used solely and exclusively for purposes of the2
fraud unit, fraud support unit, insurance fraud section, LATIFPA, and as3
further provided in this Section. All unexpended and unencumbered monies in4
this fund at the end of the fiscal year shall be returned to the Department of5
Insurance to be refunded to each insurer licensed by the Department of6
Insurance to conduct business in this state assessed a fee pursuant to this7
Section on a pro-rata basis based on each insurer's proportionate share of the8
total fees collected pursuant to this Section.9
* * *10
§1429. Effectiveness of Subpart11
This Subpart shall be null, void, and unenforceable on July 1, 2010 2016.12
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Michelle Ducharme.
DIGEST
Present law creates the Automobile Theft and Insurance Fraud Prevention Authority Fund
and provides for the administration and the priorities of the fund.
Present law provides for methods to achieve the priorities of the Louisiana Automobile Theft
and Insurance Fraud Prevention Authority ("authority"). Such methods include providing
financial support to state or local law enforcement agencies for motor vehicle theft and
insurance fraud prevention, detection and enforcement; providing financial support to state
or local law enforcement agencies, including but not limited to the office of attorney general,
for programs designed to reduce the incidence of motor vehicle theft and insurance fraud;
providing financial support to state and local prosecutors, including but not limited to the
office of attorney general, for programs designed to reduce the incidence of motor vehicle
theft and insurance fraud; conducting educational programs designed to inform motor
vehicle owners of methods of preventing motor vehicle theft and insurance fraud.
Proposed law adds conducting educational and public awareness programs designed to
inform the citizens of the state on methods of combating insurance fraud and preventing
motor vehicle theft to the list of methods to achieve the priorities of the authority.
Proposed law defines the "insurance fraud section" as the La. Automobile Theft and
Insurance Fraud Prevention Authority (LATIFPA) with the Dept. of Insurance and defines
"LATIFPA" as the Louisiana Automobile Theft and Insurance Fraud Prevention Authority
within the Louisiana Dept. of Insurance.
Present law creates an insurance fraud investigation unit ("unit") in the Dept. of Public
Safety and Corrections, public safety services, office of state police.
Proposed law provides that the unit shall be solely dedicated to the investigation of property
and casualty, worker's compensation, life, and health insurance fraud. SB NO. 792
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Proposed law provides that the police employees of the unit shall complete the National
Insurance Crime Training, phases 1, 2, and 3, and Fraud Claims Law Specialist, within the
first two years of assignment to the unit.
Present law provides that the insurance fraud investigation unit shall submit an annual report
to the governor and insurance committees of each house of the legislature not later than
February 15
th
of each year on the progress made in deterring insurance fraud and provides
for the contents of such report.
Proposed law requires the fraud support unit and insurance fraud section to also submit an
annual report to the governor and insurance committees of each house of the legislature not
later than February 15
th
of each year on the progress made in deterring insurance fraud.
Present law provides that the commissioner of insurance may assess a fee on the direct
premiums received by each insurer licensed by the Department of Insurance to conduct
business in the state. Present law provides that total fees assessed for any year shall not
exceed the amount necessary to pay the costs of investigation, enforcement, and prosecution
of insurance fraud in the state by the programs to which funds are allocated.
Proposed law provides that the fees assessed for any year shall also cover public education
and public awareness programs.
Present law provides that the fees collected shall be used solely for the purpose specified in
law and shall be allocated as follows:
(1)75% of the fees collected shall be allocated to the insurance fraud investigation unit
within the office of state police.
(2)15% of the fees collected shall be allocated to the Department of Justice to be used
solely for the insurance fraud support unit.
(3)10% of the fees collected shall be allocated to the Department of Insurance to be
used solely for the section of insurance fraud.
Proposed law reallocates the fee in the following manner:
(1)75% of the fees collected shall be allocated to the insurance fraud investigation unit
within the office of state police.
(2)10% of the fees collected shall be allocated to the Department of Justice to be used
solely for the insurance fraud support unit.
(3)10% of the fees collected shall be allocated to the Department of Insurance to be
used solely for the section of insurance fraud.
(4)5% of the fees collected shall be allocated to the La. Automobile Theft and Insurance
Fraud Prevention Authority.
Proposed law provides that the monies in the fund shall be irrevocably dedicated and
deposited in the Insurance Fraud Investigation Fund and shall be used solely as provided for
in law and only in the amounts appropriated by the legislature. Monies in the fund shall be
appropriated, administered, and used solely and exclusively for purposes of the fraud unit,
fraud support unit, insurance fraud section, LATIFPA, and as further provided in law.
Proposed law further provides that all unexpended and unencumbered monies in this fund
at the end of the fiscal year shall be returned to the Department of Insurance to be refunded
to each insurer licensed by the Department of Insurance to conduct business in this state
assessed a fee on a pro-rata basis based on each insurer's proportionate share of the total fees SB NO. 792
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collected pursuant to law.
Present law provides that the insurance fraud investigation unit within the Department of
Public Safety and Corrections, public safety service, office of state police, shall be null, void,
and unenforceable on July 1, 2010.
Proposed law extends the termination date of the unit until July 1, 2016.
Effective August 15, 2010.
(Amends R.S. 40:1421, 1422(A)(intro para), 1422(C), 1427(intro para), 1427(1) and (3),
1428(A)(1) and (4)(b)(ii) and (C), and 1429; adds R.S. 22:2134(B)(3)(e) and R.S.
40:1428(A)(4)(b)(iv))