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Regular Session, 2012
SENATE BILL NO. 251
BY SENATOR MORRISH
INSURANCE CLAIMS. Creates the Louisiana Insurance Fraud Prevention Act. (8/1/12)
AN ACT1
To enact Part II-A of Chapter 7 of Title 22 of the Louisiana Revised Statutes of 1950, to be2
comprised of R.S. 22:1931 through 1942, relative to insurance fraud; to provide3
definitions; to prohibit insurance fraud; to provide for civil actions and monetary4
penalties; to provide with respect to civil investigative demand and deposition; and5
to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. Part II-A of Chapter 7 of Title 22 of the Louisiana Revised Statutes of8
1950, comprised of R.S. 22:1931 through 1942 is hereby enacted to read as follows: 9
PART II-A. LOUISIANA INSURANCE FRAUD PREVENTION ACT10
§1931. Legislative findings11
The legislature finds that to protect the health, safety, and welfare of the12
citizens of this state, the attorney general of Louisiana and his assistants shall13
be agents of this state with the ability, authority, and resources to pursue civil14
monetary penalties, liquidated damages, or other remedies to protect the15
integrity of the insurance industry from persons who engage in fraud,16
misrepresentation, abuse, or other illegal practices, as further provided in this17 SB NO. 251
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Part, in order to obtain payments to which these insurance providers or persons1
are not entitled.2
§1932. Definitions3
As used in this Part the following terms shall have the following4
meanings unless a different meaning is clearly required by context:5
(1) "Administrative adjudication" means adjudication and the6
adjudication process contained in the Administrative Procedure Act, R.S.7
49:950 et seq.8
(2) "Agent" means a person who is employed by or has a contractual9
relationship with another person or who acts on behalf of that person.10
(3) "Attorney general" means the party authorized to institute a11
proceeding or take other authorized action as provided in this Part.12
(4) "Billing" or "bill" means submitting, or attempting to submit, a13
claim for goods, services, or supplies.14
(5) "Billing agent" means an agent of a person who performs any or all15
of the person's billing functions.16
(6) "Claim" includes any request or demand, including any and all17
documents or information required by federal or state law or rule submitted to18
an insurer for payment. "Claim" may also include any entry or omission in a19
cost report or similar document, book of account, or any other document which20
supports, or attempts to support, the claim. A claim may be made through21
paper or electronic means. Each provided service may be treated as a separate22
claim or several services may be combined to form one claim.23
(7) "Department" means the department of insurance.24
(8) "False or fraudulent claim" means a claim submitted by a person or25
his billing agent knowing the claim to be false, fictitious, untrue, or misleading26
in regard to any material information. "False or fraudulent claim" shall also27
include a claim which is part of a pattern of incorrect submissions in regard to28
material information or which is otherwise part of a pattern in violation of29 SB NO. 251
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applicable federal or state law or rule.1
(9) "Good, service, or supply" means any good, item, device, supply, or2
service for which a claim is made, or is attempted to be made, in whole or in3
part.4
(10) "Illegal remuneration" means the solicitation, receipt, offer, or5
payment of any remuneration, including but not limited to kickbacks, bribes,6
and rebates, whether in cash or in kind, for the following:7
(a) In return for referring an individual to a health care provider, or for8
referring an individual to another person for the purpose of referring an9
individual to a health care provider, or for the furnishing or arranging to10
furnish any good, supply, or service for which payment may be made, in whole11
or in part, under an insurance plan.12
(b) In return for purchasing, leasing, or ordering, or for arranging for13
or recommending purchasing, leasing, or ordering, any good, supply, or service,14
or facility for which payment may be made, in whole or in part, under an15
insurance plan.16
(c) To a recipient of goods, services, or supplies, or his representative, for17
which payment may be made, in whole or in part, under an insurance plan.18
(11) "Ineligible member" means an individual who is not eligible to19
receive insurance benefits under an insurance contract.20
(12) "Insurer" means any person or other entity authorized to transact21
and transacting insurance business in this state. Notwithstanding any contrary22
provisions of R.S. 22:242(7) or any other law, regulation, or definition contained23
in this Title, a health maintenance organization shall be deemed an insurer for24
purposes of this Part.25
(13) "Knowing" or "knowingly" means that the person has actual26
