DELAWARE INSURANCE DEPARTMENT - FRAUD INFORMATION
Title 18, Delaware Code, Chapter 24, § 2401 through § 2415 Insurance fraud
| 2401. Title. |
| 2402. Purpose. |
| 2403. Definitions. |
| 2404. Establishment of Delaware Insurance Fraud Prevention Bureau; Delaware Insurance Fraud Auxiliary Fund. |
| 2405. Evidence, documentation and related materials. |
| 2406. Confidentiality and immunity from subpoena. |
| 2407. Insurance fraud. |
| 2408. Duties of insurers. |
| 2409. Immunity. |
| 2410. Other law-enforcement authorities. |
| 2411. Enforcement, investigations, hearings, administrative penalties and appeals. |
| 2412. Consent orders. |
| 2413. Criminal prosecution. |
| 2414. Application of Administrative Procedures Act. |
| 2415. Funding. |
This chapter shall be known as and may be
cited as the Delaware Insurance Fraud Prevention Act.
(69
Del. Laws, c. 463, § 1.)
The purpose of this chapter is to confront aggressively the problem of insurance fraud in the State by facilitating the detection of insurance fraud, reducing the occurrence of such fraud through administrative enforcement and deterrence, requiring the restitution of fraudulently obtained insurance benefits and reducing the amount of premium dollars used to pay fraudulent claims. (69 Del. Laws, c. 463, § 1.)
(a) "Attorney General" means
the Attorney General of the State or the Attorney General's
designated representatives.
(b) "Authorized agency"
means any appropriate law-enforcement agency.
(c) "Bad faith" means
without any reasonable justification.
(d) "Bureau" means the
Delaware Insurance Fraud Prevention Bureau established by this
chapter.
(e) "Director" means the
Director of the Delaware Insurance Fraud Prevention Bureau.
(f) "Financial loss"
includes, but is not limited to, loss of earnings, out of pocket
and other expenses, repair and replacement costs and claims
payments.
(g) "Insurer" includes, but
is not limited to, an authorized insurer, self-insurer,
reinsurer, broker, producer or any agent thereof.
(h) "Practitioner" means a
licensee of this State authorized to practice medicine, surgery,
psychology, chiropractic or law or any other licensee or business
of this State whose services are compensated, directly or
indirectly, by insurance proceeds, or a licensee similarly
licensed in any other state, or the practitioner of any
nonmedical treatment rendered in accordance with a recognized
religious method of healing.
(i) "Statement" includes,
but is not limited to, any notice statement, proof of loss, bill
of lading, receipt for payment, invoice, account, estimate of
property damages, bill for services, diagnosis, prescription,
hospital or doctor records, x-rays, test result or other evidence
of loss, injury or expense.
(69 Del. Laws, c. 463, § 1; 70 Del. Laws, c. 186, § 1.)
(1) To initiate independent inquiries and
conduct independent investigations when the Bureau has cause to
believe that an act of insurance fraud has been, or is currently
being committed;
(2) To review reports or complaints of
alleged insurance fraud from federal, state and local police,
other law-enforcement authorities, governmental agencies or
units, insurers and the general public and to determine whether
such reports require further investigation and to conduct such
investigations; and
(3) To conduct independent examinations of
insurance fraud, and undertake independent studies to determine
the extent of insurance fraud.
(d) There is hereby created within
the Bureau a special revolving fund to be designated as the
Delaware Insurance Fraud Auxiliary Fund which shall be used by
the Bureau in the performance of the various functions and duties
required of the Bureau by law.
§ 2405. Evidence, documentation and related materials.
(a) The Commissioner or the
Commissioner's designee, in addition to other provisions of this
title, shall have the power and authority to administer oaths,
subpoena witnesses and to compel the production of non-privileged
evidence, in any form, that is relevant or will lead to the
discovery of relevant information regarding fraud investigation.
Any natural or other person, as well as any State or governmental
entities may be subpoenaed and shall produce the required
evidence or to make such evidence available for inspection by the
Bureau in a timely manner. The Superior Court of the State shall
have exclusive jurisdiction regarding the enforcement or
lawfulness of a subpoena on proper application by a party in
interest.
