SENATE, No. 1743

STATE OF NEW JERSEY

214th LEGISLATURE

 

INTRODUCED MARCH 11, 2010

 


 

Sponsored by:

Senator  NIA H. GILL

District 34 (Essex and Passaic)

Senator  JOSEPH F. VITALE

District 19 (Middlesex)

 

 

 

 

SYNOPSIS

     Establishes waiver, rebate or payment of insured’s deductible, copayment, or coinsurance by health care practitioner as a form of insurance fraud subject to criminal and civil penalties.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning insurance fraud related to health care claims and amending various parts of the statutory law.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.  Section 3 of P.L.1997, c.353 (C.2C:21-4.3) is amended to read as follows:

     3.  a. A practitioner is guilty of a crime of the second degree if that person knowingly commits health care claims fraud in the course of providing professional services.  In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.

     b.    A practitioner is guilty of a crime of the third degree if that person recklessly commits health care claims fraud in the course of providing professional services.  In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.

     c.     A person, who is not a practitioner subject to the provisions of subsection a. or b. of this section, is guilty of a crime of the third degree if that person knowingly commits health care claims fraud. A person, who is not a practitioner subject to the provisions of subsection a. or b. of this section, is guilty of a crime of the second degree if that person knowingly commits five or more acts of health care claims fraud and the aggregate pecuniary benefit obtained or sought to be obtained is at least $1,000.  In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.

     d.    (1)  A person, who is not a practitioner subject to the provisions of subsection a. or b. of this section, is guilty of a crime of the fourth degree if that person recklessly commits health care claims fraud. 

     (2)  A practitioner is guilty of a crime of the fourth degree involving health care claims fraud if that practitioner, directly or indirectly related to a claim, knowingly waives, rebates, gives, pays, or offers to waive, rebate, give or pay all or part of the deductible, copayment, or coinsurance owed by a covered person pursuant to the terms of an insurance policy between the covered person and that person’s insurance company as defined by section 72 of P.L.2003, c.89 (C.2C:21-4.5).

     In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained.

     e.     Each act of health care claims fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to subsection c. of this section.  Multiple acts of health care claims fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this section.

     f. (1) The falsity, fictitiousness, fraudulence or misleading nature of a statement may be inferred by the trier of fact in the case of a practitioner who attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted, any record, bill, claim or other document for treatment or procedure without the practitioner, or an associate of the practitioner, having performed an assessment of the physical or mental condition of the patient or client necessary to determine the appropriate course of treatment.

     (2)   The falsity, fictitiousness, fraudulence or misleading nature of a statement  may be inferred by the trier of fact in the case of a person who attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted any record, bill, claim or other document for more treatments or procedures than can be performed during the time in which the treatments or procedures were represented to have been performed.

     (3)   Proof that a practitioner has signed or initialed a record, bill, claim or other document gives rise to an inference that the practitioner has read and reviewed that record, bill, claim or other document.

     g.     In order to promote the uniform enforcement of this act, the Attorney General shall develop health care claims fraud prosecution guidelines and disseminate them to the county prosecutors within 120 days of the effective date of this act.

     h.     For the purposes of this section, a person acts recklessly with respect to a material element of an offense when he consciously disregards a substantial and unjustifiable risk that the material element exists or will result from his conduct.  The risk must be of such a nature and degree that, considering the nature and purpose of the actor's conduct and the circumstances known to him, its disregard involves a gross deviation from the standard of conduct that a reasonable person would observe in the actor's situation.

     i. (1) Nothing in this act shall preclude an indictment and conviction for any other offense defined by the laws of this State.

     (2)   Nothing in this act shall preclude an assignment judge from dismissing a prosecution of health care claims fraud if the assignment judge determines, pursuant to N.J.S.2C:2-11, the
conduct charged to be a de minimis infraction.

