Amends the definition of insurance fraud.
Ayes (62): Adams, Addabbo, Alesi, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Duane, Espaillat, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Huntley, Johnson, Kennedy, Klein, Krueger, Kruger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, O'Mara, Oppenheimer, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Valesky, Young, Zeldin
TITLE OF BILL: An act to amend the insurance law and the penal law, in relation to the definition of insurance fraud
PURPOSE OF BILL: The purpose of this bill is to include the activities that currently constitute a "fraudulent health care insurance act" within the definition of "fraudulent insurance act."
SUMMARY OF PROVISIONS:
Section 1 of the bill amends Insurance Law § 403(a) to make a technical amendment by deleting "an" in the phrase "an insurance fraud."
Section 2 of the bill amends Penal Law § 176.05 to include the activities that currently constitute a "fraudulent health care insurance act" within the definition of "fraudulent insurance act. "
Section 3 states that this bill takes effect immediately.
Currently, Insurance Law § 403 states that it is a violation of the Insurance Law for any individual, firm, association, or corporation subject to the Insurance Law to commit a fraudulent insurance act, and for the purposes of Article 4 of the Insurance Law, defines a "fraudulent insurance act" as "an insurance fraud as defined in section 176.05 of the penal law."
Penal Law § 176.05 is titled "Insurance fraud; defined," and sets forth when a "fraudulent insurance act" is committed and when a "fraudulent health care insurance act" is committed.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
STATEMENT IN SUPPORT:
In 1998, the Legislature amended a number of state laws to expand health coverage for children through the Child Health Plus program and Medicaid and concomitantly amended the Penal Law to strengthen New York's ability to deter Medicaid fraud and abuse. As part of these amendments, the Legislature added a new subdivision to Penal Law § 176.05, which defines a "fraudulent health care insurance act." However, the Legislature failed to amend Penal Law §§ 176.10 through 176.30, which prescribe penalties for five different degrees of insurance fraud and permit penalties only for a person who commits a "fraudulent insurance act."
In 2003, a chief operating officer and executive vice president of a managed health care provider was indicted on charges that included
two counts of insurance fraud in the first degree. The indictment charged that the defendant committed fraudulent insurance acts in 2003 when he submitted marketing plans to Medicaid that he knew contained materially false information. The State asserted that marketing plans allegedly submitted by the defendant were fraudulent health care insurance acts, which are a species of fraudulent insurance acts. The defendant moved to dismiss the insurance fraud counts, asserting that he did not commit a "fraudulent insurance act" as defined in the Penal Law. The New York Supreme Court granted defendant's motion and the Appellate Division and Court of Appeals affirmed. The New York State Court of Appeals held in People v. Boothe, 16 N.Y.3d 195 (2011), that "a 'fraudulent health care insurance act' is not included within the definition of 'fraudulent insurance act'" and that "the Legislature plainly failed to criminalize the conduct at issue." The Court of Appeals further stated that "if this deficiency is to be corrected, it must be done through legislative action."
The Legislature's failure to criminalize activities that currently constitute a "fraudulent health care insurance act" was not intentional, and as a result, this deficiency in the law should be remedied so that the Legislature may achieve its original goal of strengthening New York's ability to deter Medicaid fraud and abuse. Thus, this bill fixes the foregoing deficiency by amending Penal Law § 176.05 to include the activities that currently constitute a "fraudulent health care insurance act" within the definition of "fraudulent insurance act."
There are no budget implications from this bill.
This bill takes effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 5562 2011-2012 Regular Sessions IN SENATE June 2, 2011 ___________Introduced by Sen. SEWARD -- (at request of the New York State Insurance Department) -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law and the penal law, in relation to the definition of insurance fraud THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (a) of section 403 of the insurance law is amended to read as follows: (a) In this article, "fraudulent insurance act" means
[an]insurance fraud as defined in section 176.05 of the penal law; and the terms "personal insurance" and "commercial insurance" shall have the same meaning ascribed to them by section 176.00 of such law. S 2. Section 176.05 of the penal law, as amended by chapter 635 of the laws of 1996, subdivision 1 as designated and subdivision 2 as added by chapter 2 of the laws of 1998, is amended to read as follows: S 176.05 Insurance fraud; defined. [1.]A fraudulent insurance act is committed by any person who, know- ingly and with intent to defraud presents, causes to be presented, or prepares with knowledge or belief that it will be presented to or by an insurer, self insurer, or purported insurer, or purported self insurer, or any agent thereof [,]: 1. any written statement as part of, or in support of, an application for the issuance of, or the rating of a commercial insurance policy, or certificate or evidence of self insurance for commercial insurance or commercial self insurance, or a claim for payment or other benefit pursuant to an insurance policy or self insurance program for commercial or personal insurance [which]THAT he OR SHE knows to: [(i)](A) contain materially false information concerning any fact material thereto; orEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10648-02-1 S. 5562 2
[(ii)](B) conceal, for the purpose of misleading, information concerning any fact material thereto [.]; OR 2. [A fraudulent health care insurance act is committed by any person who, knowingly and with intent to defraud, presents, causes to be presented, or prepares with knowledge or belief that it will be presented to, or by, an insurer or purported insurer or self-insurer, or any agent thereof,]any written statement or other physical evidence as part of, or in support of, an application for the issuance of a health insurance policy, or a policy or contract or other authorization that provides or allows coverage for, membership or enrollment in, or other services of a public or private health plan, or a claim for payment, services or other benefit pursuant to such policy, contract or plan [, which]THAT he OR SHE knows to: (a) contain materially false information concerning any material fact thereto; or (b) conceal, for the purpose of misleading, information concerning any fact material thereto. Such policy or contract or plan or authorization shall include, but not be limited to, those issued or operating pursuant to any public or governmentally-sponsored or supported plan for health care coverage or services or those otherwise issued or operated by entities authorized pursuant to the public health law. For purposes of this subdivision an "application for the issuance of a health insurance policy" shall not include [(a)](I) any application for a health insurance policy or contract approved by the superintendent of insurance pursuant to the provisions of sections three thousand two hundred sixteen, four thousand three hundred four, four thousand three hundred twenty-one or four thou- sand three hundred twenty-two of the insurance law or any other applica- tion for a health insurance policy or contract approved by the super- intendent of insurance in the individual or direct payment market; [and (b)]OR (II) any application for a certificate evidencing coverage under a self-insured plan or under a group contract approved by the super- intendent of insurance. S 3. This act shall take effect immediately.