(b) If the Bureau seeks evidence,
documentation, or related materials located outside this State
pertinent to an investigation or examination, the Bureau may
designate representatives or deputies, including officials of the
State where the matter is located, to secure or inspect the
evidence, documentation or materials on its behalf.
(c) Subpoenas may be served in any
manner that is authorized for service of original process or
subpoenas under the Superior Court Rules of Civil
Procedure.
(69 Del. Laws, c. 463, § 1; 70 Del. Laws, c. 422, §§ 1, 2.)
§ 2406. Confidentiality and immunity from subpoena.
(a) All papers, records, documents,
reports, materials or other evidence relevant to an insurance
fraud investigation or examination shall remain confidential and
shall not be subject to public inspection so long as the Bureau
deems it is reasonably necessary to protect the privacy of the
person or matter investigated or examined, to protect the person
furnishing the material or to be in the public interest.
(b) Such papers, records, documents,
reports, materials or other evidence relevant to an insurance
fraud investigation or examination shall not be subject to
subpoena until opened for public inspection by the Bureau.
(a) It shall be a fraudulent insurance
act for a person to knowingly, by act or omission, with intent to
injure, defraud or deceive:
(1) Present, cause to be presented,
prepare, assist, abet, solicit or conspire with another to
prepare or make any oral or written statement with knowledge or
belief that it will be presented to an insurer in connection
with, or in support of, any application for the issuance of an
insurance policy, containing false, incomplete or misleading
information concerning any fact material to the application for
issuance of an insurance policy;
(2) Prepare, present or cause to be
presented to any insurer, any oral or written statement including
computer-generated documents as part of, or in support of, a
claim for payment or other benefit pursuant to an insurance
policy, containing false, incomplete or misleading information
concerning any fact material to such claims; or
(3) Assist, abet, solicit or conspire with
another to prepare or present any oral or written statement,
including computer-generated documents, that is intended to be
presented to any insurer in connection with, or in support of,
any claim for payment or other benefit pursuant to an insurance
policy, which contains false, incomplete or misleading
information concerning any fact material to the claim.
(b) It shall be a fraudulent
insurance act for a practitioner to knowingly and willfully
assist, conspire with, or urge any person to violate any of the
provisions of this chapter, or for any person who due to such
assistance, conspiracy or urging by said practitioner, knowingly
and willfully benefits from the proceeds derived from the use of
the fraud.
(c) It shall be a fraudulent
insurance act for any insurer or any person acting on behalf of
such insurer to knowingly, by act or omission, with intent to
injure, defraud or deceive:
(1) Present or cause to be presented to an
insurance claimant false, incomplete or misleading information
regarding the nature, extent and terms of insurance coverage
which may or might be available to such claimant under any policy
of insurance, whether first or third party.
(2) Present or cause to be presented to any
insurance claimant false, incomplete or misleading information
regarding or affecting in any fashion the extent of any
claimant's right to benefit under, or to make a claim against,
any policy of insurance whether first or third party.
In the absence of fraud or bad faith, no
person shall be subject to civil liability (for libel, slander or
any other relevant tort cause of action by virtue of filing
reports, without malice, or furnishing other information, written
or oral, without malice, required by this chapter or required by
the Commissioner under the authority granted in this title), and
no civil cause of action of any nature shall arise against such
person:
(1) For any information relating to
suspected fraudulent insurance acts furnished to or received from
law-enforcement officials, their agents and employees; or
(2) For any information relating to the
suspected fraudulent insurance acts furnished to or received from
other persons in this title; or
(3) For any such information furnished in
reports to the Insurance Department, the National Association of
Insurance Commissioners or any organization established to detect
and prevent fraudulent insurance acts, their agents, employees or
designees, nor shall the Commissioner or any employee of the
Insurance Department, (acting without malice) in the absence of
fraud or bad faith, be subject to civil liability (for libel,
slander or any other relevant tort) and no civil cause of action
of any nature shall arise against such person by virtue of
publication of any report or bulletin related to the official
activities of the Insurance Department. Nothing herein is
intended to abrogate or modify in any way any common law or
statutory privilege or immunity heretofore enjoyed by any
person.