(cf: P.L.2003, c.89, s.75)

 

     2.  Section 73 of P.L.2003, c.89 (C.2C:21-4.6) is amended to read as follows:

     73.  a. A person is guilty of the crime of insurance fraud if that person knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omits a material fact from, or causes a material fact to be omitted from, any record, bill, claim or other document, in writing, electronically, orally or in any other form, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted as part of, in support of or opposition to or in connection with:  (1) a claim for payment, reimbursement or other benefit pursuant to an insurance policy, or from an insurance company or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.); (2) an application to obtain or renew an insurance policy; (3) any payment made or to be made in accordance with the terms of an insurance policy or premium finance transaction; or (4) an affidavit, certification, record or other document used in any insurance or premium finance transaction.

     b.  Insurance fraud constitutes a crime of the second degree if the person knowingly commits five or more acts of insurance fraud, including acts of health care claims fraud pursuant to section 2 of P.L.1997, c.353 (C.2C:21-4.2) and if the aggregate value of property, services or other benefit wrongfully obtained or sought to be obtained is at least $1,000.  Otherwise, insurance fraud is a crime of the third degree, unless this fraud involves an act of health care claims fraud pursuant to subsection d. of section 3 of P.L.1997, c.353 (C.2C:21-4.3), in which case it is a crime of the fourth degree.  Each act of insurance fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to this subsection.  Multiple acts of insurance fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this subsection.

     c.     Proof that a person has signed or initialed an application, bill, claim, affidavit, certification, record or other document may give rise to an inference that the person has read and reviewed the application, bill, claim, affidavit, certification, record or other document.

     d.    In order to promote the uniform enforcement of this act, the Attorney General shall develop insurance fraud prosecution guidelines and disseminate them to county prosecutors within 180 days of the effective date of this act.

     e.     Nothing in this act shall preclude an indictment and conviction for any other offense defined by the laws of this State.

     f.     Nothing in this act shall preclude an assignment judge from dismissing a prosecution of insurance fraud if the assignment judge determines, pursuant to N.J.S.2C:2-11, the conduct charged to be a de minimis infraction.

(cf: P.L.2003, c.89, s.73)

 

     3.  Section 4 of P.L.1997, c.353 (C.2C:51-5) is amended to read as follows: 

     4. a. (1) A practitioner convicted of health care claims fraud pursuant to subsection a. of section 3 of P.L.1997, c.353 (C.2C:21-4.3) or a substantially similar crime under the laws of another state or the United States shall forfeit his license and be forever barred from the practice of the profession unless the court finds that such license forfeiture would be a serious injustice which overrides the need to deter such conduct by others and in such case the court shall determine an appropriate period of license suspension which shall be for a period of not less than one year.  If the court does not permanently forfeit such license pursuant to this paragraph, the sentence shall not become final for 10 days in order to permit the appeal of such sentence by the prosecution.

     (2)   Upon a first conviction of health care claims fraud pursuant to subsection b. of section 3 of P.L.1997, c.353 (C.2C:21-4.3) or a substantially similar crime under the laws of another state or the United States, a practitioner shall have his license suspended and be barred from the practice of the profession for a period of at least one year.

     (3)   Upon a second conviction of health care claims fraud pursuant to subsection b. of section 3 of P.L.1997, c.353 (C.2C:21-4.3) or a substantially similar crime under the laws of another state or the United States, a practitioner shall forfeit his license and be forever barred from the practice of the profession.

     (4)   A person convicted of second degree insurance fraud pursuant to section 73 of P.L.2003, c.89 (C.2C:21-4.6) or a substantially similar crime under the laws of another state or the United States who holds a license or certificate of authority or qualification to engage in the practice of a profession, occupation, trade, or vocation or business, including but not limited to a practitioner as defined in section 2 of P.L.1997, c.353 (C.2C:21-4.2), shall forfeit that license or certificate and be forever barred from the practice of that profession, occupation, trade, vocation or business if the act or acts of insurance fraud were related to or performed while engaged in the practice of that profession, occupation, trade, vocation or business, unless the court finds that such license or certificate forfeiture would be a serious injustice which overrides the need to deter such conduct by others and in that case the court shall determine an appropriate period of license or certificate suspension which shall be for a period of not less than one year.  If the court does not permanently forfeit such license or certificate pursuant to this paragraph, the sentence shall not become final for 10 days in order to permit the appeal of that sentence by the prosecution.

