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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 healthcare provider, or for8
referring an individual to another person for the purpose of referring an9
individual to a healthcare 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 or violate any provision of R.S.22:1924.21
B. Each violation of this Part may be treated as a separate violation or22
may be combined into one violation at the option of the attorney general.23
C. No action brought pursuant to this Part shall be instituted later than24
ten years after the date upon which the alleged violation occurred. For25
violations involving a scheme or course of conduct, no action pursuant to this26
Part shall be instituted more than ten years after the latest event formula27
component of the scheme or course of conduct.28
D. To the extent that the conduct giving rise to the cause of action29 SB NO. 251
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involves the provision of services, supplies, merchandise, or benefits of a1
medical assistance program administered by the Louisiana Department of2
Health and Hospitals, including any medical assistance programs administered3
by the state pursuant to 42 U.S.C. 1396 et. seq., the provisions of this Part shall4
not apply.5
§1934. Civil actions authorized6
A. The attorney general may institute a civil action in the courts of this7
state to seek recovery from any person or persons who violate the provisions of8
this Part.9
B. An action by a prevailing defendant to recover costs, expenses, fees,10
and attorney fees shall be ancillary to and shall be brought and heard in the11
same court as the civil action brought pursuant to the provisions of Subsection12
A of this Section.13
C. (1) A prevailing defendant may seek recovery only for costs, expenses,14
fees, and attorney fees if the court finds, following a contradictory hearing, that15
either of the following applies:16
(a) The action was instituted by the attorney general pursuant to17
Subsection A of this Section after it should have been determined by the18
attorney general to be frivolous, vexatious, or brought primarily for the purpose19
of harassment.20
(b) The attorney general proceeded with an action properly instituted21
pursuant to Subsection A of this Section after it should have been determined22
by the attorney general that proceeding would be frivolous, vexatious, or for the23
purpose of harassment.24
(2) Recovery awarded to a prevailing defendant shall be awarded only25
for those reasonable, necessary, and proper costs, expenses, fees, and attorney26
fees actually incurred by the prevailing defendant.27
D. An action by a prevailing defendant to recover costs, expenses, fees,28
and attorney fees may be brought no later than sixty days after the rendering29 SB NO. 251
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of a final nonappealable judgment.1
§1935. Burden of proof; prima facie evidence; standard of review2
A. The burden of proof in an action instituted pursuant to this Part shall3
be a preponderance of the evidence, except that the defendant shall carry the4
burden of proving that goods, services, or supplies were actually provided to an5
eligible recipient in the quantity and quality submitted on a claim. In all other6
aspects, the burden of proof shall be as set forth in the Code of Civil Procedure7
and other applicable laws.8
B. Proof by a preponderance of the evidence of a false or fraudulent9
claim or illegal remuneration shall be deemed to exist under the following10
circumstances:11
(1) If the defendant has pled guilty to, been convicted of, or entered a12
plea of nolo contendere to, or participated in a pre-trial diversion program for13
a criminal charge in any federal or state court when such charge arises out of14
circumstances which would be a violation of this Part.15
(2) If an order has been rendered against a defendant finding the16
defendant to have violated this Part.17
C.(1) The submission of a certified or true copy of an order, civil18
judgment, or criminal conviction or plea shall be prima facie evidence of the19
same.20
(2) The submission of the bill of information or of the indictment and the21
minutes of the court shall be prima facie evidence as to the circumstances22
underlying a criminal conviction or plea.23
D.(1) In determining whether a pattern of incorrect submissions exists24
in regard to an alleged false or fraudulent claim, the court shall give25
consideration to the materiality of the total amount of the incorrect submissions26
by a person in relation to the total claims submitted by the person.27
(2) "Material" or "materiality" as used in this Subsection shall have the28
same meaning as defined by rules and regulations promulgated by the attorney29 SB NO. 251
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general in accordance with the Administrative Procedure Act which incorporate1
the definition of "material" or "materiality" recognized by the American2
Institute of Certified Public Accountants.3
§1936. Civil monetary penalty4
A. In a civil action instituted in the courts of this state pursuant to the5
provisions of this Part, the attorney general may seek a civil monetary penalty6
provided in R.S. 22:1934 from any of the following:7
(1) Any person sanctioned by order pursuant to an administrative8
adjudication.9
(2) Any person determined by a court of competent jurisdiction to have10
violated any provision of this Part.11
(3) Any person who has violated a settlement agreement entered into12
pursuant to this Part.13
(4) A person who has been charged with a violation of R.S. 22:1924.14
(5) A person who has been found liable in a civil action filed in federal15
court pursuant to 18 U.S.C. 1347 et seq., or 42 U.S.C. 1320a-7(b).16
(6) A person who has entered a plea of guilty or nolo contendere to or17
has participated in a pre-trial diversion program for, or has been convicted in18
federal or state court of criminal conduct arising out of circumstances which19
would constitute a violation of this Part.20
B.(1) If a person is sanctioned by order pursuant to an administrative21
adjudication and if judicial review of the order is sought, a civil suit may be22
filed for imposition and recovery of the civil monetary penalty during the23
pendency of such judicial review. The reviewing court may consolidate both24
actions and hear them concurrently.25
(2) If judicial review of an order is sought, the attorney general shall file26
the action for recovery of the civil monetary penalty within one year of service27
of the petition seeking judicial review of the order.28
(3) If no judicial review of an order is sought, the attorney general may29 SB NO. 251
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file the action for recovery of the civil monetary penalty within one year of the1
date of the order.2
(4) Any action brought pursuant to the provisions of this Part shall be3
filed in the Nineteenth Judicial District Court for the parish of East Baton4
Rouge.5
C. In the instance of a state criminal action, the action for recovery of6
the civil monetary penalty shall be brought within one year of the date of the7
criminal conviction or final plea.8
D.(1) In the case of a civil judgment rendered in federal court, the action9
for recovery of the civil monetary penalty may be brought once the judgment10
becomes enforceable and no later than one year after written notification to the11
attorney general of the enforceable judgment.12
(2) In the case of a criminal conviction or plea in federal court, the13
action pursuant to this Section may be brought once the conviction or plea is14
final and no later than one year after written notification to the attorney general15
of the rendering of the conviction or final plea.16
(3) Any action brought under the provisions of this Subsection shall be17
filed in the Nineteenth Judicial District Court for the parish of East Baton18
Rouge.19
E. If an action is brought pursuant to this Part, the request for the20
imposition of a civil monetary penalty shall only be considered if made part of21
the original or amended petition either through a bill of information or through22
a motion filed by the attorney general's office.23
§1937. Recovery24
A.(1) Actual damages incurred as a result of a violation of the provisions25
of this Part shall be recovered only once by the insurer and shall not be waived26
by the court.27
(2) Except as provided in Paragraph (3) of this Subsection, actual28
damages shall equal the difference between the amount the insurer paid or29 SB NO. 251
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would have paid and the amount that should have been paid had not a violation1
of this Part occurred, plus interest at the maximum rate of legal interest2
provided by R.S. 13:4202, from the date the damage occurred to the date of3
repayment. Actual damages shall include investigative expenses incurred by the4
insurer.5
(3) If the violator is a managed care healthcare provider contracted with6
a health insurer, actual damages shall be determined in accordance with the7
violator's provider agreement.8
B. Civil fine. (1) Any person who is found to have violated R.S. 22:19249
or 1933 shall be subject to a civil fine in an amount not to exceed ten thousand10
dollars per violation, or an amount equal to three times the value of the illegal11
remuneration, whichever is greater.12
(2) Except as limited by this Section, any person who is found to have13
violated R.S. 22:1924 or 1933 shall be subject to a civil fine in an amount not to14
exceed three times the amount of actual damages sustained by the insurer as a15
result of the violation.16
C. Civil monetary penalty. (1) In addition to the actual damages17
provided in Subsection A of this Section and any civil fine imposed pursuant to18
Subsection B of this Section, one or more of the following civil monetary19
penalties shall be imposed on the violator:20
(a) Not less than five thousand dollars but not more than ten thousand21
dollars for each false or fraudulent claim, misrepresentation, illegal22
remuneration, or other prohibited act provided in R.S. 22:1924 or 1933.23
(b) Payment of interest on the amount of the civil fine imposed pursuant24
to Subsection B of this Section at the maximum rate of legal interest provided25
by R.S. 13:4202 from the date the damage occurred to the date of repayment.26
(2) Prior to the imposition of a civil monetary penalty, the court may27
consider whether extenuating circumstances exist as provided in R.S. 22:1938.28
D. Costs, expenses, fees and attorney fees. (1) Any person who is found29 SB NO. 251
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to have violated this Part shall be liable for all costs, expenses, and fees related1
to investigations and proceedings associated with the violation, including2
attorney fees.3
(2) All awards of costs, expenses, fees, and attorney fees are subject to4
review by the court using a reasonable, necessary, and proper standard of5
review.6
(3) The attorney general shall promptly remit awards for those costs,7
expenses, and fees incurred by the parties involved in the investigations or8