§ 2410. Other law-enforcement authorities.
(1) Preempt the authority or relieve the
duty of any other law enforcement agency to investigate, examine
and prosecute suspected violations of law;
(2) Prevent or prohibit a person from
voluntarily disclosing any information concerning insurance fraud
to any law-enforcement agency other than the Bureau; or
(3) Limit any of the powers granted
elsewhere by the laws of this State to the Commissioner of
Insurance or the Department of Insurance to investigate and
examine possible violations of law and to take appropriate
action.
§ 2411. Enforcement, investigations, hearings, administrative penalties and appeals.
(a) The matters of enforcement,
investigations, hearings, administrative penalties and appeals
shall be conducted in accordance with Chapter
3 of this title and Chapter 101 of Title
29 to the extent that such provisions are not in conflict
with the provisions set forth in this chapter.
(b) Upon a showing by a preponderance of
evidence that a violation of this chapter has occurred, the
Commissioner may impose an administrative penalty of not more
than $10,000 for each act of insurance fraud. An act of
insurance fraud may be 1 several such acts which taken together
comprise a fraudulent insurance scheme. Assessment of the
administrative penalty shall be determined by the nature,
circumstances, extent and gravity of the act or acts of insurance
fraud, any prior history of such act or acts, the degree of
culpability and such other matters as justice may require.
(c) In the event of nonpayment of the
administrative penalty after all rights of appeal have been
waived or exhausted, a civil action may be brought by the
Commissioner in Superior Court for the collection of the
administrative penalty, including interest, attorneys' fees and
costs, in the following manner:
(1) A praecipe and complaint shall be filed
setting forth that administrative action was taken against the
defendant in accordance with this chapter, that the defendant
either voluntarily entered into a consent order which called for
the payment of a specified monetary penalty, or in the
alternative, that after proper notice and hearing, the defendant
was determined to be in violation of this chapter and that by
order of the Commissioner a specified monetary penalty had been
assessed against the defendant, that all rights of appeal have
been waived or exhausted, and that payment in full has not been
made in accordance with the terms of the consent order or other
order of the Commissioner. The Department shall attach to the
complaint a certified copy of that consent order or other order
of the Commissioner.
(2) The Court shall enter judgment in favor
of the Department for the amount specified in the complaint upon
the Department establishing the following:
a. The defendant is the same person against
whom the consent order or other order of the Commissioner
applies; and
b. Payment in full has not been made by or
on behalf of the defendant according to the terms of the consent
or other order of the Commissioner.
(3) Any judgment entered shall be final to
the same extent as a judgment entered after trial.
(4) Except as otherwise provided in this
section the Superior Court Civil Rules shall govern these
proceedings.
(d) Any person who is found to have
committed an act of insurance fraud, or violated an order of the
Commissioner pursuant to a hearing, shall be liable for costs
incurred by the Bureau. The assessment for costs shall be 15% of
each penalty assessed pursuant to this section.
(e) In addition to the above, the
Commissioner shall have authority to order restitution to the
insurer of any insurance proceeds paid pursuant to a fraudulent
claim.
(f) The expenses or administrative
penalties collected by the Bureau under this chapter are
appropriated to the Bureau in accordance with § 2404
of this title. All moneys received by the Commissioner from
insurers and agents pursuant to this chapter shall be transmitted
to the State Treasurer to be deposited in the State Treasury to
the credit of the Delaware Insurance Fraud Auxiliary Fund.
All such moneys which are deposited in the Auxiliary Fund shall
be appropriated to the Bureau to be used exclusively for the
support of the Bureau.
(69 Del. Laws, c. 463, § 1; 71 Del. Laws, c. 331, § 1.)
§ 2414. Application of Administrative Procedures Act.
Except as otherwise provided in this chapter, the State Administrative Procedures Act (Chapter 101 of Title 29) applies to and governs all administrative actions taken by the Bureau.