     (5)   A person convicted of third degree insurance fraud pursuant to section 73 of P.L.2003, c.89 (C.2C:21-4.6) or a substantially similar crime under the laws of another state or the United States who holds a license or certificate of authority or qualification to engage in the practice of a profession, occupation, trade, vocation or business, including but not limited to a practitioner as defined in section 2 of P.L.1997, c.353 (C.2C:21-4.2), shall have his license or certificate suspended and be barred from the practice of that profession, occupation, trade, vocation or business for a period of at least one year if the act or acts of insurance fraud were related to or performed while engaged in the practice of that profession, occupation, trade, vocation or business.

     (6)   Upon a second conviction of third degree insurance fraud pursuant to section 73 of P.L.2003, c.89 (C.2C:21-4.6) or a substantially similar crime under the laws of another state or the United States which meets the criteria of paragraph (2) of this subsection, a person shall forfeit his license or certificate and be forever barred from the practice of that profession, occupation, trade, vocation or business.

     (7)   Upon application of the county prosecutor or the Attorney General, a person convicted of any crime of the second degree or above enumerated in chapter 20 or 21 of Title 2C of the New Jersey Statutes or a substantially similar crime under the laws of another state or the United States who holds a license or certificate or authority or qualification to engage in the practice of a profession, occupation, trade, vocation or business, including a practitioner as defined in section 2 of P.L.1997, c.353 (C.2C:21-4.2), shall forfeit such license or certificate and be forever barred from the practice of that profession, occupation, trade, vocation or business if the act or acts underlying the conviction involved or were related to an insurance transaction as defined in section 72 of P.L.2003, c.89 (C.2C:21-4.5) and touched upon or were performed while engaged in the practice of that profession, occupation, trade, vocation or business, unless the court finds that the license or certificate forfeiture would be a serious injustice which overrides the need to deter such conduct by others and in that case the court shall determine an appropriate period of license or certificate suspension which shall be for a period of not less than one year.  If the court does not permanently forfeit that license or certificate pursuant to this paragraph, the sentence shall not become final for 10 days in order to permit the appeal of that sentence by the prosecution.

     (8)   Upon application of the county prosecutor or the Attorney General, a person convicted of any crime of the third degree enumerated in chapter 20 or 21 of Title 2C of the New Jersey Statutes or a substantially similar crime under the laws of another state or the United States who holds a license or certificate of authority or qualification to engage in the practice of a profession, occupation, trade, vocation or business, including but not limited to a practitioner as defined in section 2 of P.L.1997, c.353 (C.2C:21-4.2), shall have his license or certificate suspended and be barred from the practice of that profession, occupation, trade, vocation or business for a period of at least one year if the act or acts underlying the conviction involved or were related to an insurance transaction as defined in section 72 of P.L.2003, c.89 (C.2C:21-4.5) and touched upon or were performed while engaged in the practice of that profession, occupation, trade, vocation or business.

     (9)  A practitioner convicted of health care claims fraud pursuant to subsection d. of section 3 of P.L.1997, c.353 (C.2C:21-4.3) or a substantially similar crime under the laws of another state or the United States may have his license or certificate suspended and be barred from the practice of the profession for a period of not more than one year.

     b.    A court of this State shall enter an order of license or certificate forfeiture or suspension pursuant to subsection a. of this section:

     (1)   Immediately upon a finding of guilt by the trier of fact or a plea of guilty entered in any court of this State; or

     (2)   Upon application of the county prosecutor or the Attorney General, when the license or certificate forfeiture or suspension is made pursuant to paragraph (4) of subsection a. of this section or is based upon a conviction of an offense under the laws of another state or of the United States.  An order of license or certificate forfeiture or suspension pursuant to this paragraph shall be effective as of the date the person is found guilty by the trier of fact or pleads guilty to the offense.