knowledge of the falsity of the information or that the person acts in deliberate27
ignorance or reckless disregard of the truth or falsity of the information.28
(14) "Managing employee" means a person who exercises operational29 SB NO. 251
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or managerial control over, or who directly or indirectly conducts, the1
day-to-day operations of a person. "Managing employee" shall include but is2
not limited to a chief executive officer, president, general manager, business3
manager, administrator, or director.4
(15) "Member" means an individual who is eligible to receive insurance5
benefits through an insurance contract.6
(16) "Misrepresentation" means the knowing failure to truthfully or7
fully disclose any and all information required, or the concealment of any and8
all information required, on a claim or a provider agreement, or the making of9
a false or misleading statement to the department relative to an insurance10
program.11
(17) "Order" means a final order imposed pursuant to an12
administrative, civil, or criminal adjudication.13
(18) "Ownership interest" means the possession, directly or indirectly,14
of equity in the capital or the stock, or the right to share in the profits, of an15
entity.16
(19) "Payment" means the payment to a person from an insurer17
pursuant to a claim, or the attempt to seek payment for a claim.18
(20) "Person" means any person furnishing or claiming to furnish a19
good, service, or supply who is compensated by insurance proceeds as well as20
any other entity defined as a person by federal or state law or rule and a person-21
in-fact.22
(21) "Person-in-fact" means an agent who directly or indirectly23
participates in management decisions, has an ownership interest in the person,24
or other persons defined as a person-in-fact by federal or state law or rule.25
(22) "P.O.S.T.-certified" means peace officer standards and training26
certified as established by the Louisiana Peace Officer Standards and Training27
Council.28
(23) "Property" means any and all property, movable and immovable,29 SB NO. 251
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corporeal and incorporeal.1
(24) "Provider agreement" means a document required as a condition2
of enrollment or participation as a person in an insurance program.3
(25) "Recoupment" means recovery through the reduction, in whole or4
in part, of payment to a person.5
(26) "Recovery" means the recovery of attempted benefits pursued,6
overpayments, damages, fines, penalties, costs, expenses, restitution, attorney7
fees, interest, or settlement amounts.8
(27) "Rule" means any rule or regulation promulgated by the9
department in accordance with the Administrative Procedure Act and any10
federal rule or regulation promulgated by the federal government in accordance11
with federal law.12
(28) "Sanction" shall include but is not limited to any or all of the13
following:14
(1) Recoupment.15
(2) Posting of bond, other security, or a combination thereof.16
(3) Exclusion as a person.17
(4) A monetary penalty.18
§1933. False or fraudulent claim; misrepresentation; prescription19
A. No person shall knowingly present or cause to be presented a false or20
fraudulent claim in violation of R.S. 22:1924.21
B. No person shall knowingly engage in misrepresentation or make, use,22
or cause to be made or used, a false record or statement to obtain payment for23
a false or fraudulent claim from an insurer.24
C. No person shall knowingly make, use, or cause to be made or used,25
a false record or statement to conceal, avoid, or decrease an obligation to pay26
or transmit money or property to an insurer.27
D. No person shall conspire to defraud, or attempt to defraud, an28
insurer through misrepresentation or by obtaining, or attempting to obtain,29 SB NO. 251
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payment for a false or fraudulent claim.1
E. Each violation of this Part may be treated as a separate violation or2
may be combined into one violation at the option of the attorney general.3
F. Where the person is providing medical services, no person shall4
knowingly submit a claim for goods, services, or supplies which are medically5
unnecessary or which were of substandard quality or quantity.6
G. No action brought pursuant to this Part shall be instituted later than7
ten years after the date upon which the alleged violation occurred. For8
violations involving a scheme or course of conduct, no action pursuant to this9
Part shall be instituted more than ten years after the latest event formula10
component of the scheme or course of conduct.11
§1934. Civil actions authorized12
A. The attorney general may institute a civil action in the courts of this13
state to seek recovery from any person or persons who violate the provisions of14
this Part.15
B. An action by a prevailing defendant to recover costs, expenses, fees,16
and attorney fees shall be ancillary to and shall be brought and heard in the17
