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Regular Session, 2012 ENROLLED
SENATE BILL NO. 765 (Substitute of Senate Bill No. 251 by Senator Morrish)
BY SENATORS MORRISH AND THOMPSON
AN ACT1
To enact R.S. 22:1923(3) and Part II-A of Chapter 7 of Title 22 of the Louisiana Revised2
Statutes of 1950, to be comprised of R.S. 22:1931 through 1931.13, relative to3
insurance fraud; to provide definitions; to prohibit insurance fraud; to provide for4
civil actions and monetary penalties; to provide with respect to civil investigative5
demand and deposition; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 22:1923(3) and Part II-A of Chapter 7 of Title 22 of the Louisiana8
Revised Statutes of 1950, comprised of R.S. 22:1931 through 1931.13 are hereby enacted9
to read as follows:10
§1923. Definitions11
As used in this Part, the following terms shall have the meanings indicated12
in this Section:13
* * *14
(3) "Claim" shall mean any request or demand for payment or benefit,15
whether paid or not, made by a person either in writing or filed electronically.16
* * *17
PART II-A. SLEDGE JEANSONNE LOUISIANA INSURANCE18
FRAUD PREVENTION ACT19
§1931. Legislative findings; short title20
A. The legislature finds that to protect the health, safety, and welfare of21
the citizens of this state, the attorney general of Louisiana and his assistants22
shall be agents of this state with the ability, authority, and resources to pursue23 SB NO. 765 ENROLLED
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civil monetary penalties, liquidated damages, or other remedies to protect the1
integrity of the insurance industry from persons who engage in fraud,2
misrepresentation, abuse, or other illegal practices, as further provided in this3
Part, in order to obtain payments to which these insurance providers or persons4
are not entitled.5
B. On June 7, 2011, Kim Sledge and Rhett Jeansonne were murdered6
while performing their duties as insurance fraud investigators for the Louisiana7
Department of Insurance. The tragedy of their loss is profound to their8
families, coworkers, and the citizens of this state they honorably served.9
C. This Part shall be known and may be cited as the "Sledge Jeansonne10
Louisiana Insurance Fraud Prevention Act".11
§1931.1. Definitions12
As used in this Part the following terms shall have the following13
meanings unless a different meaning is clearly required by context:14
(1) "Agent" means a person who is employed by or has a contractual15
relationship with another person or who acts on behalf of that person.16
(2) "Attorney general" means the attorney general for the state of17
Louisiana.18
(3) "Department" means the Department of Insurance.19
(4) "Insurer" means any person or other entity authorized to transact20
and transacting insurance business in this state. Notwithstanding any contrary21
provisions of R.S. 22:242(7) or any other law, regulation, or definition contained22
in this Code, a health maintenance organization shall be deemed an insurer for23
purposes of this Part.24
(5) "Knowing" or "knowingly" means that the person has actual25
knowledge of the falsity of the information or that the person acts in deliberate26
ignorance or reckless disregard of the truth or falsity of the information.27
(6) "Order" means a final order imposed pursuant to a civil or criminal28
adjudication.29
(7) "Person" means any natural or juridical entity or agent thereof as30 SB NO. 765 ENROLLED
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defined in federal or state law furnishing or claiming to furnish a good, service,1
or supply who is compensated with insurance proceeds.2
(8) "P.O.S.T.-certified" means peace officer standards and training3
certified as established by the Louisiana Peace Officer Standards and Training4
Council.5
(9) "Property" means any and all property, movable and immovable,6
corporeal and incorporeal.7
(10) "Recovery" means the recovery of attempted benefits pursued,8
overpayments, damages, fines, penalties, costs, expenses, restitution, attorney9
fees, interest, or settlement amounts.10
§1931.2. Prescription11
A. No action brought pursuant to this Part shall be instituted later than12
ten years after the date upon which the alleged violation occurred. For13
violations involving a scheme or course of conduct, no action pursuant to this14
Part shall be instituted more than ten years after the latest component of the15
scheme or course of conduct occurred.16
B. To the extent that the conduct giving rise to the cause of action17
involves the provision of services, supplies, merchandise, or benefits of a18
medical assistance program administered by the Department of Health and19
Hospitals, including any medical assistance programs administered by the state20
pursuant to 42 U.S.C. 1396 et seq., the provisions of this Part shall not apply.21
C. An action by a prevailing defendant to recover costs, expenses, fees,22
and attorney fees pursuant to R.S. 22:1931.3 may be brought no later than sixty23
days after the rendering of a final nonappealable judgment. In the instance of24
a state criminal action, the action for recovery of the civil monetary penalty25
shall be brought within one year of the date of the criminal conviction, final26
plea, or pre-trial diversion agreement.27
D.(1) In the case of a civil judgment rendered in federal court, the action28
for recovery of the civil monetary penalty pursuant to R.S. 22:1931.6 may be29
brought after the judgment becomes enforceable and no later than one year30 SB NO. 765 ENROLLED
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after written notification to the attorney general of the enforceable judgment.1
(2) In the case of a criminal conviction, final plea, or pre-trial diversion2
agreement in federal court, the action for recovery pursuant to this Part may3
be brought after the conviction or plea is final and no later than one year after4
written notification to the attorney general of the rendering of the conviction or5
final plea.6
(3) Any action for recovery brought pursuant to the provisions of this7
Part shall be filed in the Nineteenth Judicial District Court for the parish of8
East Baton Rouge.9
§1931.3. Civil actions authorized10
A. No person shall knowingly commit any fraudulent insurance act as11
defined in R.S. 22:1923 or violate any provision of R.S. 22:1924.12
B. The attorney general may institute a civil action in the Nineteenth13
