KRS 304.47-020: Fraudulent insurance acts -- Enforcement and penalties --

Compensatory damages -- Concurrent jurisdiction of Attorney General --

Reporting of fraudulent acts -- Application of section.

(1) For the purposes of this subtitle, a per son or entity commits a "fraudulent insurance

act" if he or she engages in any of the following, including but not limited to

matters relating to workers' compensation:

(a) Knowingly and with intent to defraud or deceive presents, causes to be

presented, or prepares with knowledge or belief that it will be presented to an

insurer, Board of Claims, Special Fund, or any agent thereof:

1. Any written or oral statement as part of, or in support of, a claim for

payment or other benefit pursuant to an insurance policy or from a "self-

insurer" as defined by KRS Chapter 342, knowing that the statement

contains any false, incomplete, or misleading information concerning

any fact or thing material to a claim;

2. To the extent not otherwise included under subparagraph 1. of this

paragraph, any statement that misrepresents the scope of damages,

including repair costs and other expenses, associated with a property,

casualty, or property and casualty insurance claim, including any claim

for towing or storage benefits under a property, casualty, or property and

casualty insurance policy, except this subparagraph shall not apply to

offers or counteroffers by legal counsel representing a plaintiff or

defendant in a disputed claim involving bodily injury; or

3. Any statement as part of, or in support of, an application for an

insurance policy, for renewal, reinstatement, or replacement of

insurance, or in support of an application to a lender for money to pay a

premium, knowing that the statement contains any false, incomplete, or

misleading information concerning any fact or thing material to the

application;

(b) Knowingly and willfully transacts any contract, agreement, or instrument

which violates this title;

(c) Knowingly and with intent to defraud or deceive:

1. Receives mon ey for the purpose of purchasing insurance, and fails to

obtain insurance;

2. Fails to make payment or disposition of money or voucher as defined in

KRS 304.17A -750, as required by agreement or legal obligation, that

comes into his or her possession while acting as a licensee under this

chapter;

3. Presents, causes to be presented, or prepares with knowledge or belief

that it will be presented to or by an insurer, or to the commissioner, any

statement, knowing that the statement contains any false, incomplete, or

misleading information concerning any material fact or thing, as part of,

or in support of one (1) or more of the following:

a. The rating of an insurance policy;

b. The financial condition of an insurer;

c. The formation, acquisition, merger, reconsolidation, dissolution, or

withdrawal from one (1) or more lines of insurance in all or part of

this Commonwealth by an insurer; or

d. A document filed with the commissioner; or

4. Engages in any of the following:

a. Solicitation or acceptance of new or renewal insurance risks on

behalf of an insolvent insurer; or

b. Removal, conceal ment, alteration, tampering, or destruction of

money, records, or any other property or assets of an insurer;

(d) Issues or knowingly presents fake or counterfeit insurance policies,

certificates of insurance, insurance identification cards, insurance bind ers, or

any other documents that purport to evidence insurance;

(e) Makes any false or fraudulent representation as to the death or disability of a

policy or certificate holder in any written statement or certificate for the

purpose of fraudulently obtaining money or benefit from an insurer;

(f) Engages in unauthorized insurance, as set forth in KRS 304.11-030;

(g) Violates KRS 367.628(2)(a); or

(h) Assists, abets, solicits, or conspires with another to commit a fraudulent

insurance act in violation of this subtitle.

(2) A person convicted of a violation of subsection (1) of this section shall be guilty of

a Class A misdemeanor, unless the aggregate of the claim, benefit, or money

referred to in subsection (1) of this section is:

(a) Five hundred dollars ($5 00) or more but less than ten thousand dollars

($10,000), in which case it is a Class D felony;

(b) Ten thousand dollars ($10,000) or more but less than one million dollars

($1,000,000), in which case it is a Class C felony; or

(c) One million dollars ($1,000,000) or more, in which case it is a Class B felony.

(3) A person, with the purpose to establish or maintain a criminal syndicate or to

facilitate any of its activities, shall be guilty of engaging in organized crime, a Class

B felony, if he or she engages in any of the activities set forth in KRS 506.120(1).

(4) A person convicted of a crime established in this section shall be punished by:

(a) Imprisonment for a term:

1. Not to exceed the period set forth in KRS 532.090 if the crime is a Class

A misdemeanor; or

2. Within the periods set forth in KRS 532.060 if the crime is a Class D, C,

or B felony;

(b) A fine, per occurrence, of:

1. For a misdemeanor, not more than one thousand dollars ($1,000) per

individual nor five thousand dollars ($5,000) per corp oration or twice

the amount of gain received as a result of the violation, whichever is

greater; or

2. For a felony, not more than ten thousand dollars ($10,000) per

individual nor one hundred thousand dollars ($100,000) per corporation,

or twice the amoun t of gain received as a result of the violation;

whichever is greater; or

(c) Both imprisonment and a fine, as set forth in paragraphs (a) and (b) of this

subsection.

(5) (a) In addition to imprisonment, the assessment of a fine, or both, a person

convicted of a crime established in this section may be ordered to make

restitution to any victim who suffered a monetary loss due to any actions by

that person which resulted in the adjudication of guilt, and to the division for

the cost of any investigation.

(b) The amount of restitution shall equal the monetary value of the actual loss or

twice the amount of gain received as a result of the violation, whichever is

greater.

(6) Any person damaged as a result of a violation of any provision of this section shall

have a cause of action in a court of competent jurisdiction to recover compensatory

damages, plus all reasonable investigation and litigation expenses, including

attorney's fees.

(7) (a) The Attorney General shall have concurrent jurisdiction to investigate and

prosecute violations of this section in accordance with KRS 15.235.

(b) The Attorney General, a Commonwealth's attorney, or a county attorney shall

refer to the commissio ner any report, investigation, or discovery of a

fraudulent insurance act that is received, initiated, or discovered by the

Attorney General, Commonwealth's attorney, or county attorney unless the

fraudulent insurance act has been previously reported to the commissioner.

(8) (a) The provisions of this section shall also apply to any agent, unauthorized

insurer or its agents or representatives, or surplus lines carrier who, with

intent, injures, defrauds, or deceives any claimant with regard to any claim.

(b) The claimant shall have the right to recover the damages provided in

subsection (6) of this section.