same court as the civil action brought pursuant to the provisions of Subsection18
A of this Section.19
C. (1) A prevailing defendant may seek recovery only for costs, expenses,20
fees, and attorney fees if the court finds, following a contradictory hearing, that21
either of the following applies:22
(a) The action was instituted by the attorney general pursuant to23
Subsection A of this Section after it should have been determined by the24
attorney general to be frivolous, vexatious, or brought primarily for the purpose25
of harassment.26
(b) The attorney general proceeded with an action properly instituted27
pursuant to Subsection A of this Section after it should have been determined28
by the attorney general that proceeding would be frivolous, vexatious, or for the29 SB NO. 251
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purpose of harassment.1
(2) Recovery awarded to a prevailing defendant shall be awarded only2
for those reasonable, necessary, and proper costs, expenses, fees, and attorney3
fees actually incurred by the prevailing defendant.4
D. An action by a prevailing defendant to recover costs, expenses, fees,5
and attorney fees may be brought no later than sixty days after the rendering6
of a final nonappealable judgment.7
§1935. Burden of proof; prima facie evidence; standard of review8
A. The burden of proof in an action instituted pursuant to this Part shall9
be a preponderance of the evidence, except that the defendant shall carry the10
burden of proving that goods, services, or supplies were actually provided to an11
eligible recipient in the quantity and quality submitted on a claim. In all other12
aspects, the burden of proof shall be as set forth in the Code of Civil Procedure13
and other applicable laws.14
B. Proof by a preponderance of the evidence of a false or fraudulent15
claim or illegal remuneration shall be deemed to exist under the following16
circumstances:17
(1) If the defendant has pled guilty to, been convicted of, or entered a18
plea of nolo contendere to, or participated in a pre-trial diversion program for19
a criminal charge in any federal or state court when such charge arises out of20
circumstances which would be a violation of this Part.21
(2) If an order has been rendered against a defendant finding the22
defendant to have violated this Part.23
C.(1) The submission of a certified or true copy of an order, civil24
judgment, or criminal conviction or plea shall be prima facie evidence of the25
same.26
(2) The submission of the bill of information or of the indictment and the27
minutes of the court shall be prima facie evidence as to the circumstances28
underlying a criminal conviction or plea.29 SB NO. 251
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D.(1) In determining whether a pattern of incorrect submissions exists1
in regard to an alleged false or fraudulent claim, the court shall give2
consideration to the materiality of the total amount of the incorrect submissions3
by a person in relation to the total claims submitted by the person.4
(2) "Material" or "materiality" as used in this Subsection shall have the5
same meaning as defined by rules and regulations promulgated by the attorney6
general in accordance with the Administrative Procedure Act which incorporate7
the definition of "material" or "materiality" recognized by the American8
Institute of Certified Public Accountants.9
§1936. Civil monetary penalty10
A. In a civil action instituted in the courts of this state pursuant to the11
provisions of this Part, the attorney general may seek a civil monetary penalty12
provided in R.S. 22:1934 from any of the following:13
(1) Any person sanctioned by order pursuant to an administrative14
adjudication.15
(2) Any person determined by a court of competent jurisdiction to have16
violated any provision of this Part.17
(3) Any person who has violated a settlement agreement entered into18
pursuant to this Part.19
(4) A person who has been charged with a violation of R.S. 22:1924.20
(5) A person who has been found liable in a civil action filed in federal21
court pursuant to 18 U.S.C. 1347 et seq., or 42 U.S.C. 1320a-7(b).22
(6) A person who has entered a plea of guilty or nolo contendere to or23
has participated in a pre-trial diversion program for, or has been convicted in24
federal or state court of criminal conduct arising out of circumstances which25
would constitute a violation of this Part.26
B.(1) If a person is sanctioned by order pursuant to an administrative27
adjudication and if judicial review of the order is sought, a civil suit may be28
filed for imposition and recovery of the civil monetary penalty during the29 SB NO. 251
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pendency of such judicial review. The reviewing court may consolidate both1
actions and hear them concurrently.2
(2) If judicial review of an order is sought, the attorney general shall file3
the action for recovery of the civil monetary penalty within one year of service4