     This application may also be made in the alternative by the Attorney General to the appropriate licensing agency.

     The court shall provide notice of the forfeiture or suspension to the appropriate licensing agency within 10 days of the date an order of forfeiture or suspension is entered.

     c.     No court shall grant a stay of an order of license or certificate forfeiture or suspension pending appeal of a conviction or forfeiture or suspension order unless the court is clearly convinced that there is a substantial likelihood of success on the merits.  If the conviction is reversed or the order of license or certificate forfeiture or suspension is overturned, the court shall provide notice of reinstatement to the appropriate licensing agency within 10 days of the date of the order of reinstatement. The license or certificate shall be restored, in accordance with applicable procedures, unless the appropriate licensing agency determines to suspend or revoke the license or certificate.

     d.    In any case in which the issue of license or certificate forfeiture or suspension is not raised in a court of this State at the time of a finding of guilt, entry of a guilty plea or sentencing, a license or certificate forfeiture or suspension required by this section may be ordered by a court or by the appropriate licensing agency of this State upon application of the county prosecutor or the Attorney General or upon application of the appropriate licensing agency having authority to revoke or suspend the professional's license or certificate.  The fact that a court has declined to order license or certificate forfeiture or suspension shall not preclude the appropriate licensing agency having authority to revoke or suspend the professional's license or certificate from seeking to do so on the ground that the conduct giving rise to the conviction demonstrates that the person is unfit to hold the license or certificate or is otherwise liable for an offense as specified in section 8 of P.L.1978, c.73 (C.45:1-21).

     e.     If the Supreme Court of the State of New Jersey issues Rules of Court pursuant to this act, the Supreme Court may revoke the license to practice law of any attorney who has been convicted, under the laws of this State, of health care claims fraud pursuant to section 3 of P.L.1997, c.353 (C.2C:21-4.3), or an offense which, if committed in this State, would constitute health care claims fraud, insurance fraud pursuant to section 73 of P.L.2003, c.89 (C.2C:21-4.6), or an offense which, if committed in this State, would constitute insurance fraud.

     f.     Nothing in this section shall be construed to prevent or limit the appropriate licensing agency or any other party from taking any other action permitted by law against the practitioner.

(cf: P.L.2003, c.89, s.76)

 

     4.    Section 4 of P.L.1983, c.320 (C.17:33A-4) is amended to read as follows:

     4.    a. A person or a practitioner violates this act if he:

     (1)  Presents or causes to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.), knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or

     (2)  Prepares or makes any written or oral statement that is intended to be presented to any insurance company, the Unsatisfied Claim and Judgment Fund or any claimant thereof in connection with, or in support of or opposition to any claim for payment or other benefit pursuant to an insurance policy or the "Unsatisfied Claim and Judgment Fund Law," P.L.1952, c.174 (C.39:6-61 et seq.), knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or

     (3)  Conceals or knowingly fails to disclose the occurrence of an event which affects any person's initial or continued right or entitlement to (a) any insurance benefit or payment or (b) the amount of any benefit or payment to which the person is entitled;

     (4)  Prepares or makes any written or oral statement, intended to be presented to any insurance company or producer for the purpose of obtaining:

     (a)  a motor vehicle insurance policy, that the person to be insured maintains a principal residence in this State when, in fact, that person's principal residence is in a state other than this State; or

     (b)  an insurance policy, knowing that the statement contains any false or misleading information concerning any fact or thing material to an insurance application or contract; or

     (5)  Conceals or knowingly fails to disclose any evidence, written or oral, which may be relevant to a finding that a violation of the provisions of paragraph (4) of this subsection a. has or has not occurred.

     b.    A person or practitioner violates this act if he knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of this act.

     c.     A person or practitioner violates this act if, due to the assistance, conspiracy or urging of any person or practitioner, he knowingly benefits, directly or indirectly, from the proceeds derived from a violation of this act.