Judicial District Court for the parish of East Baton Rouge to seek recovery from14
any person or persons who violate any provision of R.S. 22:1924. Each violation15
may be treated as a separate violation or may be combined into one violation at16
the option of the attorney general.17
C. An action by a prevailing defendant to recover costs, expenses, fees,18
and attorney fees shall be ancillary to and shall be brought and heard in the19
same court as the civil action brought pursuant to the provisions of Subsection20
B of this Section.21
D. A prevailing defendant may seek recovery only for costs, expenses,22
fees, and attorney fees if the court finds, following a contradictory hearing, that23
either of the following applies:24
(1) The action was instituted by the attorney general pursuant to25
Subsection A of this Section after it should have been determined by the26
attorney general to be frivolous, vexatious, or brought primarily for the purpose27
of harassment.28
(2) The attorney general proceeded with an action properly instituted29
pursuant to Subsection A of this Section after it should have been determined30 SB NO. 765 ENROLLED
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by the attorney general that proceeding would be frivolous, vexatious, or for the1
purpose of harassment.2
E. 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
§1931.4. Burden of proof; prima facie evidence; standard of review6
A. The burden of proof in an action instituted pursuant to this Part shall7
be a preponderance of the evidence.8
B. Proof by a preponderance of the evidence of a violation of R.S.9
22:1924 shall be deemed to exist if the defendant has pled guilty or been10
convicted in any federal or state court when such charge arises out of11
circumstances which would be a violation of R.S. 22:1924.12
C. The submission of a certified or true copy of a conviction shall be13
prima facie evidence of the same. The submission of the bill of information or14
of the indictment and the minutes of the court shall be prima facie evidence as15
to the circumstances underlying a criminal conviction or final plea.16
§1931.5. Civil monetary penalty17
A. In a civil action instituted in the Nineteenth Judicial District Court for18
the parish of East Baton Rouge pursuant to the provisions of this Part, the19
attorney general may seek a civil monetary penalty provided in R.S. 22:1931.620
from any of the following:21
(1) Any person determined by a court of competent jurisdiction to have22
violated any provision of R.S. 22:1924.23
(2) Any person who has violated a settlement agreement entered into24
pursuant to this Part.25
(3) A person who has been found liable in a civil action filed in federal26
court pursuant to 18 U.S.C. 1347 et seq., or 42 U.S.C. 1320a-7(a) or (b), et seq.,27
or 31 U.S.C. 3729.28
(4) A person who has entered a plea of guilty or nolo contendere to or29
has participated in a pre-trial diversion program for, or has been convicted in30 SB NO. 765 ENROLLED
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federal or state courts of criminal conduct arising out of circumstances which1
would constitute a violation of R.S. 22:1924.2
§1931.6. 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 would have been due had not a violation9
of this Part occurred, plus interest at the maximum rate of judicial 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 healthcare provider contracted with14
a health insurer, actual damages shall be determined in accordance with the15
violator's provider agreement.16
B. Any person who is found to have violated R.S. 22:1924 shall be subject17
to a civil fine in an amount not to exceed ten thousand dollars per violation.18
C. In addition to the actual damages provided in Subsection A of this19
Section and any civil fine imposed pursuant to Subsection B of this Section, a20
civil monetary penalty shall be imposed on the violator in an amount which21
equals three times the benefit pursued, including actual damages as a result of22
the violation.23
D.(1) Any person who is found to have violated this Part shall be liable24
for all costs, expenses, and fees related to investigations and proceedings25
associated with the violation, including attorney fees.26
(2) All awards of costs, expenses, fees, and attorney fees are subject to27
review by the appellate court for abuse of discretion.28
(3) The attorney general shall promptly remit awards recovered for29
those costs, expenses, and fees incurred by the parties involved in the30 SB NO. 765 ENROLLED
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investigations or proceedings to the appropriate party.1
E.(1) Payment of interest on the amount of the civil fine imposed2
pursuant to Subsection B of this Section shall be at the maximum rate of legal3
interest provided by R.S. 13:4202 from the date the damage occurred to the date4
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. 22:1931.7.7
§1931.7. Waiver; extenuating circumstances8
If a waiver is requested by the attorney general, the court may waive any9
recovery, except for actual damages, required to be imposed pursuant to the10
provisions of this Part provided all of the following extenuating circumstances11
are found to be applicable:12
(1) The violator furnished all the information known to him about the13
specific allegation to the department or attorney general no later than thirty14
days after the violator first obtained the information.15
(2) The violator cooperated fully with all federal or state investigations16
concerning the specific allegation.17
(3) At the time the violator furnished the information concerning the18
specific allegation to the department or the attorney general, no criminal, civil,19
or departmental investigation or proceeding had been commenced as to the20
alleged violation.21
§1931.8. Deposit of monies collected22
All monies collected pursuant to this Part shall be dedicated to and23
deposited into the Insurance Fraud Investigation Fund pursuant to R.S.24
40:1428(C). Forty percent of the monies deposited into the fund pursuant to25
this Part shall be allocated from the fund to the attorney general's office for26
purposes as provided by law.27
§1931.9. Assessment reduction or recalculation28
Except as provided in this Part, there shall be no reduction or29
recalculation in the Insurance Fraud Investigation Fund assessment allocation30 SB NO. 765 ENROLLED