of the petition seeking judicial review of the order.5
(3) If no judicial review of an order is sought, the attorney general may6
file the action for recovery of the civil monetary penalty within one year of the7
date of the order.8
(4) Any action brought pursuant to the provisions of this Part shall be9
filed in the Nineteenth Judicial District Court for the parish of East Baton10
Rouge.11
C. In the instance of a state criminal action, the action for recovery of12
the civil monetary penalty may be brought as part of the criminal action either13
through a bill of information or through a motion filed by the attorney general's14
office; otherwise such action shall be brought within one year of the date of the15
criminal conviction or final plea.16
D.(1) In the case of a civil judgment rendered in federal court, the action17
for recovery of the civil monetary penalty may be brought once the judgment18
becomes enforceable and no later than one year after written notification to the19
attorney general of the enforceable judgment.20
(2) In the case of a criminal conviction or plea in federal court, the21
action pursuant to this Section may be brought once the conviction or plea is22
final and no later than one year after written notification to the attorney general23
of the rendering of the conviction or final plea.24
(3) Any action brought under the provisions of this Subsection shall be25
filed in the Nineteenth Judicial District Court for the parish of East Baton26
Rouge.27
E. If an action is brought pursuant to this Part, the request for the28
imposition of a civil monetary penalty shall only be considered if made part of29 SB NO. 251
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the original or amended petition either through a bill of information or through1
a motion filed by the attorney general's office.2
§1937. Recovery3
A.(1) Actual damages incurred as a result of a violation of the provisions4
of this Part shall be recovered only once by the insurer and shall not be waived5
by the court.6
(2) Except as provided in Paragraph (3) of this Subsection, actual7
damages shall equal the difference between the amount the insurer paid or8
would have paid and the amount that should have been paid had not a violation9
of this Part occurred, plus interest at the maximum rate of legal interest10
provided by R.S. 13:4202, from the date the damage occurred to the date of11
repayment. Actual damages shall include investigative expenses incurred by the12
insurer.13
(3) If the violator is a managed care health care provider contracted14
with a health insurer, actual damages shall be determined in accordance with15
the violator's provider agreement.16
B. Civil fine. (1) Any person who is found to have violated R.S. 22:192417
or 1933 shall be subject to a civil fine in an amount not to exceed ten thousand18
dollars per violation, or an amount equal to three times the value of the illegal19
remuneration, whichever is greater.20
(2) Except as limited by this Section, any person who is found to have21
violated R.S. 22:1924 or 1933 shall be subject to a civil fine in an amount not to22
exceed three times the amount of actual damages sustained by the insurer as a23
result of the violation.24
C. Civil monetary penalty. (1) In addition to the actual damages25
provided in Subsection A of this Section and any civil fine imposed pursuant to26
Subsection B of this Section, one or more of the following civil monetary27
penalties shall be imposed on the violator:28
(a) Not less than five thousand dollars but not more than ten thousand29 SB NO. 251
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dollars for each false or fraudulent claim, misrepresentation, illegal1
remuneration, or other prohibited act provided in R.S. 22:1924 or 1933.2
(b) Payment of interest on the amount of the civil fine imposed pursuant3
to Subsection B of this Section at the maximum rate of legal interest provided4
by R.S. 13:4202 from the date the damage occurred to the date of repayment.5
(2) Prior to the imposition of a civil monetary penalty, the court may6
consider whether extenuating circumstances exist as provided in R.S. 22:1938.7
D. Costs, expenses, fees and attorney fees. (1) Any person who is found8
to have violated this Part shall be liable for all costs, expenses, and fees related9
to investigations and proceedings associated with the violation, including10
attorney fees.11
(2) All awards of costs, expenses, fees, and attorney fees are subject to12
review by the court using a reasonable, necessary, and proper standard of13
review.14
(3) The attorney general shall promptly remit awards for those costs,15
expenses, and fees incurred by the parties involved in the investigations or16
proceedings to the appropriate party.17
§1938. Waiver; extenuating circumstances18
If a waiver is requested by the attorney general, the court may waive any19
recovery, except for actual damages, required to be imposed pursuant to the20
provisions of this Part provided all of the following extenuating circumstances21