proceedings to the appropriate party.9
§1938. Waiver; extenuating circumstances10
If a waiver is requested by the attorney general, the court may waive any11
recovery, except for actual damages, required to be imposed pursuant to the12
provisions of this Part provided all of the following extenuating circumstances13
are found to be applicable:14
(1) The violator furnished all the information known to him about the15
specific allegation to the department or attorney general no later than thirty16
days after the violator first obtained the information.17
(2) The violator cooperated fully with all federal or state investigations18
concerning the specific allegation.19
(3) At the time the violator furnished the information concerning the20
specific allegation to the department or the attorney general, no criminal, civil,21
or departmental investigation or proceeding had been commenced as to the22
alleged violation.23
§1939. Deposit of monies collected24
Sixty percent of all monies collected pursuant to this Part shall be25
dedicated to and deposited into the Insurance Fraud Investigation Fund26
pursuant to R.S. 40:1428(C). The remaining forty percent recovered shall be27
dedicated to the attorney general's office.28
§1940. Civil investigative demand29 SB NO. 251
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A. If the attorney general has information, evidence, or reason to believe1
that any person or entity may be in possession, custody, or control of any2
documentary material or information relevant to an investigation for a possible3
violation of this Part, he or any of his assistants may issue to the person or entity4
a civil investigative demand before the commencement of a civil proceeding to5
require the production of the documentary material for inspection or copying6
or reproduction, or the answering under oath and in writing of interrogatories.7
Any civil investigative demand issued pursuant to this Part shall state a general8
description of the subject matter being investigated and the applicable9
provisions of law constituting the alleged violation of this Part. A civil10
investigative demand for the production of documentary material shall describe11
each class of documentary material to be produced with such definiteness and12
certainty as to permit such material to be fairly identified. A civil investigative13
demand for answers to written interrogatories shall set forth with specificity the14
written interrogatories to be answered. Each investigative demand shall set a15
return date of no earlier than twenty days after service of the demand upon the16
person or his representative or agent.17
B. A civil investigative demand issued pursuant to this Part may be18
served by the sheriff or a P.O.S.T.-certified investigator employed by the19
attorney general or by the office of state police when the demand is issued to a20
resident or domestic business entity found in this state. A civil investigative21
demand issued to non-resident or a foreign business entity may be served using22
long-arm jurisdiction as provided for in the Louisiana Code of Civil Procedure.23
C. Upon failure to comply with the civil investigative demand, the24
attorney general may apply to the district court having jurisdiction over the25
person to compel compliance with the civil investigative demand.26
D. Except as otherwise provided in this Section, no documentary27
material, answers to interrogatories, or copies thereof, while in the possession28
of the attorney general or any other agency assisting the attorney general with29 SB NO. 251
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the matter under investigation, shall be available for examination by any person1
or entity except as determined by the attorney general and subject to any2
conditions imposed by him for effective enforcement of the laws of this state.3
Nothing in this Section shall be construed to prohibit or limit the attorney4
general from sharing any documentary material, answers to interrogatories, or5
copies thereof with the United States government or with any other state6
government, or any federal or state agency, or any person or entity that may be7
assisting in the investigation or prosecution of the subject matter of the civil8
investigative demand.9
E. The attorney general may use documentary material derived from10
information obtained pursuant to this Section, or copies of that material, as the11
attorney general determines necessary for the enforcement of the laws of this12
state, including presentation before a court.13
F. If any documentary material has been produced by any person or14
entity in the course of any investigation pursuant to a civil investigative demand15
and any case or proceeding before the court or grand jury arising out of such16
investigation, or any proceeding before any state agency involving such material17
has been completed, or no case or proceeding in which such material may be18
used has been commenced within a reasonable time after analysis of all19
documentary material and other information assembled in the course of the20
investigation, the attorney general, upon written request of the person or entity21
who produced the material, shall return to such person or entity any such22
material which has not passed into the control of any court, grand jury, or23
agency through introduction into the record of such case or proceeding.24
G. "Documentary material" as used in this Section shall include but is25
not limited to all electronically-stored information including writings, drawings,26
graphs, charts, photographs, sound recordings, images, and other data or data27
