TITLE 18

Insurance Code

Insurance

CHAPTER 24. INSURANCE FRAUD


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.;

(a) The Delaware Insurance Fraud Prevention Bureau is hereby established within the Department of Insurance and authorized to employ investigators and appropriate support staff as is necessary to carry out its mandate.

(b) The Commissioner shall appoint the full-time supervisory and investigative personnel of the Bureau including the Director and Chief Investigator, who shall hold their employment at the pleasure of the Commissioner and who shall be qualified by training and experience to perform the duties of their positions. The Commissioner shall also appoint the clerical and other staff necessary for the Bureau to fulfill its responsibilities under this chapter.

(c) It shall be the duty of the Bureau:

(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;

(3) To conduct independent examinations of insurance fraud, and undertake independent studies to determine the extent of insurance fraud; and

(4) To enforce § 2118(q)(4) of Title 21 by confiscating license plates of uninsured motorists who have failed to provide proof of insurance after being afforded an opportunity to prove proof of insurance as required in § 2118(q)(4) of Title 21.

(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.

69 Del. Laws, c. 463, § 1; 75 Del. Laws, c. 59, § 2.;

(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.;

(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.

69 Del. Laws, c. 463, § 1.;

(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;

(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; or

(4) Prepare, present or cause to be presented to any insurer or other person, or demand or require the issuance of, a certificate of insurance that contains any false or misleading information concerning the policy of insurance to which the certificate makes reference, or assist, abet, solicit or conspire with another to do any of the acts described in this sentence. As used in this section, "certificate of insurance" means a document or instrument, regardless of how titled or described, that is, or purports to be, prepared or issued by an insurer or insurance producer as evidence of property or casualty insurance coverage. The term does not include a policy of insurance, insurance binder, policy endorsement, or automobile insurance identification or information card.

(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.

69 Del. Laws, c. 463, § 1; 79 Del. Laws, c. 217, § 2.;

Any insurer which has a reasonable belief that an act of insurance fraud is being, or has been, committed shall send to the Bureau, on a form prescribed by the Bureau, any and all information and such additional information relating to such act as the Bureau may require.

69 Del. Laws, c. 463, § 1.;

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.

69 Del. Laws, c. 463, § 1.;

This chapter shall not:

(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.

69 Del. Laws, c. 463, § 1.;

(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 of 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, or self-insured employer 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. However, the Department may, in its discretion, pay a reward drawn from the assessed administrative penalty to an individual who reports to the Insurance Department an incident of insurance fraud which results in either an admission or finding of fraud. The reward shall not exceed the lesser of the assessed administrative penalty or $25,000. In order to be eligible to receive a reward pursuant to this subsection, a reporting individual must sign a written complaint that subjects the person to the sanctions of § 1233 of Title 11. An insurance carrier that is the victim of insurance fraud is not eligible to receive a reward pursuant to this subsection for reporting such fraud.

69 Del. Laws, c. 463, § 1; 71 Del. Laws, c. 331, § 1; 75 Del. Laws, c. 276, § 1; 76 Del. Laws, c. 1, § 1.;

Any person so requested may enter into a consent order whereby such person, without admitting the conduct complained of, consents to the imposition of an administrative penalty and when so requested agrees to cease and desist the acts or omissions complained of.

69 Del. Laws, c. 463, § 1.;

The imposition of any fine or other sanction under this chapter shall not preclude prosecution for a violation of any of the criminal laws of this State.

69 Del. Laws, c. 463, § 1.;

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.

69 Del. Laws, c. 463, § 1.;

The costs of administration and operation of the Delaware Insurance Fraud Prevention Bureau shall be borne by all of the insurance companies admitted or authorized to transact the business of insurance in this State. The Commissioner shall assess $750 annually against each insurance company to provide the funds necessary for the operation of the Bureau.

71 Del. Laws, c. 69, § 2; 78 Del. Laws, c. 205, § 1.;