     d.    A person or practitioner who is the owner, administrator or employee of any hospital violates this act if he knowingly allows the use of the facilities of the hospital by any person in furtherance of a scheme or conspiracy to violate any of the provisions of this act.

     e.     A person or practitioner violates this act if, for pecuniary gain, for himself or another, he directly or indirectly solicits any person or practitioner to engage, employ or retain either himself or any other person to manage, adjust or prosecute any claim or cause of action, against any person, for damages for negligence, or, for pecuniary gain, for himself or another, directly or indirectly solicits other persons to bring causes of action to recover damages for personal injuries or death, or for pecuniary gain, for himself or another, directly or indirectly solicits other persons to make a claim for personal injury protection benefits pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.); provided, however, that this subsection shall not apply to any conduct otherwise permitted by law or by rule of the Supreme Court.

     f.     A practitioner violates the “New Jersey Insurance Fraud Prevention Act,” P.L.1983, c.320 (C.17:33A-1 et seq.), if that practitioner, directly or indirectly related to a claim, waives, rebates, gives, pays, or offers to waive, rebate, give or pay all or part of the deductible, copayment, or coinsurance owed by a covered person pursuant to the terms of an insurance policy between the covered person and that person’s insurance company.

(cf: P.L.1997, c.151, s.3)

 

     5.    This act shall take effect on the first day of the fourth month next following enactment, and shall apply to any health care claim submitted, attempted to be submitted, caused to be submitted, or attempted to cause to be submitted, for payment or reimbursement on or after that date.

 

 

STATEMENT

 

     This bill establishes that a waiver, rebate or payment of an insured’s deductible, copayment, or coinsurance by a health care practitioner, owed by a covered person pursuant to the terms of an insurance policy between that person and an insurance company, shall be considered a form of insurance fraud.  The bill amends several sections of the State’s Criminal Code (Title 2C of the New Jersey Statutes) concerning “health care claims fraud” and “insurance fraud,” as well as the “New Jersey Insurance Fraud Prevention Act,” P.L.1983, c.320 (C.17:33A-1 et seq.) in order to accomplish its objectives.

     First, the bill establishes that a health care practitioner is guilty of a crime of the fourth degree involving health care claims fraud if that practitioner, directly or indirectly related to a claim, knowingly waives, rebates, gives, pays, or offers to waive, rebate, give or pay all or part of the deductible, copayment, or coinsurance owed by a covered person pursuant to the terms of an insurance policy between the covered person and that person’s insurance company.  A crime of the fourth degree is punishable by a term of imprisonment of up to 18 months, a fine of up to $10,000, or both.

     The bill also incorporates this form of fourth degree health care claims fraud within the relevant provisions of the Criminal Code which describe the broader crime of “insurance fraud,” set forth in section 73 of P.L.2003, c.89 (C.2C:21-4.6).

     In addition to the above described term of imprisonment and fine, the commission of the fourth degree crime of health care claims fraud may result in an order by the court or an appropriate licensing agency, which suspends the guilty health care practitioner’s license or certificate for a period of not more than one year, and bars the practitioner from the practice of the profession during that time.

     Second, under the “New Jersey Insurance Fraud Prevention Act,” the bill establishes that a health care practitioner violates that act if the practitioner, directly or indirectly related to a claim, waives, rebates, gives, pays, or offers to waive, rebate, give or pay all or part of the deductible, copayment, or coinsurance owed by a covered person.  In accordance with that act, a violation may subject the health care practitioner to an administrative proceeding before the Commissioner of Banking and Insurance, with a penalty of between $5,000 and $15,000, plus restitution to any insurance company that suffered losses due to the violation, or a civil action in court with the same range of monetary penalties, plus payment of court costs and reasonable attorneys’ fees to the commissioner. 

     Further, violations of the “New Jersey Insurance Fraud Prevention Act” may result in a recommendation to the appropriate licensing agency with respect to a potential suspension or revocation of the health care practitioner’s license or certification.  See P.L.1998, c.21, s.41 (C.17:33A-25).