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to the attorney general's office as provided in R.S. 40:1428.1
§1931.10. Civil investigative demand2
A. If the attorney general has information, evidence, or reason to believe3
that any person or entity may be in possession, custody, or control of any4
documentary material or information relevant to an investigation for a possible5
violation of this Part, he or any of his assistants may issue to the person or entity6
a civil investigative demand before the commencement of a civil proceeding to7
require the production of the documentary material for inspection or copying8
or reproduction, or the answering under oath and in writing of interrogatories.9
Any civil investigative demand issued pursuant to this Part shall state a general10
description of the subject matter being investigated and the applicable11
provisions of law constituting the alleged violation of this Part. A civil12
investigative demand for the production of documentary material shall describe13
each class of documentary material to be produced with such definiteness and14
certainty as to permit such material to be fairly identified. A civil investigative15
demand for answers to written interrogatories shall set forth with specificity the16
written interrogatories to be answered. Each investigative demand shall set a17
return date of no earlier than twenty days after service of the demand upon the18
person or his representative or agent.19
B. A civil investigative demand issued pursuant to this Part may be20
served by the sheriff or a P.O.S.T.-certified investigator employed by the21
attorney general or by the office of state police when the demand is issued to a22
resident or a domestic business entity found in this state. A civil investigative23
demand issued to a non-resident or a foreign business entity may be served24
using long-arm jurisdiction as provided for in the Code of Civil Procedure.25
C. Upon failure to comply with the civil investigative demand, the26
attorney general may apply to the district court having jurisdiction over the27
person to compel compliance with the civil investigative demand.28
D. Except as otherwise provided in this Section, no documentary29
material, answers to interrogatories, or copies thereof, while in the possession30 SB NO. 765 ENROLLED
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of the attorney general or any other agency assisting the attorney general with1
the matter under investigation, shall be available for examination by any person2
or entity except as determined by the attorney general and subject to any3
conditions imposed by him for effective enforcement of the laws of this state.4
Nothing in this Section shall be construed to prohibit or limit the attorney5
general from sharing any documentary material, answers to interrogatories, or6
copies thereof with the United States government, any other state government,7
any federal or state agency, or any person or entity that may be assisting in the8
investigation or prosecution of the subject matter of the civil investigative9
demand.10
E. The attorney general may use documentary material derived from11
information obtained pursuant to this Section, or copies of that material, as the12
attorney general determines necessary for the enforcement of the laws of this13
state, including presentation before a court.14
F. If any documentary material has been produced by any person or15
entity in the course of any investigation pursuant to a civil investigative demand16
and any case or proceeding before the court or grand jury arising out of such17
investigation, or any proceeding before any state agency involving such material18
has been completed, or if no case or proceeding in which such material may be19
used has been commenced within a reasonable time after analysis of all20
documentary material and other information assembled in the course of the21
investigation, the attorney general, upon written request of the person or entity22
who produced the material, shall return to such person or entity any such23
material that has not passed into the control of any court, grand jury, or agency24
through introduction into the record of such case or proceeding.25
G. "Documentary material" as used in this Section shall include but is26
not limited to all electronically-stored information including writings, drawings,27
graphs, charts, photographs, sound recordings, images, and other data or data28
compilations that would be subject to a request for production under Federal29
Rule of Civil Procedure 34 as it exists now or is hereafter amended.30 SB NO. 765 ENROLLED
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§1931.11. 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. 22:1931.10. The 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. The 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. The 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 a domestic business entity of this state. An investigative subpoena issued to22
a non-resident or a foreign business entity may be served using long-arm23
jurisdiction as provided for in the 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, who26
are responsible for complying with the subpoena on the entity's behalf, and may27
set forth, for each person designated, the matters on which he will testify. The28
persons so designated shall testify as to matters known or reasonably available29
to the organization.30 SB NO. 765 ENROLLED
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D. Upon failure of a person or entity to comply with the investigative1
subpoena, the attorney general may apply to the district court having2
jurisdiction over the person to compel compliance with the investigative3
subpoena. Failure to comply with a court order is punishable by contempt.4
§1931.12. 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 pursuant to this7
Part under either of the 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 a third12
party to avoid paying recovery, or in an attempt to protect the property from13
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
to the court and the attorney general.30 SB NO. 765 ENROLLED
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§1931.13. Termination of Part1
This Part shall terminate on August 1, 2014.2
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: