SENATE, No. 754

 

STATE OF NEW JERSEY

 

INTRODUCED FEBRUARY 15, 1996

 

 

By Senator CARDINALE

 

 

An Act concerning insurance fraud and certain self-insurance funds and amending P.L.1983, c.320.

 

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

 

    1. Section 3 of P.L.1983, c.320 (C.17:33A-3) is amended to read as follows:

    3. As used in this act:

    "Attorney General" means the Attorney General of New Jersey or his designated representatives.

    "Commissioner" means the Commissioner of Insurance.

    "Director" means the Director of the Division of Insurance Fraud Prevention in the Department of Insurance.

    "Division" means the Division of Insurance Fraud Prevention established by this act.

    "Hospital" means any general hospital, mental hospital, convalescent home, nursing home or any other institution, whether operated for profit or not, which maintains or operates facilities for health care.

    "Insurance company" means:

    a. Any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person engaged in the business of insurance pursuant to Subtitle 3 of Title 17 of the Revised Statutes (C.17:17-1 et seq.), or Subtitle 3 of Title 17B of the New Jersey Statutes (C.17B:17-1 et seq.);

    b. Any medical service corporation operating pursuant to P.L.1940, c.74 (C.17:48A-1 et seq.);

    c. Any hospital service corporation operating pursuant to P.L.1938, c.366 (C.17:48-1 et seq.);

    d. Any health service corporation operating pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.);

    e. Any dental service corporation operating pursuant to P.L.1968, c.305 (C.17:48C-1 et seq.);

    f. Any dental plan organization operating pursuant to P.L.1979, c.478 (C.17:48D-1 et seq.);

    g. Any insurance plan operating pursuant to P.L.1970, c.215 (C.17:29D-1);

    h. The New Jersey Insurance Underwriting Association operating pursuant to P.L.1968, c.129 (C.17:37A-1 et seq.);

    i. The New Jersey Automobile Full Insurance Underwriting Association operating pursuant to P.L.1983, c.65 (C.17:30E-1 et seq.) and the Market Transition Facility operating pursuant to section 88 of P.L.1990, c.8 (C.17:33B-11); [and]

    j. Any risk retention group or purchasing group operating pursuant to the "Liability Risk Retention Act of 1986," 15 U.S.C.§3901 et seq.;

    k. Any fund or joint self-insurance fund operating pursuant to Article 1 of chapter 10 of Title 40A of the New Jersey Statutes (N.J.S.40A:10-1 et seq.), Article 3 of chapter 10 of Title 40A of the New Jersey Statutes (N.J.S.40A:10-6 et seq.), Article 4 of chapter 10 of Title 40A of the New Jersey Statutes (N.J.S.40A:10-12 et seq.), P.L.1983, c.372 (C.40A:10-36 et seq.), P.L.1983, c.108 (C.18A:18B-1 et seq.), or P.L.1992, c.51 (C.40A:10-52 et seq.); and

    l. The New Jersey State Health Benefits Program operating pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.).

    "Person" means a person as defined in R.S.1:1-2, and shall include, unless the context otherwise requires, a practitioner.

    "Practitioner" means a licensee of this State authorized to practice medicine and surgery, psychology, chiropractic, or law or any other licensee of this State whose services are compensated, directly or indirectly, by insurance proceeds, or a licensee similarly licensed in other states and nations or the practitioner of any nonmedical treatment rendered in accordance with a recognized religious method of healing.

    "Producer" means an insurance producer as defined in section 2 of P.L.1987, c.293 (C.17:22A-2), licensed to transact the business of insurance in this State pursuant to the provisions of the "New Jersey Insurance Producer Licensing Act," P.L.1987, c.293 (C.17:22A-1 et seq.).

    "Statement" includes, but is not limited to, any application, writing, notice, expression, statement, proof of loss, bill of lading, receipt, invoice, account, estimate of property damage, bill for services, diagnosis, prescription, hospital or physician record, X-ray, test result or other evidence of loss, injury or expense.

(cf: P.L.1991, c.331, s.1)

 

    2. Section 8 of P.L.1983, c.320 (C.17:33A-8) is amended to read as follows:

    8. a. There is established in the Department of Insurance the Division of Insurance Fraud Prevention. The division shall assist the commissioner in administratively investigating allegations of insurance fraud and in developing and implementing programs to prevent insurance fraud and abuse. The division shall promptly notify the Attorney General of any insurance application or claim which involves criminal activity. When so required by the commissioner and the Attorney General, the division shall cooperate with the Attorney General in the investigation and prosecution of criminal violations.

    b. The commissioner shall appoint the full-time supervisory and investigative personnel of the division, including the director, who shall hold their employment at the pleasure of the commissioner without regard to the provisions of Title 11A of the New Jersey Statutes and shall receive such salaries as the commissioner from time to time designates, and who shall be qualified by training and experience to perform the duties of their position.

    c. When so requested by the commissioner, the Attorney General may assign one or more deputy attorneys general to assist the division in the performance of its duties.

    d. The commissioner shall also appoint the clerical and other staff necessary for the division to fulfill its responsibilities under this act. The personnel shall be employed subject to the provisions of Title 11A of the New Jersey Statutes, and other applicable statutes.

    e. The commissioner shall appoint an insurance fraud advisory board consisting of eight representatives from insurers doing business in this State. The members of the board shall serve for two year terms and until their successors are appointed and qualified. The members of the board shall receive no compensation. The board shall advise the commissioner with respect to the implementation of this act, when so requested by the commissioner.

    f. The Director of the Division of Budget and Accounting in the Department of the Treasury shall, on or before September 1 in each year, ascertain and certify to the commissioner the total amount of expenses incurred by the State in connection with the administration of this act during the preceding fiscal year, which expenses shall include, in addition to the direct cost of personal service, the cost of maintenance and operation, the cost of retirement contributions made and the workers' compensation paid for and on account of personnel, rentals for space occupied in State owned or State leased buildings and all other direct and indirect costs of the administration thereof.

    g. The commissioner shall, on or before October 15 in each year, apportion the amount so certified to him among all of the companies writing the class or classes of insurance described in Subtitle 3 of Title 17 of the Revised Statutes (C.17:17-1 et seq.), and Subtitle 3 of Title 17B of the New Jersey Statutes (C.17B:17-1 et seq.), within this State in the proportion that the net premiums received by each of them for such insurance written or renewed on risks within this State during the calendar year immediately preceding, as reported to him, bears to the sum total of all such net premiums received by all companies writing that insurance within the State during the year, as reported, except that no one company shall be assessed for more than 5% of the amount apportioned. The commissioner shall certify the sum apportioned to each company on or before November 15 next ensuing, and to the Division of Taxation in the Department of the Treasury. Each company shall pay the amount so certified as apportioned to it to the said Division of Taxation on or before December 31 next ensuing, and the sum paid shall be paid into the State Treasury in reimbursement to the State for the expenses paid.

    "Net premiums received" means gross premiums written, less return premiums thereon and dividends credited or paid to policyholders and also means and includes contributions made to funds and joint self-insurance funds which are included in the definition of an insurance company pursuant to section 3 of P.L.1983, c.320 (C.17:33A-3) and the New Jersey State Health Benefits Program, less return contributions.

    h. The total appropriations recoverable under this section for the operation of the division shall not exceed $500,000.00 during its first full fiscal year of operation.

(cf: P.L.1991, c.331, s.5)

 

    3. This act shall take effect immediately.

 

 

STATEMENT

 

    This bill provides that the "New Jersey Insurance Fraud Prevention Act" will apply to the self-insurance funds and joint self-insurance funds of municipalities, counties and school boards and the New Jersey State Health Benefits Program. Currently, the Division of Insurance Fraud Prevention cannot act on complaints of fraud concerning these self-insurance funds.

 

 

 

Includes self-insurance funds of public entities under the "New Jersey Insurance Fraud Prevention Act."