compilations that would be subject to a request for production under Federal28
Rule of Civil Procedure 34 as it exists now or is hereafter amended.29 SB NO. 251
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§1941. Investigative deposition1
A. When the attorney general has information, evidence, or reason to2
believe that a violation of this Part has occurred, the attorney general may issue3
an investigative subpoena for deposition testimony to any person or entity that4
may have information or knowledge relevant to the matter under investigation,5
or for the purpose of revealing, identifying, or explaining documentary material6
or other physical evidence sought under R.S. 22:1940. Such investigative7
subpoena shall contain a general description of the matter under investigation8
and a notice informing the prospective deponent of his right to counsel at the9
deposition with opportunity for cross-examination. Such deposition shall be10
conducted at the principal place of business of the deponent, at his place of11
residence, at his domicile, or, if agreeable to the deponent, at some other place12
convenient to the attorney general and the lawful and designated attorney13
representative of the deponent. Such deposition shall be held at a date no earlier14
than seven days after the date on which demand is received, unless the attorney15
general or an assistant attorney general designated by the attorney general16
determines that exceptional circumstances are present which warrant the17
commencement of such testimony within a lesser period of time.18
B. An investigative subpoena issued pursuant to this Part may be served19
by the sheriff or a P.O.S.T.-certified investigator employed by the attorney20
general or by the office of state police when the demand is issued to a resident21
or domestic business entity found in this state. An investigative subpoena issued22
to non-resident or a foreign business entity may be served using long-arm23
jurisdiction as provided for in the Louisiana Code of Civil Procedure.24
C. When the investigative subpoena is issued to a business entity, the25
entity shall designate one or more officers, directors, or managing agents, and26
may set forth, for each person designated, the matters on which he will testify.27
The persons so designated shall testify as to matters known or reasonably28
available to the organization.29 SB NO. 251
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D. Upon failure to comply with the investigative subpoena, the attorney1
general may apply to the district court having jurisdiction over the person to2
compel compliance with the investigative subpoena. Failure to comply with a3
court order is punishable by contempt.4
§1942. Asset forfeiture5
A. In accordance with the provisions of Subsection B of this Section, the6
court may order the forfeiture of property to satisfy recovery under the7
following circumstances:8
(1) The court may order a person from whom recovery is due to forfeit9
property which constitutes or was derived directly or indirectly from gross10
proceeds traceable to the violation which forms the basis for the recovery.11
(2) If the attorney general shows that property was transferred to a12
third party to avoid paying of recovery, or in an attempt to protect the property13
from forfeiture, the court may order the third party to forfeit the transferred14
property.15
B. Prior to the forfeiture of property, a contradictory hearing shall be16
held during which the attorney general shall prove by clear and convincing17
evidence that the property in question is subject to forfeiture pursuant to18
Subsection A of this Section. No such contradictory hearing shall be required19
if the owner of the property in question agrees to the forfeiture.20
C. If property is transferred to another person within six months prior21
to the occurrence or after the occurrence of the violation for which recovery is22
due or within six months prior to or after the institution of a criminal, civil, or23
departmental investigation or proceeding, it shall be prima facie evidence that24
the transfer was intended to avoid paying recovery or was an attempt to protect25
the property from forfeiture.26
D. The healthcare provider or other person from whom recovery is due27
shall have an affirmative duty to fully disclose all property and liabilities and28
all transfers of property which meet the criteria of Subsection C of this Section29 SB NO. 251
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to the court and the attorney general.1
Section 2. The provisions of this Act shall be effective August 1, 2012, and shall be2
null and void and have no effect on August 1, 2014. Except as provided in this Act, there3
shall be no reduction or recalculation in the Insurance Fraud Investigation Fund assessment4
as provided in R.S. 40:1428.5
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Morrish (SB 251)
Creates the Louisiana Insurance Fraud Prevention Act.
Effective August 1, 2012.
(Adds R.S. 22:1931–1942)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill
1. Deletes the detailed list of specific acts constituting false or fraudulent claims
or misrepresentations.
2. Specifies that proposed law does not apply to programs administered by the
La. Department of Health and Hospitals.
3. Dedicates 60% of monies collected pursuant to proposed law to the Insurance
Fraud Investigation Fund. Provides that the remaining 40% shall be
dedicated to the attorney general's office.
4. Makes proposed law effective from August 1, 2012 to August 1, 2014.