are found to be applicable:22
(1) The violator furnished all the information known to him about the23
specific allegation to the department or attorney general no later than thirty24
days after the violator first obtained the information.25
(2) The violator cooperated fully with all federal or state investigations26
concerning the specific allegation.27
(3) At the time the violator furnished the information concerning the28
specific allegation to the department or the attorney general, no criminal, civil,29 SB NO. 251
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or departmental investigation or proceeding had been commenced as to the1
alleged violation.2
§1939. Deposit of monies collected3
All monies collected pursuant to this Part, minus actual damages4
incurred in pursuing a judgment or conviction, shall be dedicated to and5
deposited into the Insurance Fraud Investigation Fund pursuant to R.S.6
40:1428(C).7
§1940. Civil investigative demand8
A. If the attorney general has information, evidence, or reason to believe9
that any person or entity may be in possession, custody, or control of any10
documentary material or information relevant to an investigation for a possible11
violation of this Part, he or any of his assistants may issue to the person or entity12
a civil investigative demand before the commencement of a civil proceeding to13
require the production of the documentary material for inspection or copying14
or reproduction, or the answering under oath and in writing of interrogatories.15
Any civil investigative demand issued pursuant to this Part shall state a general16
description of the subject matter being investigated and the applicable17
provisions of law constituting the alleged violation of this Part. A civil18
investigative demand for the production of documentary material shall describe19
each class of documentary material to be produced with such definiteness and20
certainty as to permit such material to be fairly identified. A civil investigative21
demand for answers to written interrogatories shall set forth with specificity the22
written interrogatories to be answered. Each investigative demand shall set a23
return date of no earlier than twenty days after service of the demand upon the24
person or his representative or agent.25
B. A civil investigative demand issued pursuant to this Part may be26
served by the sheriff or a P.O.S.T.-certified investigator employed by the27
attorney general or by the office of state police when the demand is issued to a28
resident or domestic business entity found in this state. A civil investigative29 SB NO. 251
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demand issued to non-resident or a foreign business entity may be served using1
long-arm jurisdiction as provided for in the Louisiana Code of Civil Procedure.2
C. Upon failure to comply with the civil investigative demand, the3
attorney general may apply to the district court having jurisdiction over the4
person to compel compliance with the civil investigative demand.5
D. Except as otherwise provided in this Section, no documentary6
material, answers to interrogatories, or copies thereof, while in the possession7
of the attorney general or any other agency assisting the attorney general with8
the matter under investigation, shall be available for examination by any person9
or entity except as determined by the attorney general and subject to any10
conditions imposed by him for effective enforcement of the laws of this state.11
Nothing in this Section shall be construed to prohibit or limit the attorney12
general from sharing any documentary material, answers to interrogatories, or13
copies thereof with the United States government or with any other state14
government, or any federal or state agency, or any person or entity that may be15
assisting in the investigation or prosecution of the subject matter of the civil16
investigative demand.17
E. The attorney general may use documentary material derived from18
information obtained pursuant to this Section, or copies of that material, as the19
attorney general determines necessary for the enforcement of the laws of this20
state, including presentation before a court.21
F. If any documentary material has been produced by any person or22
entity in the course of any investigation pursuant to a civil investigative demand23
and any case or proceeding before the court or grand jury arising out of such24
investigation, or any proceeding before any state agency involving such material25
has been completed, or no case or proceeding in which such material may be26
used has been commenced within a reasonable time after analysis of all27
documentary material and other information assembled in the course of the28
investigation, the attorney general, upon written request of the person or entity29 SB NO. 251
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who produced the material, shall return to such person or entity any such1
material which has not passed into the control of any court, grand jury, or2
agency through introduction into the record of such case or proceeding.3
G. "Documentary material" as used in this Section shall include but is4
not limited to all electronically-stored information including writings, drawings,5
graphs, charts, photographs, sound recordings, images, and other data or data6
compilations that would be subject to a request for production under Federal7
Rule of Civil Procedure 34 as it exists now or is hereafter amended.8
§1941. Investigative deposition9
A. When the attorney general has information, evidence, or reason to10
believe that a violation of this Part has occurred, the attorney general may issue11
an investigative subpoena for deposition testimony to any person or entity that12
may have information or knowledge relevant to the matter under investigation,13
or for the purpose of revealing, identifying, or explaining documentary material14
or other physical evidence sought under R.S. 22:1940. Such investigative15
subpoena shall contain a general description of the matter under investigation16
and a notice informing the prospective deponent of his right to counsel at the17
deposition with opportunity for cross-examination. Such deposition shall be18
conducted at the principal place of business of the deponent, at his place of19
residence, at his domicile, or, if agreeable to the deponent, at some other place20
convenient to the attorney general and the lawful and designated attorney21
representative of the deponent. Such deposition shall be held at a date no earlier22
than seven days after the date on which demand is received, unless the attorney23
general or an assistant attorney general designated by the attorney general24
determines that exceptional circumstances are present which warrant the25
commencement of such testimony within a lesser period of time.26
B. An investigative subpoena issued pursuant to this Part may be served27
by the sheriff or a P.O.S.T.-certified investigator employed by the attorney28
general or by the office of state police when the demand is issued to a resident29 SB NO. 251
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or domestic business entity found in this state. An investigative subpoena issued1
to non-resident or a foreign business entity may be served using long-arm2
jurisdiction as provided for in the Louisiana Code of Civil Procedure.3
C. When the investigative subpoena is issued to a business entity, the4
entity shall designate one or more officers, directors, or managing agents, and5
may set forth, for each person designated, the matters on which he will testify.6
The persons so designated shall testify as to matters known or reasonably7
available to the organization.8
D. Upon failure to comply with the investigative subpoena, the attorney9
general may apply to the district court having jurisdiction over the person to10
compel compliance with the investigative subpoena. Failure to comply with a11
court order is punishable by contempt.12
§1942. Asset forfeiture13
A. In accordance with the provisions of Subsection B of this Section, the14
court may order the forfeiture of property to satisfy recovery under the15
following circumstances:16
(1) The court may order a person from whom recovery is due to forfeit17
property which constitutes or was derived directly or indirectly from gross18
proceeds traceable to the violation which forms the basis for the recovery.19
(2) If the the attorney general shows that property was transferred to a20
third party to avoid paying of recovery, or in an attempt to protect the property21
from forfeiture, the court may order the third party to forfeit the transferred22
property.23
B. Prior to the forfeiture of property, a contradictory hearing shall be24
held during which the attorney general shall prove by clear and convincing25
evidence that the property in question is subject to forfeiture pursuant to26
Subsection A of this Section. No such contradictory hearing shall be required27
if the owner of the property in question agrees to the forfeiture.28
C. If property is transferred to another person within six months prior29 SB NO. 251
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to the occurrence or after the occurrence of the violation for which recovery is1
due or within six months prior to or after the institution of a criminal, civil, or2
departmental investigation or proceeding, it shall be prima facie evidence that3
the transfer was intended to avoid paying recovery or was an attempt to protect4
the property from forfeiture.5
D. The health care provider or other person from whom recovery is due6
shall have an affirmative duty to fully disclose all property and liabilities and7
all transfers of property which meet the criteria of Subsection C of this Section8
to the court and the attorney general.9
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Creates the Louisiana Insurance Fraud Prevention Act.
Effective August 1, 2012.
(Adds R.S. 22:1931–1942)